Tips for Bidding at Auctions
Bidding is usually a straight forward matter, but sometimes you can benefit from doing it a little differently. The benefit of course is you can save money, and that should be well aligned with any reasonable approach to frugal living.
Why spend more for an item if you don't have to? Remember, you're here to get a great deal.
Here are some techniques for making a bid that you might want to try at the next auction.
Jump in higher than expected right from the start. This can scare off your competitors. If you (and others) anticipate the highest price to be around $55, and you (and others) are waiting for the someone to start off at around $10, then you might jump in at $35.
Some in the crowd will be a little apprehensive to participate because they will be uncertain as to how high you might be willing to go, especially if your starting bid is three times what they expected to see. This can scare off your competitors, and they might just leave that item alone and let you have it for $35.
Wait until the end. Near the end of each item people start to get uncomfortable with making higher offers for fear of getting stuck with paying too much for an item. Using the above example, if the item valued at $55 reaches $50 and sticks there for a few moments, you can jump in with $55 and win the item while others are wondering if they really want to run the price up higher than $55.
You don’t have to start lower and run the item up to that point. Just be the last one to signal the auctioneer after everyone else runs out of courage to go higher. You need to make certain that the item is worth $55, otherwise you are paying too much. You also have to be prepared for what you are going to do if someone outbids you.
Do you let the item go or do you bid again to get what you wanted? It all depends on what you see as the value of the item. It is a good idea to have a ceiling in mind when you are faced with such a situation so you don’t pay too much for an item.
Bid up in higher increments. This shows others you are serious about getting the item. This can sometimes scare off your competition, as they might be concerned about how high you are willing to go.
As an example, I wanted a portable gas welding outfit with numerous extra oxygen and acetylene bottles. I knew the value of the portable gas welder was about $150, and the extra bottles were worth about $40 each. The total package was worth $550.
My bid of $100 was countered with one for $110. The auctioneer turned to me to see if I would go $120, and instead I raised it to $130. It wasn’t exactly a bold move, but it sent a message to my competition that I was serious, and it worked – the action stopped right there and I purchased the gas welding unit and all the extra bottles for $130.
Get your bid in. Sometimes just getting in works fine since the auctioneer wants to move on to another item. If you snooze, you lose. In other words, pay attention and you won’t miss placing an offer on something you want. If the other person fails to act in time, and the auctioneer wants to move on to the next item, then he will call out “sold” and point to you as the new owner of the item.
Understand the bid increments and get in at the right spot. This technique is a little trickier to execute, but it works. You’ll sometimes see a pattern in the bidding that can be used to your advantage if you know when to jump in.
Once I was trying to win flats of tools – cardboard flats filled with pliers, cutters, screwdrivers, sockets, saws, hammers and other tools. I wanted to pay no more than $5 per flat for most of the flats. Sometimes I was willing to pay $7.50 for flats that had more tools, higher quality tools, or tools that were of higher value.
The offers generally started at $1, then $2, then $3, then $4, then $5, and occasionally would go to $7.50 for the higher value flats of tools. After watching the action for a while, I concluded that most of the tool buyers had similar hopes and expectations. They were:
- Getting a flat of tools for $1.
- Winning the item by going just $1 higher than the other guy.
- Common flats of tools were worth $5.
- Better flats of tools were worth $7.50.
It was also clear to me that the auctioneer preferred jumping from $5 to $7.50 and then from $7.50 to $10. After creeping up to $5 at the rate of one dollar at a time, he didn’t want to do the same thing going from $5 to $10. Using these observations and assumptions, I formulated the following approach:
For flats that I thought would sell for $5, I jumped into the fray with odd number values like $1 or $3 so I could be out-bid at $4 and be the last one in at $5. If I didn’t sequence it correctly, I would end up getting in at the even numbers like $2 or $4, being out-bid at $5 and then having to pay $7.50 if I really wanted to win the flat.
Note: The difference is only $2.50, but since I was buying many flats of tools for the home, garage, shop and truck, the $2.50 I saved allowed me to buy another flat of tools for every 2 that I won. Why go home with 6 flats of tools, when you can go home with 9 flats of tools for the same money?
For flats that I thought would sell for $7.50, I got in at the even numbers like $2 or $4 so I could be out-bid at $5 and be the last one in at $7.50, the value that I had placed on the flat of tools.
Participate later in the auction. Here is an approach to bidding that works well at auctions that are selling many of the same items. I use this approach at tool auctions where nothing but tools are sold, and many of the tools are identical or very similar.
Let’s say you want to buy a reciprocating saw, also known as a saws-all. The tool auction will likely have 10 or 12 of them for sale. Let the auction go as it may for the first 6 or 8 saws to see what the crowd is willing to pay. If there are only a handful of buyers interested in the saws-alls, then the offers later in the auction will likely be lower since the demand is lower.
