Flipping
Flipping
Anyone could get excited by the idea of buying something at government auctions and turning around and instantly selling it for a huge profit. This more commonly known as "flipping." While it's possible to make a profit from buying at government auctions, don't make the mistake of thinking that it's easy. Making assumptions about resale values or liquidity in the market can cause you loss.
Some people go into government auctions thinking they will buy a diamond ring or a Mercedes Benz with the intention of running to either a jeweler or car dealer and immediately flipping the item, in other words selling it instantly to another party that normally buys at wholesale to make a quick profit. This almost never works out.
Not only do jewelers and car dealers have their own wholesale sources for items, which they tend to view as trade secrets, but they also look at anything you buy via the Internet or Government Auction as lost business for them. Many of them will be annoyed by your offer to sell to them. They want you to buy from them, not sell to them.
If you ask them what the ring or car is worth, you might not get the truth. They will probably try to buy the item from you at a price that would constitute a form of legalized theft and you will be left with the feeling that you overpaid for the item, even if it’s not true.
In the case of jewelry, only a written appraisal by a qualified gemologist should be considered for value, and even then, as we stated before, it is not an indication of market value. It’s highly subjective and relies on the opinion of the individual gemologist. In the absence of reliable standards, the only thing left to do is comparison-shopping. Go to the mall, look online, and in mail order catalogs. Talk to people in the industry. Look at what similar items go for on eBay, since that is your most likely sales channel.
Cars on the other hand are more standardized, with the market following Kelly Blue Book more closely. Of course the condition of the car is sometimes subjective as well, so even if you brought the blue book with you to a dealer, you would probably still end up haggling.
Instead of trying to make a quick buck, research your market thoroughly and look for the long term potential. The more knowledge you have about a specific market, and government auctions items are certainly not limited to jewelry and cars, the more likely you will be able to buy and sell profitably.
