Auctions are Fun!
Auctions can be a lot of fun and a thrifty way to spend your money, consistent with your frugal living objectives. These public sales are conducted to raise money, sell personal property, liquidate estates, settle court orders, reduce household belongings before a move, and the list goes on and on.
The big advantage of attending these type of sales is the wide range of items on which you can bid, and the chance of finding a tremendous bargain. Usually the more common items are cheaper to win because of lower demand. Specialty items usually have higher demand, so there will be more people bidding up the cost.
No matter, you usually can get some really interesting and useful items for a good price.
The key concept is that you don’t buy things – you have to win them. That is part of the fun and excitement. You just never know the price an item will bring until the bidding begins. It all depends on whether there is someone present who wants the same thing you want, and what they are prepared to bid to win it.
What kind of bargains can you expect? Well, here are some examples of things I have purchased, what I paid, and what I believe the item was worth:
- A three legged galvanized free standing tower, 125 feet tall, in 9 sections – paid $230, worth $15,000.
- A double stack of tool boxes full of tools – paid $115, worth $300.
- A three foot by seven foot super heavy duty welding table – paid $35.00, worth $250.
- High side pickup truck bed trailer – paid $55.00, worth $200.
- Two large shop vacuums – paid $5.00, worth $100.
- Xerox 5334 photocopier with 21 shelf collator – paid $2.00, worth $3,000.
- Hitachi 16 inch chop saw – paid $75, worth $400.
You can’t always expect a great bargain, though. The competition is standing right there with you, and you might be looking to buy the same thing that many others want. But if you’re the only person there interested in a particular item, you can win it for pennies on the dollar.
The Basic Sequence of Events
Each auction is conducted in a similar manner. Here’s the basic sequence of events:
- Go to the registration table/cashier and get a bidder’s number. This identifies you as a bidder. If you win an item, the clerk records the item description, your winning bid and your bidder’s number. You must have a bidder’s number in order to bid.
- While you are waiting for the bidding to start, walk around and look at what is being sold, so you get a good idea of what you want to bid on. It’s a good idea to arrive 30 minutes to an hour early to peruse the items.
- Once the bidding starts, the items are held up, put on display or otherwise described so you know what is up for bid.
- The auctioneer starts off by naming a starting price. It will sound something like “who will start at ten, ten, ten…?” or “do I hear ten”?
- If no one will give that price, then the price is dropped by increments until someone signals the auctioneer that they are willing to pay that price.
At the right is an example of a woman signaling the auctioneer that she is willing to bid the price that the auctioneer has called out.
- The auctioneer works up incrementally to higher bid prices and receives bids from anyone interested until a high bid is reached.
- There may be a pause in the action at the high point of the bidding to allow for another higher bid, or the auctioneer may quickly call out “sold” and move onto the next item.
- After an item is sold, the auctioneer will call out the bidder number and final winning bid so the clerk can record this information. Periodically, the clerk’s bid record sheets are taken to the cashier.
Here the clerk for the front yard "ring" records the results of the bidding.
One of the cardinal rules at an auction is “don’t talk to the clerk”. She or he is busy listening for winning bids, bidder numbers, and a description of the items sold. They should not be unnecessarily distracted.
- Items that are sold may be left in place, handed to the highest bidder, or set aside for the winners to collect. Small items are typically handed to the winning bidder, while larger items are left in place to be removed later.
- Once you are done bidding on the items you want, you then go to the cashier and give her your bidder number. She will look through the clerk’s bid record sheets, and tally up all your purchases. Let them know what your last purchase was, so they can make certain they have all the tickets for your items.
Here is what the bidder's tickets look like. You can see that the bidder number, item description and winning bid amount are listed.
Here is the way one auction house organizes winning tickets during the sale. You can see that bidders 8, 16, 23 and 34 have already purchased several items as they have tickets placed into slots with their bidder number.
Below shows an auction clerk filing the winning bid tickets in the racks to keep track of who won what items.
The original bid tickets are kept by the auction company and copies are given to the buyers when they settle up at the end of the sale.
- All auction houses require you to pay for your items before you leave the building or area.
