Archive for March, 2016

The Art of the Deal – Part I

Written by traderchris on . Posted in Uncategorized

You don’t have to be a blustery real estate mogul to be good at making a deal. Being a good negotiator is part science and part art, so anything you learn from a book or article needs to be practiced frequently in the real world before you can expect to become good at it. This article is the first of a two-part series intended to offer some tips to improve your negotiating skills when selling and buying.

Tips for Sellers

Do your homework. You can’t sell anything very well if you don’t know much about your item. Some basic questions you should answer first include:

  • What is demand for this item?
  • Is it authentic?
  • What’s it worth?

Before I sell anything, I always verify that there is a good demand for an item. You can browse the current listings on Craigslist for large, common items such as furniture or household goods, while the sold listings on eBay provide a good overview of market prices for smaller items.

If your item has significant value in the hundreds or thousands of dollars, be sure to have it authenticated before your attempt to sell it. If you didn’t purchase it directly from the manufacturer, artist, or a reputable re-seller, then consider seeking out an expert in the field or appraiser to verify your item is authentic.

Once you’ve verified it’s authentic, determine a range of value based upon comparing the condition of your item to similar or identical examples that have recently sold. Again, you can use Craigslist or the sold section on eBay to find this type of information.

 

Start high, then work your way low. As a seller, your objective is to try to sell your item for as much as possible, while the buyers try to to buy it for as cheaply as possible. If you have a certain price in mind that you want an item to sell for, try marking-up the price, then gradually reducing the price over time until it sells. For example, price an item worth $75-$100 at $125, then lower the price by $15 – $25 every other week until it sells. You may even get lucky and have someone that really wants the item pay your initial $125 asking price.

For a quicker sale, advertise that you’re willing to consider a “Best Offer” and negotiate with potential buyers until someone offers a price in the “sweet spot” that you’re willing to accept.

 

Know when to hold, and when to fold. If you happen to have something that’s rare, valuable, and in-demand, then you can almost name your price when it comes to negotiating with a serious buyer. For example, a 1952 Topps #311 Mickey Mantle baseball card in poor condition is worth enough to send you (and your family) on a nice vacation. Better examples could pay for a car… or house! That’s because this particular card is considered a cornerstone of any serious baseball card collection and is difficult to find in any condition, let alone excellent condition.

On the other hand, having large collection of common items (such as newer baseball cards, rocks, and travel mementos) is typically much more difficult to sell. This is due to the time involved to sort through and identify more valuable individual examples and also because of low demand in general for those types of items. In those cases, sometimes it’s a good deal for you simply to be able to locate someone willing to pay you a reasonable amount to haul off the collection and do the work themselves.

A Beginner’s Guide to Selling at Auction

Written by traderchris on . Posted in Uncategorized

This is the second part of a two-part series on buying and selling at auction for beginners. In this article, I’ll provide some guidelines for choosing an auction house.

Pros and Cons. Selling at auction can be a great way to sell an estate or collection quickly and efficiently. A well-organized auction can attract a lot of buyers and can turn the entire contents of a house or collection into cash with a day or two of sales. If the auction include items that are, rare, valuable, or have interesting provenance (history of use or ownership), then it’s possible to exceed the original estimates if a bidding war breaks out.

On the downside, most items sold at auction are sold “without reserve”, meaning there is no minimum sales price established for an item and it may sell for much less than you wanted. Larger auction houses may be willing to set a reserve if an item qualifies for one of their specialized quarterly or semi-annual sales, but that means that you may be waiting several months or longer for your item to be listed for sale (and even then, there are no guarantees that it will sell).

 

Understand the fees. Auctions are essentially a form of consignment, but the fees they charge may not always be fully understood by the consignor (seller). An auction house receives a sales commission (percentage) based on the final bidding price of an item. The consignor’s commission rates can vary widely, anywhere from 0% to 40%, and often depend on the value of the item(s) being sold. A second commission called a buyer’s premium is charged separately to the buyer. This fee may be anywhere from 10% to 25%, depending on the auction house and the bidding method utilized.

