How to Make Extra Cash Buying at Auctions
We've all seen those TV shows where people buy things at auction and then sell them for exurbanite profits. Whether it's an abandoned storage unit, or jewelry and sports collectables at an estate auction, there are literally millions of dollars worth of merchandise out there available for purchase at greatly discounted price. I've been buying and selling merchandise at estate sales part-time for a few years now and can tell you that the extra income I earn from doing so each month, is a great way to buy those little things that you'd otherwise not allow yourself to have. I've been to Spain and Australia with the profits from my auction hunting and bought, a bunch of toys that make life a little more fun and I'm going to give you the basics to get started, if you've got the guts that is.
Step 1: Know the risk
This is the most important step and I can't stress it enough. BUYING THINGS AT AN AUCTION IS A RISK. There is no guarantee that you are going to make a profit and often times you may not even make you money back. So don't go into it thinking that you're going to make money off of every item, because the reality is, that some purchases will fail and fail huge in some instances.
Sure, it's exciting on TV when they pay $200 for a storage locker and find an original copy of Dante's Inferno, signed by Dante himself, but the reality is that that rarely if ever happens, and you have to be willing to LOSE some money, in order to MAKE some money.
So before we go any further remember, BUYING THINGS AT AN AUCTION IS A RISK.
Step 2: Be prepared
I learned at my first auction that I was powerfully unprepared. I had no idea what anything was worth and ended up buying a $2,500 set of Swiss cookware for $129 that I thought I could sell online for at least $400. The cookware set sat on Ebay for three months and eventually sold for $75, but only after I included a sixty piece Tupperware set I'd been given by my mother a few years earlier.
I was blinded by the $2,500 price tag on the product and bought it. Had I been prepared and done my homework, I would have seen that there were no fewer than ten sets of the same cookware on Ebay, and were yet to sell. A lesson learned, but a pricey lesson.
Had I brought along my laptop, I could have checked the product online, seen where it was selling and how much I could have realistically gotten for it. So when I say be prepared, I mean bring along a laptop or smartphone that will allow you to quickly research the products and see if there is a profit to be made, or if your just buying a set of fancy paperweights, no matter how good the price may seem.
Step 3: Do your homework
This is a lot like step 2, but a little more involved. Traditional auctions have a preview before they begin, where you can roam around and see what's up for sale. Get there early, see what you like and then step out to you car and see if you can find the product online. See how much it's selling for in the stores and on sites like Ebay, this will give you a better idea of the potential for profit, and that's why you're there to begin with. I hope.
My first time at an auction I was so excited that I bought a silver necklace for $45, thinking that I would get a few hundred for it. Had I known that silver was selling for $35 an ounce I never would have bought the necklace, which I later was offered $25 for and is currently hanging on a statue in my office.
If you're going to the auction to buy jewelry with a plan of selling that gold or silver to a company that is going to buy it off of you by weight, know how much the product is selling for. Check prices online at sites like goldprice.org and see what you can realistically get for your purchase. Remember, if you buy 2 ounces of silver that's worth $70, no cash for silver company is going to give you $70, so don't spend more on a product than you can get in return, and that goes for all items.
With jewelry remember; look for a stamp and a number. Each piece of jewelry you buy should have a stamp and a number on it. Learn what each number means and don't buy it unless it has a stamp on it because if doesn’t have a stamp it's pretty much worthless.
With storage locker auctions the deal is a little different. You don't know exactly what you're getting, so there is an even greater risk. Also, remember that you have to take all of the merchandise with you, so factor in how much it's going to cost you to dump the garbage in the unit.
Step 4: Don't bid with your emotions
Unless you’re a bored billionaire out to blow some pocket change, only bid on the things that will make you money. If you see a statue of a dog that reminds you of your dog Buck from when you were a child, go ahead and buy it if it makes you happy, but everything else must be approached as a business transaction if you're serious about making a profit.
At one particular auction, I got caught up in the excitement of a bidding war with an auction regular, paid $300 for a piece of electronics that was three generations old and I still have that piece of electronics because I let the excitement carry me away.
Keep a level head and know what you're buying, set a limit before the item you like comes up and stick to it. Unless you're interested in having a house full of crap that you can't sell, then by all means, go ahead and bid away, the auctioneer will thank you.
Step 5: Selling your newly acquired merchandise
You should have already done your research by now, if not at the auction, then when you got home with your new merchandise. Bought a painting that seemed like a good deal? Go have it appraised by an art dealer or at a gallery, and ask if they are interested in selling it for you, or even buying it off of you. If you've bought some old Baseball cards and want to see what you might get for them, search eBay to see what they're going for online.
Pretty simple really. The more people that know you have an item for sale, the more likely you are to sell it.
It's best to sell the merchandise as quickly as possible, so you can get more in and put that money back in your pocket. Setup an account on Ebay.com or any other local online site that allows you to sell your merchandise. Kijiji.ca is a free website that offers free ads just like Ebay, but you keep 100% of the profits because they don't facilitate payment between the two parties involved in the transaction. So it's up to you to meet the buyer, or have them come to you.
I know it sounds like an antiquated notion, but some people still read the paper and placing an ad in the classifieds may get you a bite. Bought a washer or dryer at the auction, go to a laundry mat and put a flyer up on the bulletin board or any other bulletin board you can find. Tell friends that you have merchandise for sale; they may know someone at work who's looking or what you've got, or be interested themselves.
Talk to the other buyers at the auction, find out whose there to buy what and develop relationships. If one buyer is there to buy jewelry for his store, talk to him and find out what he's likely to pay you if you get a choice piece of jewelry that he misses out on. It never hurts to know other people in the business and even if you two can't do business, they may be able to give you helpful hints, or point you to someone who is looking to buy your merchandise.
I said it before and I'll say it again, the more people that know you have merchandise for sale, the more likely you are to sell it, so get out there and let the people know in as many ways as you possible can.
Step 6: Be fair and realistic
Nobody wants to get screwed. Sell a $40 gold necklace on Ebay for $300, and the buyer finds out you took them for a ride, well that's going to come back and haunt you in the form of bad feedback online. Get enough bad feedback on your Ebay account and you'll find that nobody is interested in buying from you anymore. Of course you want to make a profit, we all do or we wouldn't be doing this, but treating people fair is a major factor in deciding how much you'll make and it's just good karma not to treat people bad.
So, make sure you know and can except the risks. Not all purchases are guaranteed to make you money. Get there early and bring along a laptop or smartphone so you can do your research. Know what you can realistically get for an item before you buy it and don't get caught up it the excitement of the bidding. Let as many people out there know you've got merchandise for sale, there are lots of avenues to do this. Try to screw people and it will come back and bite you in the butt eventually.
Whether you're in it to make a few dollars extra or make a career out of it remember, have fun, but keep a level head and stay focused.