Reserve prices are the lowest price at which a coin can be sold at an auction. Setting an optimal reserve price is very important to all participants at an auction.
Grade and Condition Come First
Grade and Condition. The physical state of a coin has the greatest impact on its value, so this must be determined prior to establishing the reserve. An example would be a George V florin in EF condition would have a reserve many times higher than a similar coin in Fine condition. Small differences in surface quality, luster and strike will have a great impact on the number.
Recent Comparable Sales
When setting a reserve, the auctioneer will pull recent comparable sales (typically from the last two to three years) from major sales held by other auction houses. These can be found in results databases of past sales. The hammer prices of similar coins of the same date, grade and variety can be used to set a realistic reserve, as opposed to the printed retail value in a price guide from five years ago.
Rarity and Population Data
Census data from grading companies such as PCGS and NGC can be used by the auctioneer in conjunction with the original mintage figures of a coin and the population reports for that coin to establish a coin’s true rarity. This is more important than face value rarity and can greatly affect the reserve. For example, a high mintage coin that only has a few examples in the highest grades will have a higher reserve than a low mintage coin with average grades.
The Seller’s Expectations
A seller typically has a figure in mind for the reserve, and an honest auctioneer will discuss this with the seller.
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Where the Reserve Sits Against the Estimate
As a general rule the reserve is set around the lower end of the estimate (80% – 90%) to allow genuine bidders to start at a price they feel is fair but to prevent the item selling at a very low price in an unsuccessful auction.
Setting a reserve too high can mean the coin is sold when you weren’t prepared to part with it and setting it too low can mean you are sold at a hammer price you regret. The correct number is a delicate balance.
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