Have you ever gone to a live auction or watched one on TV?
Did you see the auctioneer try to start off an auction with a ridiculously high starting price? No one bids, right? Then the auctioneer yelled “give me a dollar bill” and all of a sudden, a bunch of hands go flying up and the bidding ensues.
One of the most common questions we get from sellers is “how much should I start the auction at?” We typically recommend starting auctions at about 10% of the expected
value of the item. Many times, when we make this recommendation, it’s met with great skepticism. But once we explain our reasoning, our sellers try it and are thrilled with the results.
Here’s why you should start your auctions at a low starting price:
Unlike live auctions, we can’t start high and work our way back down to a low price that motivates people to bid, we need to start at the lowest price.
The idea is to bring as many people into the auction as possible. This includes bringing in folks hoping to get a deep discount on items. Once there are several people involved in the auction, the competition amongst bidders heats up. The mindset changes from “that’s a steal at that price” to “ah, what the heck, what’s another $20.” This competition is what drives the price up.
We have had many sellers experience great results after taking our recommendations. Here is a recent example…
“Although I was skeptical as all get-out, I followed municibid’s recommendations and posted the minimum bid at about 10% of what I hoped to get for each item. In the end, my trucks (truck 1, truck 2) exceeded expectations by about $13,000 each, and the paver and grader that we hoped to sell for parts, exceeded my expectations by $4,700 and 7,300, respectively! Thanks for your advice, expertise, and guidance!”
-Bruce R. Light, Penn Township Secretary / Manager (April 2012)
Again, the key is to compel as many people as possible to bid. This is also why we highly recommend against setting a reserve. When an auction has a reserve, it scares bidders away that otherwise might have placed a bid… and then got competitive. The other reason is no matter what, with municibid, you’re never obligated to accept the results.
The bottom line is we are on your side! We want you to sell your items for the highest possible amount. We are here to help, so never hesitate to ask for recommendations or an opinion.
