[vgemito]

Mulligan : Thank you for the explanation of the missing posts. I had wanted to believe those were the reasons and am happy to have them confirmed.

As to the larger issue of auction reserves, I agree that they should be honored .

However, auction companies such as Christies and Sotheby's are not "trusted third parties". They are agents for the sellers, pure and simple. And, as long as you are mentioning them, you might also read their terms of sale, in which they disavow any responsibility whatsoever for anything they write in their own catalogues, advertising, etc.. In that regard they feel obliged to look out for themseleves entirely.

In my view, the reserve question becomes crucial as the value of the property rises. As long as the expected price is $50 or $100 for a domain, there isn't much to care about. However, for a $100k domain, can one really expect someone to just put it out there and settle eventually for $1k if few bidders show up? Not likely. And if that did happen, it would destroy the confidence of future sellers.

Two available answers to this scenario are not satisfactory:

1) Set a high visible reserve
That's OK, but it seriously dilutes some of the key advantages of auction - the dynamics of competitiveness, hope, changing expectations, timeliness, etc. that make auctions unpredictable and potentially rewarding.

2) Move the sale from "auctions" to "sales" thread.
In this case you are simply excluding the seller entirely from any advantages of auction.

As prices rise in any given auction, buyers struggle to adjust, and sometimes decide to change their limits and bid higher. On the other end, sellers should also be free to act similarly, perhaps to conclude in the end to accept a lower price. This is all part of the dynamic of auctions that needs to be expressed for a healthy market.

Low starting bids are part of the mix, but they should not dictate reserves. Auction houses regularly underestimate prices in order to draw in participants, knowing that more bidders, once in battle, will help to raise prices, and possibly even drive the price through the ceiling. You may not like that, but it is an established part of auction marketing, and generally benefits the seller.

One way to bridge the gap between the needs of buyer and seller is to provide the sellers' estimates of the expected price in advance. The reserve then becomes dependent on these estimates, rather than on the opening bid.

Reserves are always individualized, but usually amount to about 65% of the lower estimate and not higher that the low estimate. It should also be part of the sale understanding that the reserve should not exceed the high estimate. This allows buyers to know that something estimated, say, at a high of $3k, is not going to be held out for a million.

Here is a simplified example of how one might structure such a sale:

Reserved Auction:
gimmemöney.com
xn--1234.com
English Translation: "get rich quick"
est. $2,000-3,000
Starting bid: $800
$50 increments under $1,000, $100 increments above $1,000.

In this case, the seller might have a private reserve of, say, $1250 (but not legitimately more than $3000). Other outcomes might be that the domain sells for $5000 or more, making the seller happy, or the seller might decide in the end to let it go for a bid of $800, making the buyer happy. Whatever the result, such a strategy is neither complicated nor misleading, but at the same time allows maximum flexibility and incentive.


Regards