Reserve Price — The Floor Beneath the Hammer
Reserve Price — The Floor Beneath the Hammer
Auction terminology for the confidential minimum, with bought-in mechanics and bidder implications
The reserve price, more commonly shortened to the reserve, is the confidential minimum below which an auction lot will not be sold. It is set by agreement between the consignor and the auction house, recorded on internal lot paperwork, and not disclosed to bidders or printed in the catalogue. If competitive bidding fails to reach the reserve, the lot is bought in — passed without sale, marked BI on the post-sale records, and returned to the consignor. The reserve is the principal commercial mechanism for protecting the consignor's downside while leaving the upside open to whatever the bidding will support.
Setting the reserve
Standard practice at Sotheby's, Christie's, Phillips, Bonhams, and the smaller specialist houses places the reserve at or slightly below the low estimate. A lot catalogued at £80,000 to £120,000 would typically carry a reserve between £64,000 and £80,000. Reserves are never set above the low estimate; that would be commercially self-defeating and is prohibited by the standard consignor agreements.
Where a consignor wants maximum protection, the reserve sits closer to the low estimate; where the consignor wants a strong probability of a sale, the reserve sits below it, sometimes substantially so. Estates and trusts, which carry fiduciary duties to liquidate within reasonable timeframes, often instruct reserves in the lower range; private collectors with discretionary holdings often instruct reserves at the top of the permissible range.
The auctioneer's chandelier bidding
Auctioneers walk bidding up toward the reserve using chandelier bids — bids called from the rostrum that do not represent any actual bidder. The practice is permitted only below the reserve, and is required to be conducted transparently in the sense that the auctioneer does not pretend the bid comes from a specific person. Once the reserve is met by a genuine bid, the auctioneer can take no further chandelier bids; all subsequent bidding must be between real participants. If chandelier bidding fails to attract a real bidder up to the reserve, the lot is announced unsold and the chandelier bids are rescinded.
Bought-in lots and post-auction sale
An unsold lot — bought in, BI, passed — is returned to the consignor, but the auction house typically retains a contractual right to pursue post-auction sale at or near the reserve for a defined window, often 30 to 60 days. During this window, the lot is offered to underbidders and to clients who could not attend the sale; if a buyer is found at the reserve, the sale concludes at that price and the auction house earns its standard commission. After the window expires, the consignor may withdraw the lot or re-consign it.
The terminology varies marginally between houses: BI, bought in, passed, unsold, and floor (in some American usage) all refer to the same condition of failure to meet the reserve. Hammered down, by contrast, refers to a successful sale where the gavel falls and the lot is sold at the final hammer price.
Reserves and market signalling
Persistent buy-in rates above industry norms — typically 15 to 25 per cent for fine jewellery sales depending on category — signal either soft demand or aggressive consignor expectations. Specialists track buy-in rates closely, and a sequence of unsold lots in a category prompts re-evaluation of estimates and reserves for subsequent sales. Buyers can read post-sale results to identify lots that bought in and approach the auction house about post-auction availability; the reserve, while not disclosed in the live sale, is often functionally implied by the closing chandelier bid before the lot was passed.
For investors and collectors
For investors evaluating jewellery as an asset class, the reserve is an important concept because it constrains the consignor's downside but also reduces effective liquidity at price points below the reserve. A piece with a £1 million reserve cannot be sold at auction for £900,000 unless the consignor authorises a reduction; in a falling market, a reserve set during a stronger period can lock the consignor into a sequence of bought-in attempts. Liquidity-conscious sellers therefore set reserves with attention to the prevailing market and to the time horizon over which they are willing to test the lot.