Additionally, fees may be charged for services such as pick-up, advertising, appraisals, or even if an item fails to sell. Generally, the more valuable an item or an estate may be, the better chance you may have in negotiating a better commission or reduction of certain fees.

 

Reputation. An important consideration when deciding on an auction house is their reputation. Is the staff friendly and knowledgeable? Do they specialize in a particular type of item, and if so, how have their past sales been? Are there any reviews / testimonials available from past consignors online or in person? It certainly never hurts to do your homework in this area to ensure that your expectations will be met.

 

Presentation. In sales, presentation is everything. Auctions are no different, and top auctioneers know that. Before the sale, what sort of preview does the auction house provide? Are there photos and descriptions of the items available online, and if so, are they of good quality? Does the auction house only sell locally, or do they accept phone and online bidding as well? How are items presented when they are being sold?

If at all possible, try to attend a live sale before choosing an auction house. You’ll get true sense of the staff, their clientele, as well as how things run. Ideally, a sale should run like a well-oiled machine, with knowledgeable, friendly employees available to address any questions or concerns. Choose anything less and you’re selling yourself short.

A Beginner’s Guide to Buying at Auction

Written by traderchris on . Posted in Uncategorized

Live auctions can be a great way to scoop up bargains or add hard-to-find items to your home or business. To the novice, however, auctions can appear confusing or intimidating at first. Here are some good tips to get you started successfully at your local auction house.

  1. Caveat emptor (or “Let the buyer beware”). Most items sold at auction are sold “as is” in estate condition, which means they have previously been owned and/or used and don’t come with a guarantee. Items may also be described incorrectly and damage or defects may not necessarily be included in online descriptions or photos. Whenever possible, inspect the items in person for signs of wear, damage, or repair. If you can’t make it to the auction house, call or e-mail in advance of the sale to inquire about the condition of the item(s).
  1. Ask questions. Auction houses should be happy to educate new buyers on the auction process and the items being sold, and if they aren’t welcoming, take your business elsewhere! Bidders typically have to register in advance, which may include providing a copy of a driver’s license and/or form of payment to keep on file. You should also be aware of any buyer’s premium (a fee charged by the auction house to the buyer) and taxes after the sale, which may add another 15% to 25% to the final bid price.
  1. Make a list. Seasoned bidders will often make a list of items they wish to bid on with their maximum bid amount next to an item description or lot number. This keeps them focused and within their budget.
  1. Carry a measuring tape. If you’re planning on purchasing a larger item such as a piece of furniture or a rug, be sure to take the measurements of both the space that you intend to place it, as well the doorframes in your home and the cargo area of your vehicle. You’d be amazed at how many people buy things that don’t fit in their car or home!
  1. Bring some packing materials. Auction houses may have some extra boxes and recycled packing material available for buyers, but they’re usually limited and may be gone by the time you get a chance to pack. Bring some newspapers and boxes to pack smaller items and have some old blankets handy if you plan to buy furniture or other large items. If you purchase a chandelier, a wardrobe box from Lowes or Home Depot can be a good way to transport it home safely.
  1. Pack a snack. Auctions may have anywhere from several hundred to a thousand or more lots to sell at a time, so you may be waiting a while between lots that you want to bid on. Consider packing a snack and some caffeine if you’re going to be there for several hours or more.
  1. For resale, buy wholesale. Auctions can be a great way to purchase inventory at wholesale prices. Items sold as lots or in large sets can often be sold individually for a profit, providing you buy at a good price. Do your homework beforehand to determine a reasonable cost per item before bidding. The “sold” prices on eBay are usually a good indication of the resale value of more common items.
  1. Leave an absentee bid. Don’t have hours to spare sitting in a chair? Consider leaving an absentee bid, in which the auction house will bid on items for you up to a maximum amount that you set. Be sure to ask how the absentee bids are executed.

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