Definition
In short: A reserve price is the minimum amount a seller will accept — if bidding doesn't reach it, the item doesn't sell.
A reserve price is the confidential minimum amount a seller will accept for an item at auction. If bidding does not reach the reserve, the lot "passes" — it does not sell, and the item is returned to the consignor or re-offered in a future sale. The opposite of a reserve auction is an absolute auction, where every lot sells to the highest bidder regardless of price.
How It Works
The reserve price is set by agreement between the consignor and the auction house before the sale. It is almost always confidential — bidders know a reserve exists but not the exact amount. The auctioneer may announce "the reserve has been met" once bidding crosses the threshold. Most estate sales run absolute or with very low reserves to maximize bidder participation, since higher turnout typically drives stronger final prices. For guidance on pricing estate sale services, including how reserves factor into commission structure, consult your auctioneer. Reserves are more common on high-value individual items — fine art, jewelry, real estate — where the seller needs downside protection. A lot that passes due to an unmet reserve still costs the auction house time and catalog space, so many auctioneers discourage unrealistic reserves.
Related Terms
See also: Buyer's Premium — the fee added on top of the hammer price. Hammer Price — the final bid price when the gavel falls. Estate Sale vs Auction — how different sale formats handle pricing. For cataloging strategies that help lots clear their reserves, see How to Catalog an Estate Sale.
Frequently Asked Questions
What happens if the reserve price isn't met?
If bidding does not reach the reserve price, the lot "passes" — it does not sell.
The item is either returned to the consignor, re-offered in a future auction at a lower reserve, or the auction house may negotiate a post-auction sale with the highest bidder if the consignor agrees. Some auction houses charge a buy-back or pass fee to consignors whose reserves are not met.
What is an absolute auction?
An absolute auction (also called a no-reserve auction or unreserved auction) is a sale where every lot sells to the highest bidder regardless of price.
There is no minimum — even a $1 bid wins if no one bids higher. Absolute auctions attract more bidders because participants know they can win, which often drives final prices higher than reserved sales for common estate and personal property items.
Should I set a reserve price?
It depends on the item and sale format.
For estate sales and general personal property, running absolute (no reserve) typically generates more bidder activity and stronger overall results. For high-value items — fine art, jewelry, collectibles, or real estate — a reasonable reserve protects the seller from a bad outcome. Discuss reserve strategy with your auctioneer, and avoid setting reserves above fair market value, which leads to passed lots.
According to auction industry data, no-reserve lots typically achieve higher sell-through rates than reserve-protected lots, though individual results vary by category and market conditions.
Sources
- Technavio, "Online Auction Market Growth Analysis." technavio.com