A reserve price protects the consignor. It is the lowest hammer price at which the auction house is authorised to sell the lot, agreed in the consignment contract and kept confidential from bidders. A lot offered without a reserve, often described as “no reserve” or “sold to the highest bidder regardless of price”, will sell for whatever the top bid is.
How the reserve relates to the estimate
The low and high estimate are published. The reserve is not, but the trade convention, and in some jurisdictions the rule, is that the reserve is never above the low estimate. A lot estimated at $2,000 to $3,000 may carry a reserve of $1,500 or $2,000, but not $2,500. That convention is what makes estimates trustworthy: a bidder knows that a bid at the low estimate can buy the lot.
How the auctioneer handles it in the room
In a live sale the auctioneer may open bidding below the reserve and bid on the consignor’s behalf, one increment at a time, until the reserve is reached. This is legal in most places as long as the conditions of sale disclose that the auctioneer may bid up to the reserve, and it stops at the reserve. Bidding on behalf of the seller above the reserve is not permitted. If the room never reaches the reserve the auctioneer passes the lot, and the result is recorded as bought in.
How the reserve works online
In a timed auction the platform does the auctioneer’s job. The reserve is stored on the lot, bidders see a “reserve not met” indicator until a bid reaches it, and a maximum bid that exceeds the reserve is usually executed up to the reserve immediately so that the lot shows as sold. When the lot closes below reserve it is marked unsold automatically and the consignor statement shows it as returned. In a live auction with online bidding the clerk console shows the reserve to the clerk and nobody else.
Setting reserves across a sale
Reserves are agreed per lot, but on a large consignment they are often set as a formula, such as a fixed percentage of the low estimate. Auction software with bulk editing lets a specialist adjust reserves across a whole collection in one pass rather than lot by lot. The reserve, the estimate and the consignor’s agreed commission should all sit on the same lot record so that settlement needs no re-keying.