A sale might be held at an auction house, a private home or a public building. Most auctions are conducted in "rings". A ring is an area where an auctioneer sells items. Think of a circus ring, only the auction ring can be any shape or size. Sometimes more than one ring is run simultaneously.
The auctioneer will have helpers and spotters for showing items, recognizing bids and getting sold items to bidders. These are usually referred to as “ring men” even if they aren’t all men.
Here a ring man is showing a coffee mug stand with mugs while the auctioneer takes bids on the item.
What sounds like gibberish will come out of the auctioneer’s mouth, while he tells you the current bid and the next highest bid he is looking for. Understanding the gibberish will take some experience. Some auctioneers don’t speak gibberish, but instead, give the information in clear English. I think the gibberish is more fun.
The auctioneer will usually explain the bidding rules first. They are typically as described above, but each auctioneer is a little different, and anything unusual will be noted on signs, handout sheets, or explained during the first few minutes before items are offered for sale.
The keys to successful bidding are:
- Know the auctioneer style.
- Listen carefully to what the current bid is.
- Understand what they are selling.
- Know how they are selling it.
- Bid wisely without getting caught up in the buying frenzy.
The company conducting the sale is there to make money, so they have an interest in selling to the highest bidder. The higher the gross sales volume, the more money the company makes. Your job, of course, is to win items at the lowest cost - it's a good approach to frugal living.
All pictures on this page are of sales by Al-Rose Auction and Realty, LLC in Cheyenne, Wyoming. I find these folks to be good people to work with.
Here are three reasons a low sale price might not be possible.
- First, it usually is a competitive environment where others want the same thing you are interested in. This can lead to a bidding contest. You need to know the value of the item so you can limit your bid to something reasonable. No sense getting into a "bidding war" with someone where you end up paying more money than the item is worth.
- Second, there might be minimum bid requirements on some of the items. If you think an item is worth $1 and the minimum bid is $5, then your $1 bid may not be accepted. This can be the case at an auction house where the items can simply be set aside for future sales.
In the case of estate and moving sales conducted on location, the job of the auctioneer is to get the things moved out of there, not to hang onto them, so any bid might be accepted if it is the only one. Protocol would suggest that $1 is a minimum bid for anything up for sale.
- Third, if you haven’t examined an item carefully, then you might bid too much for something of little value. You might also bid too much because you get caught up in the “feeding frenzy” of other buyers. Fortunately, all of this is within your control.
As an example, I saw a spittoon that sold for over $65 like one might expect of a collector’s item. Neither the high bidder, nor the second highest bidder looked at the item first. They just listened to the auctioneer describe it as brass with Union Pacific Railroad markings on it. If either bidder had looked the item over, then they would have seen that it was a $10 souvenir.
Preview of items for sale. Items are organized beforehand so you can preview them. There may be a number of vehicles and equipment lined up in a lot or field. There may be folding tables filled with boxes, flats or bags of material. Items may simply be organized on a flatbed trailer or cart. Sometimes they are sold where-is, like a bunch of stuff in a barn or shop.
For organized consignment type sales, a listing of items will generally be available as a handout. Numbered items on the list will match tags or stickers affixed to the items displayed.
Your job is to find what you want, know what its value is, and make certain that it is in the condition that you expect it to be, before you bid on the item. Plug stuff in, wind it up, shake it, peer into it, operate it, and determine its value. Most things are sold as-is and where-is, meaning that it is sold in the condition that it is, and you have to remove it from where it is located.
In some cases, auction houses will generally guarantee items to be in working condition. They want you to be happy and return as a customer, so this might be their practice, especially if they are selling a lot of things that operate on batteries, gasoline or electric power. In other cases where there is a mixture of furniture, fixtures, power tools, appliances and clothes, the auctioneer may extent a guarantee on a case-by-case basis that something works as it should.
Ask about any guarantees before you bid, otherwise assume that everything is sold as-is and where-is.
How to identify value of an item. Here is a handy guide about the value of items at a public sale. These tips are good to keep in mind when you are bidding. Things are only worth what someone will pay for them, but you need to know about some practical limitations of the value of things.
- Generally, everything being sold is used. If not, it is surplus or overstock. In any case, it is something that someone wants to get rid of. For used items, the condition of the item has to be taken into consideration when assessing its value.
