What Means 'Reserve Price'?

I understand the interplay of my bid and a reserve price to be:

1) No matter how high my bid, I will pay exactly one increment above the second-highest bidder; and,

2) If there is a reserve price, and one increment above the second-highest bidder does not get me past the reserve price, the lot is passed.

So, for example:

- I offer a max bid of U$D 100;

- The market is weak, and the second-highest bidder offered U$D 50;

- The reserve price is U$D 80;

- One increment above U$D 50 does not rise above U$D 80;

- The lot is passed.

But I recently ran across an auctioneer whose rules state:

"It may be assumed that all lots are subject to a reserve price. The auctioneer may implement such reserve price by bidding on behalf of the seller."

Under this rule, if I understand it correctly, I would pay the higher of one increment above the second-highest bidder *or* the reserve price (or one increment about the reserve price).

So, for example:

- I offer a max bid of U$D 100;

- The market is weak, and the second-highest bidder offered U$D 50;

- The reserve price is U$D 80;

- My winning bid is one increment above U$D 80.

I do not really care for the expression 'bidding on behalf of the seller', because the 'seller' is 'bidding' with the firm knowledge that I will go higher each time. That ain't bidding.

Q/ Do you participate/not in auctions where the auctioneer may bid against you on behalf of the seller?

Q/ Is this a common practice? (I prefer to bid IRL, where reserve prices will either be exceeded or result in a pass, so this shtick is new to me.)

Cheers,

/s/ ikeyPikey

Q The auctioneer may implement such reserve price by bidding on behalf of the seller.

A The auctioneer & seller are either the same person with two ebay ids trying to increase their own auction, or two well known friends one bidding the price up with no intention of winning & paying for the item. I would steer clear of the seller and report them as this is not a fair auction. Its actually against the rules on ebay. Also if a seller wants a certain price for an item then they should start the auction at that price or use the buy it now function and set the price they want.

I don't think this is ebay. Which auction house is this?

I figured it out - It's Regency-Superior Auctions

From their list of rules -

3. Reserves Some consignors have been advanced monies against the sale of their properties. It may be assumed that all lots are subject to a reserve price. The auctioneer may implement such reserve price by bidding on behalf of the seller.

It means that they can open the bidding below the reserve, and bid on behalf of the seller up to the reserve.
In the example you cite, they open the bid at 50, bid on your behalf 60 (from your 100), they go 70 on behalf of the seller, and 80 from you, meeting the reserve. At that point, they stop. If someone else comes in, they may bid on your behalf up to your maximum.

You can see that when you leave a bid with an auctioneer, you better be sure that they are honorable, as they know your max. Without transparency, how hard would it be for them to bid you up to 90 or 100? That's why I use an auction agent when I bid in auctions.