Even if you’re new to salvage car auctions, there’s a good chance that you’ve heard the term reserve before. Reserves are a key aspect of all types of vehicle auctions, whether they’re held at physical auction houses, or something like our own online vehicle auctions right here at RAW2K. One question in particular we get from our customers is this: what is a no reserve car auction? You can find the answer below - but first, let’s start with the basics.
What is a reserve?
Reserve is short for reserve price. In a nutshell, it’s a fixed minimum price that indicates the bare minimum that the seller will accept for their vehicle. Generally, bids that do not reach the reserve price have a very low chance of successfully securing the car. If the winning bid of an auction does not outstrip the reserve price, the vehicle may not sell in that auction at all.
When sellers come to sell their car at auction, whether that’s online or at a physical auction house, they will typically work with the auctioneer to set a reserve price in advance. The expertise and professional judgement of auctioneers is invaluable in making this calculation, as they won’t be influenced by any personal feelings about the car in question, and can base their valuation on past experience and their knowledge of current market rates.
It’s not unknown for sellers to be wary about the auctioneer somehow lowballing them on setting a reserve price, but auctioneers have vested interests in setting these reserve prices as high as realistically possible, as they also receive a proportion of the proceeds. However, they’ll be able to help set a reserve price that strikes the right balance between lucrative and realistic.
Setting a reserve price also incurs an additional fee for sellers, but most find that it’s (literally) a small price to pay for having the peace of mind that their salvage car won’t sell at a disappointingly low price. If the highest bidder in the auction then fails to reach the reserve price, most auctioneers will try and negotiate a compromise between the buyer and the seller, so that everyone walks away satisfied that they’ve had value.
If no compromise can be reached, the seller has the option of refusing the deal and putting the car up for a future auction instead. However, most auction houses charge additional fees for entry to each one of these, as well as storage fees in the meantime, so it takes a careful judgement!
What does no reserve mean?
A no reserve auction is exactly what it sounds like. None of the salvage cars up for sale in a no reserve auction have any minimum prices on them, which means they get sold no matter what kind of price they fetch.
Because there is no minimum price, these types of auctions have the potential to provide buyers with the best bargains, which makes them understandably the most popular. That in turn means they’re more competitive, which can provide lucrative rewards for sellers. The more competitive the auction, the higher the winning bid might be.
There is a trade-off, though. Since sellers are bound to sell the vehicle no matter what the winning bid might be, they may even run the risk of selling the vehicle at a financial loss. This may depend on the type and condition of the salvage car in question. So for sellers, choosing whether or not to set a reserve price on their vehicle always involves carefully weighing up the pros and cons, and ultimately making a judgement call!
If you’re a buyer looking for a bargain on your next salvage car, we’ve got good news for you - you’re in exactly the right place already! Here at RAW2K we’ve got a huge range of Mercedes salvage cars for sale, along with models from other leading luxury brands like Audi and BMW. Our online car auctions UK are refreshed on a daily and weekly basis, so there are always great deals to be had! Why not take a look around our site, and see what you can find?