- Value new never opened items at 1/2 their original retail price, perhaps a little more. Retail outlets usually buy things and sell them with a 100% markup. This pays for their overhead and profit. Sometimes the markup is more, and sometimes it is less, but a 100% markup is usually a good assumption.
If you don't believe me about 100% markup, then consider that Sears often has tools at half off the original price. How can they sell things at half off? Is it to get you in the door? If so, then would they loose money on expensive tools just to get you to come in the store? I can think of lots of less expensive ways of getting customers in the door.
- For something used in good condition, but not like new, my advice is to bid no more than 1/3 of its retail price.
- For used average condition items, 1/4 its original retail price should be your ceiling to stay under.
- Even if the auction house paid for the items in order to make money on resale, they typically make a very low bid to purchase the items in bulk, so they usually buy things for pennies on the dollar. You should too.
For certain items like tools, firearms, vehicles and collector's items, these guidelines probably won't apply. In these cases, you need to be familiar with the special demand of the market to better determine the value of an item.
Bidding. In general, you place a bid by signaling the auctioneer when he is calling out a bid that you are willing to make. This is the most common approach. You can also call out a bid to the auctioneer to get the bidding started where you want it to start.
Here a man in the crowd signals the auctioneer that he is willing to start the bidding at $5 for the red shop vacuum.
Bidding continues until the auctioneer thinks he has the highest bid reasonably obtainable in the shortest time. Usually auctioneers will sell items at a rate of about one each minute or two. The auctioneer won’t wait for you to carefully consider your bid, so you need to know what you are willing to pay for an item before bidding on the item begins.
Here are some bidding tactics that you can use to win items at these public sales. They only work when you know the value of the item, so know what you are bidding on.
Dealing with high bids. Even though you are buying something used or otherwise unwanted, you still will encounter high bids. Sometimes the bids are unbelievably high. The problem is that these sales are competitive environments and some people go a bit crazy and pay retail price or more for items.
Here are some examples:
- A complete, like-new set of o-rings in a nice indexed case sold for $50. The cost of the o-rings brand new in the case from the retail outlet was $10. I saw them on sale recently for about $7.
- A nice good condition heavy duty large size tap and die set sold for $500. The “Buy it now” cost of similar sets on eBay was $150.
High bids win the items. Although this is contrary to your objective of getting things for least cost, you are going to see bids that are much higher than what they ought to be.
There are five main reasons you’ll see high bids:
- Some folks just don’t know what the value of something is. It looks good, and they assign a value to it without any previous knowledge about the item. This is how you end up paying too much. Know the value of items before you bid.
- People think of value in terms of retail price, and some don’t mind paying near that price. Remember that retail purchase prices include overhead and profit, as well as manufacturing, advertising and transportation costs. At an auction, the cost of overhead, profit, advertising and transportation of an item shouldn’t come into consideration. The original retail purchaser has already paid that and it doesn’t need to be paid again.
- Folks can get into an “argument” during the bidding. That is, they really want the item and they lose sight of the item’s value. All they focus on is getting the item and they just keep bidding against others until they win. That is one sure way to win, but not a good way to get something cheap.
At the right is bidder 27 who has signaled the auctioneer that he is willing to bid on a box of classic record albums. He is in competition with one other bidder who wants the same LPs. The bid went up high enough that bidder 27 stopped bidding and his competition won the box of albums.
- People can talk themselves into bidding up from a bid where they feel comfortable, instead of putting a ceiling on their bids. Their perspective is that it is only another dollar or another five dollars more to stay in the bidding. So, they stay in - and win.
This is like staying in a poker game where the minimum to open hasn’t been met and the ante is 25 cents. After 45 minutes of play, you still ante up your 25 cents and the pot has $18 of your money, all placed in there 25 cents at a time. It’s easy to go up in those small increments.
- Some bidders run the bid up just to mess with the other bidders. Their thinking is that if the other guy is determined to buy this, then I am going to make him pay a little more for it. It gives some people a little satisfaction knowing that if they couldn’t win the item cheaply, then the other guy isn’t going to get it cheap either.
