How is the starting price for a lot determined?

What is an estimate and how is it determined?

The starting price of a lot at auction is rarely pulled out of thin air. It is based on an estimate—a preliminary valuation of the item determined by the auction house's experts. This is not the exact sale price, but rather a projected range within which the lot is expected to sell.

The estimate serves as a guide for both the seller and potential buyers. It helps bidders understand the approximate value of the item and plan their budget. The formation of this range is a complex process based on in-depth analysis and experience.

Key Valuation Factors: From Market to Rarity

To determine a fair estimate, experts consider numerous factors. Each of them contributes to the final valuation and helps to form a realistic idea of the item's value.

The main criteria for valuation are:

Market analysis. Experts study the current demand for similar items, general trends in a specific collecting segment, and the overall economic situation.

Comparison with analogues. A thorough analysis of past auction results is conducted. Specialists look for similar items (analogues) and see what price they were sold for. This is one of the most reliable ways to determine market value.

Rarity factor. The uniqueness of an item directly affects its price. If a lot is one-of-a-kind, produced in a limited edition, or has unique characteristics, its value increases significantly.

Condition and provenance. The physical condition of the item (presence of damage, restorations) plays a key role. No less important is the provenance—the history of the lot's ownership. A confirmed history, especially if the item belonged to a famous person or was in a renowned collection, can multiply its value.

Key Valuation Factors: From Market to Rarity

A Low Start as a Marketing Strategy

Sometimes, auction houses intentionally set the starting price significantly below the estimate. This is not a mistake, but a deliberate marketing move aimed at attracting the maximum number of participants. A low entry threshold creates an illusion of accessibility and encourages even those who did not plan to seriously compete for the lot to participate.

The psychological effect of this approach is enormous. A large number of participants creates a buzz and a spirit of competition. During the bidding process, people get caught up in the excitement, and the initial low price is quickly surpassed. As a result of 'auction fever,' the final value of the lot may not only reach the estimate but significantly exceed it.

What does 'no-reserve sale' mean?

Auction Type	Description	Risk for Seller	Attractiveness for Buyer
With Reserve Price	The lot will not be sold if the bidding does not reach the hidden minimum price.	Low	Medium
No Reserve	The lot is guaranteed to be sold to the highest bidder.	High	Very High

In auction terminology, the concepts of reserve price and no-reserve sale are common. Understanding these terms is critically important for all bidders. A reserve price is a confidential minimum amount for which the seller is willing to sell their lot. If the bidding does not reach this mark, the lot is considered unsold.

'No Reserve' sale means there is no such hidden minimum price. The lot will be sold to the winning bidder at the highest price offered, whatever it may be, even if it is just the starting bid. This approach is very attractive to buyers as it offers a chance for a very good deal, but it carries certain risks for the seller.