Using a hidden reserve price in auctions.

I've been both a buyer and a seller in Audiogon auctions and have not only made excellent deals with terriffic people, but had a lot of fun doing it (thanks, Audiogon!).

I've always wondered, however, why some people bother to use a hidden reserve price in auctions. I suppose some potential buyers may enjoy the mystery of a hidden reserve price, but it tends to just put me off. If a seller has a reserve price, why not just have an auction with a minimum price and no reserve? Perhaps some sellers don't realize that you can do this.

How do you feel about this?
Hi Steve; I've done several eBay auctions and have usually used a "hidden" reserve-- eBay explains the benefit (reasons) for using it: paraphrasing, a lower minimum bid (than reserve) will attract more bidders, but may not be the minimum price a seller is willing to accept. OTOH, if you post the minimum you will accept up-front, you may attract no bidders at all. And in fact, I've found this to be true. I guess it's just auction psychology.

As a buyer though, I tend to agree with you, I don't care for the hidden reserve either. Craig
Garfish, is right about auction psychology. I watched a listing of friend, who for a month had a classified add for a very clean $3000 CD player. He listed it for under what everyone else was selling them for thinking he would turn it quicker that way as he had already bought another machine. He was at least $200 under everyone else by the end of the add at $900. Well the add expired, and still no sale. He decided to auction it. He didn't use the hidden reserve though, he went no reserve and started at $1. I have seen him sweat on these no reserve auctions before. It takes real balls! Anyway at the end of the auction the thing sold for almost $1300! There is no other way to explain it than that someone else must think it is worth buying so I better bid more, when a week before they could have bought it for $900. It was VERY interesting to watch.
I agree with Garfish. Also, I think the idea with the low opening and higher reserve is to entice bargain hunters into bidding at a low price, hoping they will get into a bidding frenzy and meet your reserve. As a buyer I don't like them because since I don't want to bid higher than the reserve, I have to place a lot of bids as I slowly work my way up to the reserve.
My 2cents is that I usually avoid bidding on auctions if I dont know what the reserve price is. I once emailed a seller askingwhat the reserve was with the intention of maybe making a direct offer. He would not reveal the reserve so I made no offer. Who knows...maybe hidden reserves are a way of trying to get too much from an item. I cant begin to say how many auctions had a hidden reserve & buy it now option where the bid was within 5% of the buy it now price but the reserve had not yet been met.
I agree with you the a hidden price should be visible, it can only help the seller and also the buyer. What bothers me most is that in a number of auctions I have encountered, there have been strange bids by people who had never bought or sold anything and who put in high prices, as if they were tryign to boost the price of the auction, this bothers me more than the visible reserve issue
I have had an experience with a hidden reserve and a minimal opening bid that ended up being beneficial to both me[the buyer] and the seller. As is my practice with these types of auctions I decide my maximum bid[my buy it now price] and stick with that no matter what. I placed the bid but it turned out to be below the hidden reserve so I thought I had missed out on the item. However, a day or so later the seller contacted me [the item had not sold] and we eventually made a deal that was below his reserve and slightly above my bid. Had he set a minimum bid at the same amount as the hidden reserve I probably would have passed and not bid at all. In general, however, I avoid auctions - twice I was the high bidder but still placed a higher bid .
An item can be sold for less than the reserve. There is just no obligation to sell. The high bid below the reserve is the same as an offer that is less than the asking price on a classified. You can also negotiate some other price.

I have gotten some great deals on eBay and here because the seller decided to let me have it for my high bid that was less then the reserve, or still less than I would have offered had it been a classified.

The big auction housed Sotherbys, Christies, etc., hold reserve auctions all the time. If the seller won't sell the Picasso for less than $5 Million, then no sale. The reserve is secret. If they told you the reserve up front, what is the point? They might as well take it to an art dealer and take offers.

When I have used a reserve, it has always been set at the bare minimum I will accept as an offer, if it had been a classified. My reserves have always been exceeded. Probably some people have unrealistic expectations, and set them too high.