Is this an absolute auction?
Is this a “real” auction?
These are probably the most frequently asked questions we get here at AirSpace Central.
The reserve is the minimum price the seller is willing to accept for the aircraft. But why is this figure often kept hidden? Let’s dive into the reasoning behind this practice and how it plays into the overall strategy of online auctions, particularly in the world of aircraft brokerage.
Why Reserves Remain Hidden
The primary reason reserves are hidden is to foster competition. When bidders are unaware of the exact reserve price, they often feel compelled to hunt for the reserve. Incrementally pushing the bid to find the reserve. Once the reserve is revealed – typically a bit below what the auction house expects to be fair market value – the real bidding starts. This creates a dynamic where each bidder must evaluate not just what the aircraft is worth on the open market but also what it’s worth to them personally.
As the auction progresses, when the bidding reaches the reserve price, Reserve Met will clearly be shown on the screen, signaling that the aircraft will be sold to the highest bidder above that point. This revelation can spur even more competitive bidding, as participants now know the aircraft is within their grasp if they continue to bid.
Some of our auctions operate with no reserve, meaning the starting bid serves as the minimum price, and the aircraft will sell for whatever the highest bid is, no matter how low. These auctions typically state “no reserve” clearly in their listings, attracting a wide range of bidders who see an opportunity to potentially acquire the aircraft at a great value. Keep in mind these no reserve auctions are typically only applied for aircraft that have either a high desirability on the market OR the owner is really ready to just be done with it (for various reasons).
Think of it like flying—pilots must balance boldness with situational awareness. Just as a pilot must boldly navigate the skies while keeping an eye on the instruments, a bidder must navigate the auction with both confidence and a clear understanding of market value. It’s part by the numbers and part by your guts.
Auction Theory and Bidding Strategy
Auction theory supports the practice of hidden reserves by emphasizing the psychological elements of bidding. When reserves are hidden, it taps into a bidder’s competitive nature. The uncertainty pushes bidders to stretch their budgets, often leading to higher bids. Research in auction theory shows that hidden reserves can lead to more active bidding, as participants try to “find” the reserve price and win the auction.
In the early 2000s, the brand “No Fear” epitomized the idea of making bold moves to win. This same mindset applies in the auction world. The bidders who walk away with the aircraft are often the ones who weren’t afraid to push their limits, while those who hold back might regret not bidding more aggressively. It’s a game of strategy, courage, and understanding the market.
Registering to Bid
If you’re ready to jump into the fray and start bidding, the first step is registration. The process is straightforward, but it’s essential to understand each step to ensure you’re fully prepared when the auction begins.
- Before the Auction Starts: If the auction hasn’t started yet, simply click the “Register to Bid” button. This will guide you through the necessary steps to become an eligible bidder.
- After the Auction Has Started: If the auction is already in progress, you can still register by clicking as if you’re going to place a bid. If you haven’t yet signed an agreement, the system will prompt you to do so. Take a moment to read the terms and conditions to ensure you’re aware of the auction rules.
- Submitting Your Deposit: To activate your bidding privileges, you’ll need to submit a refundable deposit. This can be done via check or ACH before the auction starts, or by wire transfer or credit card during the auction. If you prefer using a credit card, request a payment link to facilitate the transaction.
- Confirmation of Bidding Status: Once your deposit is received, you’ll be notified that you’re ready to bid. From there, it’s all about strategy and timing as you watch the clock count down.
Conclusion
Understanding why reserves remain hidden can give you a strategic edge in online aircraft auctions. By fostering competition and encouraging bold bidding, hidden reserves can lead to better outcomes for both sellers and buyers. Additionally, knowing that some auctions have no reserve or a higher start price with no reserve above it can help you plan your strategy. As you prepare to bid, remember that a mix of boldness and market awareness—much like flying a plane—is your best bet for success. Register early, know the rules, and when the time comes, bid like you mean it. The skies—and the auction—favor the brave.