This is a guest post from Matt Ainslie. He is a reference librarian and auction animal. His interests include blacksmithing, learning new obscure facts and saving money. He lives with his wife and children in Philadelphia.
Some months back I was at an auction, and was chatting with the auctioneer. I asked how things were going.
“All right,” he said, “but we're having trouble getting people out here, some days.”
“I would think you'd be getting more people, not fewer, what with the recession.”
“I mean, it's amazing how cheap some of this stuff goes, and perfectly good stuff, too.”
The conversation wandered off to another topic, but I've thought about it since. So today I'm going to tell you about auctions.
Most people seem to think of auctions as a trope, a cultural artifact that they mostly know from television. You know, like the old commercial where a man is at an auction, sees his wife arrive, raises his hand to wave, and then it cuts to them leaving the auction towing the 15-foot papier-mÃ¢chÃ© rabbit bought by that accidental bid. Or James Bond raising a paddle at Sotheby's in competition with a beautiful Russian spy for a Faberge Imperial Easter Egg.
But in reality they are not that dangerous or exotic.
At least a dozen people die every day in every county in the U.S., and something has to become of their stuff. Relatives take some items, and some heirs hold estate sales (think whole-house garage sales) but the rest usually goes to weekly estate auctions. The auctioneers clean the house out, haul the items back to their auction house, and set them up in rows and on tables. Or sometimes they just auction everything right where it is.
The beauty of the auction is universally agreed: Stuff sells quickly. That's what the heirs and executors want — to avoid hassle and settle the estate as fast as possible. Coincidentally, that's also what the customers want, because if a sale is guaranteed to take place, the only questions are to whom and for how much. If there isn't much competition in the first question– and typically auction-goers are “auction animals” (addicts), meaning they already own one of most kinds of things– the answer to the second question is “for next to nothing.”
How does it work?
First, go to the auction's office and get a bidder's number. They take your name and contact information — so they can send you a bill if you forget to pay — and they issue you a card with a three-digit number, which you show to the auctioneer upon winning a lot.
The auctioneer begins at a pre-announced time at one end of the rows of stuff. He starts with a high number and drops it quickly when he gets no bids, which of course happens, since anyone interested wants to pay as little as possible and no one knows how many competitors there will be. He's looking for a clear bid signal– eye contact and a nod or wave, or a verbal response to the numbers he's calling out, like “Yeah!” or “Here!” to get his attention. You can also call out an offer: If he's trying to get $2.50, you might call out, “A buck!” and he can choose to take your bid or not. If there are no bids even at a dollar or two, the auctioneer will add other stuff to it and form a “lot,” and try again.
If the bidder requests that certain items be sold separately, or in a group, the auctioneer will usually comply. If there is something he thinks likely to sell on its own, he'll decide to sell separately. For example, I wanted to bid on a 4,500-pound floor jack (it lifts 4,500 pounds; it doesn't weigh that much) and as I'd guessed he would, he auctioned it individually without my having to ask. If there's nothing else on the table that anyone thinks should be sold individually, the auctioneer will sell everything else on the table for “one money” as the auction expression goes, meaning one price for the whole lot.
Your winning bid is not your final cost. The auction charges a “buyer's premium” of some percentage, usually 10 to 20 percent, plus sales tax. So if your winning bid was $100 at an auction with a 10 percent buyer's premium, your final cost is $110 plus sales tax.
I won that floor jack for $32.50. Floor jacks are useful and a little scarce (though the following week there were six or seven!). That was far and away the highest price I paid for any one lot. The buyer's premium at this auction's was 15 percent, making the total cost before tax $37.38. (Sales taxes apply, but would also be charged if you were buying these things new, so I ignore them here.)
From buyer to seller
Staggering deals can be had at auctions. I've bought table loads for $5 and had seven people come up afterward and each offer to buy an individual item from my lot– typically nothing I wanted– for a dollar apiece. Meaning the rest of the stuff cost me negative money– I was paid to take it. I've also been one of those people buying items in someone else's lot.
This auction in Pennsylvania was a good day. In addition to the floor jack, I got:
- A lot of two boxes of books= $2.30 (that's $2 bid + 15 percent buyer's premium)
- A lot of junky-looking household stuff, which included a pet hair cleaner, extension cords, a black light and — what I saw on the bottom but the auctioneer missed– a bow saw = $2.30
- An industrial-strength yellow plastic mop bucket with wringer= $2.30
- A lot of mainly junky stuff (“from here to the end of the table, one money”), which included a silver plate goblet from 1810 = $2.30
- A lot of four more boxes of books = $5.75
Imagine you'd bought this stuff. How much would your profit have been on these? Setting aside the household junk as of little value and the goblet (since that required my antique-hunting experience to spot), here's what the other items would have cost you to buy new:
- Bow saw= $10 at Home Depot
- Mop bucket with wringer = $60.49 at Amazon.com
- 4,500-pound floor jack = $152 (for a 5,000-pound version) at Home Depot
- Six boxes of books — contained 131 books of quotations, fitness, and business, whose original sticker prices totaled $2,126.50.
I paid $8.05 total for the boxes of books. I cherry-picked a few to keep, and brought the rest to a used bookstore my wife and I like to go to, where they gave us $31 in store credit for those they wanted, and gave away the rest. (They asked what I wanted done with the rest, so I could have taken the others back, but you have to figure the time and effort involved. The business books, especially, I could have listed on Amazon.com or whatever. But spending lots of time and effort wasn't worth it.) If the books I kept had cost me $20, used, that's $273 in value for $50.
The cost of new
But, you say, these things aren't new! That's absolutely correct. But consider depreciation. That's the process by which businesses recognize part of the initial cost of a piece of equipment as an expense during each year of its useful life, deducting it from revenue and subtracting it from the asset's book value. At the price I paid, the auction house sold me the mop bucket and wringer as if 96 percent of its useful life was over. It's tough, thick plastic and will more than likely last me the rest of my life and then serve my heirs (or whoever buys it at my estate auction). New is way overrated.
I should stress that I have no immediate need for a bow saw, a mop bucket, a floor jack or the books. Neither did anyone else, which was why they went so cheap. By next week two people may have discovered a need for them, and if similar items were available at the next week's auction, what I got for $2 might sell for $22.50. The immediacy of needs is the basis for modern retail, and those who have satisfied as many needs as possible before they experience them pay the least to satisfy them. I could foresee times when I, my family or my friends might suddenly need a mop bucket with wringer. And when that happens, $58 is staying in our pocket.
Be prepared for a different way of spending money and a different way of life if you become an auction animal. Having a decent-sized basement and garage helps. You absorb the situation by osmosis: the more auctions you attend, the more accurate your judgment will be regarding the rarity of an item. Should you buy this item now or is another one likely to turn up at an auction next week?
OK, I'm sold! So to speak. How do I find an auction near me?
Your best bet used to be the Yellow Pages, but today, visit the website of the National Auctioneers Association or AuctionZip and enter your Zip code and how many miles you're willing to drive. Click on a hit and it'll lead you to a page with the auction house's information and a link to its website. Browse around the website and find when its general estate auctions are. Sometimes you can even view photos of items in the upcoming auction. The three places I visit most often in the Philadelphia area are Uniques and Antiques, Wilson Brothers and Briggs's Auction, which have auctions every week– on Tuesdays, Wednesdays and Fridays, respectively. Some, like Briggs's, hold their auctions in the evenings. If you're not working or working only part-time, the weekday auctions, with decreased competition, can make for excellent prices.
Are you an auction hound? Do you have any tips for others who want to try their hand?