Making Profits Tutorial
Making Profits II
Get cheap stuff and resell it on eBay for a profit. It sounds easy, doesn’t it? Well besides the fact that it actually takes time and effort to make money, you need to exercise caution when buying. There’s an old saying that a little bit of knowledge is dangerous. This is doubly true when purchasing items for resale. You must absolutely know the market values before forming a bidding strategy.
First of all, market value has absolutely nothing to do with retail value. If you search around eBay you will see that pricing is typically well below retail. In fact this is not so great for sellers as this blog will attest to:
http://glinden.blogspot.com/2006/04/ebays-growth-and-competitive-threats.html
Pulling out a profit on an item is difficult; you have to get it for well below market value. Our users have reported success stories using our site to find bargains. In one case, a clever bidder negotiated a sale with the US Marshall’s Service and bought a houseboat for $100,000 and then went and got it appraised for $249,000.
On a small scale, someone got the first two seasons of the Sopranos on DVD brand new in the box for $1. Someone wrote to us to tell us that he bought a car for under $600, drove it for two years and sold it for $1500. Someone else bought an antique fire truck, the real thing, not a toy, for $780.
On PoliceAuctions.com, they tell you when and where all the Government Auctions are happening, but we cannot advise you as to what a good deal is. We lack the resources to measure prices in all markets for comparison and often a “good deal” is subjective.
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 in Fire Auctions, 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 in our Fire Auctions 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 are only slightly friendlier in that they give you a way to return the item, but you get socked with a 15% restocking fee. This fee covers shipping, handling, insurance, transaction fees, and is intended to keep people from bidding recklessly.
Now imagine some scenarios with cars. You go to a government auction, purchase a vehicle at a great price, take it home, and the transmission falls off. Who can you complain to? No one because the vehicles are sold as is where is. In other words, it’s your headache now. So remember to factor in all scenarios when bidding.
Ok, if we haven’t made you at least a little squeamish about bidding without knowing fair market values, then we haven’t accomplished the goal of this section, which was to get you to be cautious when bidding. After all, you’re not just looking for a great deal, you’re looking to resell at a profit.
