by: Dale Hartley
What I’m about to reveal cannot be accomplished every time and at every auction. At most auctions you can do well for yourself, but not make out like a bandit. But at some auctions you can make out like a bandit if you use your wits. If you attend auctions half a dozen or more times a year, your chances will come.
For Newbies: It’s Not Rocket Science
Don’t be intimidated by live auctions if you’ve never been to one. Just go and observe for awhile. Within an hour you’ll understand the dynamics well enough to jump into the bidding.
The first thing to do upon arriving is register and get a bidder number. The auction company may require you to show a driver’s license. This prevents people from (a) winning an item, changing their minds, and leaving without paying; or (b) using the “controlled chaos” as cover to shoplift their winnings.
Once you have your number, hang loose and observe for a few minutes. At first you may find the speed of the auction and the auctioneer’s chant confusing. Don’t worry about it. Within a short time it will all fall into place.
One final word for newbies: Find out if there’s a “buyer’s premium.” A buyer’s premium is a mark-up you pay in addition to your winning bid. It’s part of the purchase price before sales tax is added. For example, if the auction has a 10% buyer’s premium and you win something with a $90 bid, your price at check-out will be $99 plus tax.
Check the fine print of auction ads or flyers. Notice of a buyer’s premium will be spelled out (“10% buyer’s premium”) or abbreviated (“15% BP). There should also be signs on display at the auction site announcing the buyer’s premium if there is one. If in doubt, ask when you register.
Exploit Auction Circumstances
Just as no two auctions will offer exactly the same merchandise or draw exactly the same crowd, so no two auctions will be carried out under identical circumstances. I’ll show you some ways to legitimately take advantage of an auction’s flaws and weaknesses.
Examples of auction flaws or weaknesses: A lazy or mediocre auctioneer…a disorganized auction staff…too much inventory being sold in too short a time…a low turn-out or a crowd that starts drifting away early. These are factors that put pressure on the auctioneer and determine how well or poorly the sale progresses. By exploiting the auctioneer’s disadvantages, you can turn him from your financial adversary into your reluctant financial benefactor.
The first strategy, therefore is to (a) be aware of the importance of auction flaws and weaknesses, and (b) learn to recognize and exploit them. Now I’ll give you specific examples of how this is done.
How to Profit From Public Auctions: Divide and Profit
About three years ago I attended a regular monthly antique auction held at an auctioneer’s warehouse. At this event he was overloaded with inventory and was trying to move as many lots as possible before his crowd began to drift away. The auctioneer’s excess inventory and his haste to move as much merchandise as possible in a single day were weaknesses that I could exploit (and did).
One item I bought was a 1920’s-era dining room suite in very good condition. It consisted of a table, eight chairs, and a china cabinet. Take notice of this: I didn’t want the dining room. I didn’t need it. I had no intention of taking possession of it (and I didn’t). Yet I bid for it, won it, paid for it — and profited from it! Here’s how…
Normally the auctioneer wouldn’t sell a valuable old dining room like this as a complete set. He’d get a better total price by dividing the set into three “lots” (the table, the chairs, and the china cabinet) and selling each lot separately. By doing this he forces people who want the whole set to bid not only against each other, but also against those who want just parts of the set. And once a “whole-set” bidder has won part of the set, he or she will bid aggressively to get the rest.
But on this day the auctioneer offered the complete dining room “all for one money” (as we auctioneers say) because he just had too much merchandise to move. So I bought it.
I paid $1300 for the set (only one other person was interested in the entire set, so I had little competition). I left this furniture in the auction barn and called the auctioneer a couple of days later. I told him I wanted to re-consign the dining room for his next sale one month later. I specified that he should sell it in three separate lots. At the next auction my dining room sold for $2400 total. Less his commission, I pocketed about $500 without so much as even touching the furniture. Not a huge windfall, but then again I didn’t have to do anything except bid, pay, and make a phone call to the auctioneer. (And that was just one transaction among half a dozen that I profited from!)
Right Merchandise, Wrong Market
Remember that antique baby grand piano I got for $1,000? I bought that to keep, not to resell. It’s worth at least $5,000. So how did I get it so cheap?
The piano was the right item being sold at the wrong place and to the wrong crowd.
The auction was held in a little Southern town of about 300 people. Just a post office, a railroad track, and this auctioneer’s warehouse (not the same place that I bought the dining room). This auctioneer was well-established and drew his crowd from many bigger outlying communities. But his average crowd was between 100 and 150 people, most of them rural people with no interest in grand pianos. (Plus there was the additional problem of moving it. Once again, I was one of only two bidders.
Here’s another example. This time I was buying to resell, and this was a smaller and more common-place type of transaction:
I was at an estate auction being held onsite at the deceased person’s home. The auctioneer had a tent set up in the yard, and all the household goods were displayed inside the tent. Once again, this took place in a small town (about 5,000 people).
The auctioneer offered a cardboard box full of bric-a-brac. I had already spotted the box and knew I would bid for it. Among the assorted junk in the box was a pair of small Black Forest wall shelves. The shelves were supported by carved deer heads with glass eyes. As it turned out, neither the auctioneer nor the crowd knew what they were or their value. I bought the box for $65 and resold the shelves on eBay for $235 (i.e., right merchandise at the right marketplace). The rest of the junk in the box I tossed (yard sale type junk).
How to Profit from Public Auctions: Buying to Resell
== eBay ==
You have to be careful when buying anything to resell on eBay. As a marketplace eBay has become a victim of its own success. It’s overly crowded and competitive. I’m not a frequent seller on eBay, but when I do list items I have about an 80% success rate. And I only list items that I feel sure will sell. Yet I still have about 20% no-sales.
Other eBay hazards include the hassle of non-paying bidders and the risk of selling-but-not-profiting. You can sell-but-not-profit if your merchandise only attracts one or two bids. When this happens, the eBay and Paypal fees (not to mention the time and gas required to ship your items) can erode your gains.
But some items are consistently reliable sellers. If you know something about auto parts, jewelry, china, or any other product line with a niche market, you might be able to convert live auction purchases into eBay sales.
== Antique Booth ==
You can get started in the antique business on a strictly part-time and absentee basis. All you have to do is rent a booth in a local antique mall. The mall management will mind the store and make the sales. You only have to keep your booth stocked with inventory from estate sales, garage sales, and antique auctions.
If you already know something about antiques or collectibles, that’s great. Because you already know more than I did when I started. I knew next to nothing. I only knew what I liked. Everything I’ve learned about antiques and collectibles is the result of going to antique malls and attending auctions.
== Flea Market ==
With a flea market booth you’re not limited to antiques and collectibles, and you don’t have to know anything about the merchandise except what it will sell for.
If you go the flea market route, estate auctions are still very good sources — but you can probably do exceptionally well for yourself at business liquidations, storage unit auctions, and surplus or salvage auctions.
As you can see, the potential to profit from public auctions is limited only by your time and ingenuity!
About The Author:
Dale Hartley is a consultant to the U.S. Department of Defense and used to enjoy auctioneering, but it wore off. He now publishes the consumer website, Consumerama, ( http://www.consumerama.net ) and exposes corrupt auction practices at Auction Avenger ( http://www.auctionavenger.com ).