Why should a seller announce they are selling "with reserve" at an auction?

Announcing that a seller is selling "with reserve" serves as a clear communication to bidders regarding the terms of the sale. By stating that the auction is with reserve, it signals to potential bidders that the seller retains the right to accept or reject the highest bid. This announcement helps to set expectations and reduces the possibility of misunderstandings during the auction process, ensuring that all participants are aware that the auction does not guarantee a sale at the highest bid unless it meets the seller’s predetermined reserve price.

This clarity is crucial as it allows bidders to make informed decisions about their bidding strategies. Without announcing the reserved status, bidders might assume that the highest bid is a winning bid, leading to possible confusion and dissatisfaction if the auction concludes without a sale. Thus, the primary purpose of this announcement is to foster transparency and prevent any misinterpretation about the outcome of the auction.