Jewelry and General Merchandise
Buying at Government Auctions V
In a recent interview, a representative from EG&G Technical Services, the company that handles the big Treasury Auctions, spoke about how buyers need to be careful at auction because they can pay too much for an item.
We attended one of those auctions recently and got an idea of what she was talking about. Someone bid over $12,000 for a bag of pearls. Now it’s possible that the pearls were worth that, and we lack the gemological expertise to form a definitive opinion, but when we see a necklace of pearls routinely go for under $200 PoliceAuctions.com, we have to wonder if the bidder knew what the pearls were really worth. Maybe the bidder knew something we didn’t or maybe the bidder got caught up in the frenzy of bidding. At any rate, a mistake on this scale could cost thousands of dollars.
The auctioneer for the Treasury Department appraises the jewelry they auction, but does not disclose this information to the public. It’s probably just as well because jewelry appraisals are highly subjective and don’t seem to have much to do with market pricing. This is a good time to remind everyone that the estimated values on jewelry items on PoliceAuctions.com are for insurance purposes only, not for forming a bidding strategy. They are not a guarantee of value so don’t make the mistake of thinking they will hold up in the market. They won’t. Always read the listings and value disclosures carefully before bidding.
The benefit of using wholesale markets like government auctions to buy items for resale is that typically the items go up for bid with no reserve. No reserve means the top bid gets the item, even if it sells for below market value.
On the other hand, wholesale markets offer very little buyer protection. In most government auctions, there are absolutely no refunds, unless you can prove the item was misrepresented, and good luck doing that.
Fire Auctions on PoliceAuctions.com are friendlier in that they give you a way to return the item, subject to a 15% restocking fee. This fee covers shipping, handling, insurance, transaction fees, and is intended to keep people from bidding recklessly.
Recently at a government auction, we saw a bulk lot of 150,000 sunglasses go for around $32,000. Simple math puts that at about 22 cents per pair. We’ve seen many vendors selling cheap sunglasses, but we’ve never seen them on sale for 22 cents each. If you had the funds to invest, the room to store the items, and the sales channel to plug the items into, that purchase represented a significant resale opportunity. Even if the buyer resold the lot at 50 cents a pair, they would have more than doubled their profits. We don’t know what actually happened in this case, it’s only speculation on our part, but we think the bidder got a great deal.
Government auctions run the full spectrum of items from jewelry, electronics, collectibles, cars, planes, furniture, and just about anything else you can think of. Sometimes people get a great deal and sometimes they don’t.
Arm yourself with as much market value data as you can before attending one of these auctions, that way you can formulate bidding strategies that make sense. Do comparison shopping to find values.
You never know if you’re bidding against a professional investor who knows exactly what to pay or Joe Blow who is thrilled to win, no matter what the price, so it really is up to you to keep your bidding in line with what you want it to be. To get the latest government auctions data, so you know where and when these auctions are happening near you, go to PoliceAuctions.com. Happy Bidding!
