What is the difference between an Auction with a Reserve and a Pure Sale Auction?
An auction with a reserve means that the seller has placed a minimum dollar amount which must be met during the auction process in order to guarantee that the highest bidder will win the car. The seller will not advise us nor the bidders what the reserve amount is.
In reserve auction scenarios, if you are the highest bidder on the car but did not meet the reserve price set by the seller, the car is considered sold On Approval.
This means that at the conclusion of the auction the seller needs to approve the sale of the car to you for the high bid amount since the reserve was not met. In most cases the seller will likely give you a counter-offer which is closer to their reserve price. You have the ability to provide a subsequent counter-offer to their offer or stay firm on your high bid amount. Since you were the highest bidder the seller is only allowed to negotiate with you and no one else. If s/he decides that s/he does not want to provide a counter-offer to your highest bid or does not accept your counter-offer to their offer, s/he can just re-list the car and send it back to auction.
This negotiation process could take anywhere from 1 hour to just over 1 business day following the date you were the highest bidder (weekends excluded).
Since the seller incurs additional auction listing fees every time he runs the car through auction, it is rare that the seller will not provide some sort of counter-offer to your highest bid. So, depending on how far apart your highest bid is from their reserve price, the seller may enter into negotiations with you.
Pure Sale Auction
A pure sale auction, means just that: Highest bidder for the auction wins the car regardless of the amount of the high bid. Please note that reserve auctions can also turn into pure sale auctions. This happens when the seller’s reserve price is met during the live auction bidding.