Find a saws-all that you like near the end of the listing of tools, and make an offer on that when it comes up. If the first bunch of reciprocating saws sold for $90, the identical saws will likely sell for $75 later in the auction.
The same approach applies to multiple tool sales held over several years in the same area. After there have been 3 or 4 tool sales in your area, the winning price for tools should be lower since the market will more likely be saturated. In other words, the demand will have been met by previous sales, so the lower demand should make for lower winning offers because there are fewer people demanding those products.
Read the auctioneer. I have a funny story to tell here. I was buying tools at an auction in Denver and they had an out-of-breath auctioneer take over just as the tool lots came up. The auctioneer was a life-long smoker and it showed because he didn’t have much breath to conduct the auction.
Whenever I got to what I considered my high bid, I would hold up the card showing my number, and he almost gladly announced “sold” and called out my number, just so he could stop to catch his breath. I did that about 8 times, and it almost seemed like I had control over the auctioneer. Each time I held up my card, he said “sold” and stopped to catch his breath.
It was almost as if I was saving him from being completely breathless. And, it worked well for me. I won a nice bunch of tools for a very reasonable cost.
Wait on choice bids. When they are selling choice, you pay a premium to have the first choice of a set of items. After the winner of choice makes his selection, it is not uncommon for others to be offered a choice at the same price before a new round of selling takes place. Sometimes choice offerings are done again on a set of items if the auctioneer thinks he can get a higher sales price because people want the opportunity to make a selection of choice.
After the choice transaction is finished, the remaining items are usually piled together and sold for one price. This is when you can make a good buy, especially if you have no preference on the remaining items.
You pay a premium for getting your choice
- Example #1: At a farm sale there were many digging bars, pinch bars, crow bars and other long heavy steel tools for prying. They were sold first by choice. The winning bidder bought two at $6. That’s $12 for two tools. The remaining 6 pinch bars were then sold as a lot. The winner of the lot paid $4 for the 6 tools.
In this example, the $4 winner didn’t get the best tools, but he got way more tools for far less cost than the winner of choice. The scrap value of the iron bars was more than the $4, so he made out just fine – all because he waited until the sale for choice was finished.
- Example #2: At a business closing auction, there were many boxes of long hardened steel black screws used to fasten together log furniture. Several of the boxes were unopened, and many of the screws were 12 inches or longer. At a hardware store, these screws would cost about $1 each.
A choice bid was selected to start selling the boxes of screws. I stayed out of the bidding because I wanted to bat “clean up” instead of paying a premium for the screws. The winner of choice paid $22.50 and he took two unopened boxes of 13 inch screws that contained 250 pieces each. Another man wanted choice for the same $22.50. Then another man also wanted choice for the same $22.50 cost.
The remaining screws were then sold as one lot. That’s what I had been waiting for. At the end of the bidding, I was the winner at $25 and won 9 boxes of screws. Many were 13 inches long, some 12 inches long, some 11 inches long and some were 6 inches long. There were about 900 screws in all, most of them 9 inches or longer.
I didn’t care that the screws were not the longest available at the auction. I just wanted as many as I could get. How often do you use a 13 inch screw anyway? Have you ever even seen one? You get the idea. The 900 long screws were a great buy even if they weren’t the longest available.
The winners of choice paid $22.50 for 250 screws, or about 9 cents a piece. That was a great buy. My purchase was 900 screws for $25 or about 3 cents a screw. That was a fantastic buy.
The lesson here is if you don’t care about which items you wind up with (assuming they are all about the same) then you might get a much better deal bidding on the remaining items when they are sold as a lot instead of trying to get one or more by being the winner in a bid for choice.
, so if you don't really care about which one you get, just wait until bidding on choice is through.
One last illustration to show the typical dynamic involved in bidding for choice. Let’s suppose there are 8 widgets for sale. All are red except one green widget. The green is the most desirable, but regardless of color, they all perform the same.
You and a competitor at the auction start head-to-head bidding to get the choice of widgets because you both want the green one. You win at $20 and then select the green widget. You competitor loses interest because he wanted the green widget too, but now there are only red ones left to sell.
You are satisfied. Your competitor is disappointed. Both of you drop out, but for different reasons.
Now the remaining 7 widgets are sold as a single lot. Since you have your green widget and your competitor isn’t interested anymore, the remaining 7 widgets sell for $3 and the winner gets a great deal on perfectly good widgets because most everyone else was fixated on getting a green one.
Practice these approaches to bidding at auctions, and you'll find that you'll be successful in getting more for less, and that should be part of anyone's frugal living game plan.
Done with Bidding, take me back to Auctions