To Auction Or Not To Auction...
I tell folks all the time, “Want to find out what something is really worth in today’s market? Put it in a well-advertised, well-attended auction and you’re going to find out.” An auction is the quickest way to find what the current market conditions are. However, auctions are not for everybody. Are they right for you?
Auctions are one of the oldest forms of selling property, going back centuries. Auctions can be fast-paced and exciting. Auctions are a transparent way to find out what the actual current market looks like. An auction with good “in-house” attendance is often a great place to socialize and network. They can be entertaining and, since most of them cost nothing to attend, you will get more entertainment value from one than many paid functions you may go to. But still, the question remains, “Are auctions right for me?”
Lets look at the Seller’s side for a moment. Sellers who sell at auction: know when their property will sell and when to expect the proceeds; have engaged one of the fastest ways known to move product or property; have their items exposed to a large number of prospective buyers who are looking to buy (and the auctioneer is the one doing that marketing for you); have the comfort of knowing the marketplace at an auction is competitive, so more than one prospective Buyer competes to set the market price.
If you are a Buyer, some advantages to consider are: an auction provides an opportunity to purchase at a fair market value based on actual selling prices, not asking prices; a Buyer will most often be exposed to multiple choices in one location; you already know you’re dealing with a motivated Seller who is looking to SELL, so you’re not wasting valuable time with a Seller who is just fishing for a certain price; in the case of auctions online, a bidder can participate from anywhere, at most anytime that is convenient and also remain anonymous, if desired.
According to a study published by the National Auctioneers Association, more than half of the total U.S. population has attended a live auction and most think auctions are an exciting way to get good deals. They also found most folks are willing to drive up to 1.3 hours on average to attend an auction. Because the auction process is an open marketplace, with willing participants, it treats all parties in the transaction in a fair and equitable manner.
However, an auction may not be for everybody. Some buyers do not trust themselves at an auction. They say they get “auction fever” when an item they like comes up for bid and they often bid “what ever it takes” to win the item and later regret paying too much. For folks like that, an online or absentee approach may work best. Determine ahead of time what you are willing to pay for a particular item and then leave a “max bid” either online, or absentee through the auctioneer. This way you won’t get caught up in the heat of the moment and go over your limit.
Some Sellers worry about their property not bringing enough. But let’s face it, most of the time, all a Seller can really expect out an item is a wholesale price anyway. For example, if you take your item to a dealer and try to sell it to them, they are going to offer you a wholesale price (remember they have to pay overhead, expenses and would like to make a return on their investment). If you consign your item to a Gallery or Consignment shop, they are going to hold out for full retail price (which will often take some time) and then they will take, on average, a 40% to 60% commission for selling the item for you. So you’re back to realizing a wholesale price again. At auction, you may not get “full retail” for your item, but most auctions charge about 20% to 30% commissions (less on higher dollar items), so your net will probably be close to the same which ever way you decide to go.
Keep in mind it is always best to deal with an auction company that you trust and has a solid reputation (as is the case with any company). Like all facets of business, there are those who do not deal fairly with their customers. Generic, online platforms, such as eBay can even be manipulated by shady sellers. Cheaters always find ways to cheat. Although it has been my experience that most auctions are on the level, it seems there is a bad apple or two in every bunch, so do your research.
Quirky things seen at some auctions include husbands and wives (who are not sitting together) bidding against each other for the same item. Sometimes people who are “messing” with someone by running the bid up will get stuck with a high-dollar item they really did not want (karma). Some bidders acquire quirky habits to “tease” the auctioneer. Some will wait right until the last second before the auctioneer says “SOLD” to raise their hand and bid again. Others will make the slightest movements necessary in order to bid on the sly (some merely raise a finger or eyebrow). Some bidders play games with each other. I could tell many stories about crazy things that can go on at an auction, but perhaps it’s best for you to attend one and find out for yourself.
Jim Olson © 2017
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