The smart shopper will steer clear of the high bidding and look for items that most people don’t have an interest in. This is where you can get the bargains.
So, how will I know what the price of things will be? You won’t until the bidding for the item is underway. It all depends on what other people want. If they want what you want, then the price is going to go up. Frugal shopping dictates that you back off, let the other guy have the item, and look for other items to buy.
There have been times when I left an sale early because the bidding was consistently high, unreasonably so. There is no sense sticking around with the high bid crowd. I am there for a bargain, not a beating.
Mistakes and bid retractions. If you bid on an item and then find out it isn’t as represented or you misunderstood what was being sold, most auctioneers will allow you to retract the bid. After all, they want you to be happy, and they want to appear to be fair-minded to their regular customers. Either flag the auctioneer or one of the nearby ring men.
If you regularly seek to retract your bid, you may be prohibited from bidding anymore during that sale.
The auctioneer can be hard-nosed about bid retractions. Your bid is a legal commitment to buy. This is usually explained in writing on a handout. It works in your favor as well. If you are the high bidder on an item and the auctioneer says sold, it is yours.
A good auctioneer will stand on his declaration of “sold”. I have attended some sales where the auctioneer tried to go back and start the bidding again when he realized that there were other bidders interested in the item after he said “sold”. Don’t let that happen. He said: “sold”, and that means you are now the legal owner of the item. Politely stand your ground.
Getting your stuff. As a bidder, you may collect your items and remove them to another location so all your stuff is in one pile. Most auction houses will allow you to take things to your vehicle for safe keeping.
Here a woman takes books to her truck. Wow, she bought a lot of books by the looks of things.
After you make your purchases, you might find a break in the action where the things up for bid are not of interest to you. Use that time to put your stuff in your car. If you are buying quite a few things, then find a place to stash them so you can keep an eye on them.
In any case, items sold to you are yours so you need to watch over them since you will be expected to pay for them even if someone else walks off with part of your pile.
Large items sold to you will generally be marked with your bidder number and left in place.
There is usually a window of opportunity for you to pick up the items. It may be hours or days. Check first before bidding on those items to see when you can pick them up, and to see if they will have loading equipment or assistance available when you come to get them.
Picking up large items on the day of the auction is usually a good practice, as they will likely have a loader available for that purpose. Also, the friends you meet at the sale will be there to help you with large and heavy items.
You might have to wait until the auction ends to pick up your things because the loading area can be busy and congested. You’ll likely have to navigate among others that are there to pick up their stuff too.
Other protocol. Sometimes you get a box or bag of things where you are only interested in one or two items. Protocol would dictate that you take everything that you bid on and win. That isn’t necessary, but it is good form.
In the case of an iron pile or a wood pile, you might cherry pick what you want and leave the rest. After all, you aren’t being paid to clean up the yard. Leftover items are usually cleaned up later and hauled to the dump by another organization, or the owner.
Sometimes auctions will include a trailer or a dumpster on the premises where you can discard unwanted items instead of hauling them home with you. Make good use of that facility if you don’t want some of the bulk that came with the purchase you made. You might also find some good stuff in the refuse pile. Feel free to help yourself.
Lastly, you might be interested in a particular item in a box filled with miscellaneous items. If you are not the high bidder, you can bargain privately with the high bidder to purchase just the items that you were most interested in.
A simple inquiry or statement of your interest to the high bidder will be enough to see if he is willing to part with some of his stuff for a fee. If you were both bidding for the same key items in the box, then don’t expect your offer to be accepted, but it doesn’t hurt to try. It might be that he has no interest in the items that you are interested in and will sell them for a very low price.
Enjoy yourself, have fun, and bid wisely at these sales that could become a part of your frugal living lifestyle.
Done with Auctions, take me back to the Home page.
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I'm a big proponent of being debt-free, and I mean entirely debt-free - no mortgage payment. It's not essential for financial freedom, but you'll love the feeling once you get there. If you didn't have a rent or mortgage payment, how much more could you do for yourself with your current level of income? I suspect plenty.
If you ever hope to see an abundance of wealth, you need to plug the hole in your boat. The wealthy don't necessarily make lots of money, instead, they know how to hang onto what they make, and make it work for them.