In Tough Times, Auctioneers Run a Buyer's Market

How many times have you wandered around the garage thinking, "Man, I could really use a 12,000-pound hydraulic lift"?

Just go to Stanley J. Paine Auctioneers, in Stoughton, Mass., a suburb south of Boston, and buy one in a bankruptcy auction for $3,000. You'd be saving over $13,000 from what a brand-new hydraulic lift would cost you. This drives home the bittersweet lesson at the heart of every bankruptcy auction: Someone else's loss becomes your gain.

Indeed, in a recession, the increase in losses of various kinds -- jobs, customers and revenue -- is creating opportunities for others to gain. As the amount of goods for sale due to bankruptcies, foreclosures and overproduction increases, the number of people willing to make large purchases decreases. As a result, a small buyer's market for the rich has formed.

The 30,000 auctioneers currently operating in the United States held about 1.5 million auctions in 2001, estimates John Roebuck, former president and chairman of the National Auctioneers Association, the largest auctioneer organization in the U.S. And he says that number has been increasing, thanks to a shift in perception about auctions as more people use eBay EBAY to buy and sell goods. "Auctions are going well all across the country," Roebuck says.

The myriad ways auctioneers receive merchandise are as varied as the merchandise itself. In the case of the hydraulic lift, U.S. Shuttle of Chelsea, Mass., went bankrupt when airport traffic dried up at Boston's Logan Airport after Sept. 11. As a result, the company's assets, including the lift, vans, office furniture and a complete set of garage tools were auctioned off to help pay off debts. All told, the auction netted $15,000 to $20,000, according to Stanley Paine, the principal auctioneer.

Auctioneers sell off company surplus and pick up assets during foreclosures, insurance claims and criminal seizures. Auctioneers get the unclaimed stuff left in storage lockers. And when no one really wants what's left in a will -- which can include houses, cars and land -- and the inheritors agree to sell it off and divide the cash, the estate is sold off at auction, piece by piece.

The Price Is Right

"I've got two gorgeous life-sized bronze horses for sale. You could put a saddle on 'em and go," boasts June Nash, auctioneer and owner of Flamingo Park Auction in West Palm Beach, Fla. She thinks the bronze horses will sell for between $5,000 and $10,000 for the pair, and she jokes, "a real life-sized race horse costs $100,000."

You can find some serious bargains on the auction block if you're willing to do the legwork and look closely. Nash has an 18-karat gold, diamond and pearl necklace that should auction for $500 to $800. In a store, she says, it would retail for $1,500. It even has a matching ring.

Items are often unique in addition to being cheaper, and can't be found in a retail store. Sometimes items are the retail store. "I've got 23,000 used videotapes for sale next Wednesday," Paine says, detailing an upcoming auction of a bankrupt video store. He expects the collection of tapes to fetch at least $12,000, which may not be a bad price for someone who never wants to visit a movie video rental store again.

As for real estate, buyers can grab themselves some little houses on some big prairies, with farmland going for as little as $6,000 an acre. And even if you're not in the market for a 30-acre tobacco farm with a working barn and three tractors, auctioneer Jimmy Johnson and others like him often split up the land into smaller parcels that could make excellent country homes. "We do the same thing McDonald's does," Johnson boasts. "You're buying the hamburger instead of the cow."

Going Once, Going Twice, Sold!

Although the intensity and excitement of purchasing at an auction can seem overwhelming, auctioneers say the stereotype is overblown. "The word auction seems like it scares people. I think it's the myth they've heard that somebody scratches their nose and winds up buying a motorboat," Roebuck says. "None of that is the truth."

And don't be intimidated by the pros. Individuals have more buying power, because professional buyers have to resell items later and can't pay too much. "Dealers don't have a chance," says Nash.

For those who are interested, getting started is as easy as opening up the local paper. This is where the rabid auction-goers turn first, while scanning the Web's less-comprehensive national listings. The National Auctioneers Association's main Web site lists auctions by category, location and name.

A quick perusal shows that Worley Auctioneers and Appraisers in Hamilton, Ohio, has rare Al Hirschfeld lithographs up for grabs. Micron Auctions of Munster, Ind., has a huge allotment of old railroad signage on the auction block. And you can call Dimmerling Realty & Auctioneers of East Canton, Ohio, and ask them about the 2.5-acre parcel with a one-bedroom house, attached horse barn and storage shed.

Once you've identified what you want, the next step is checking it out. Most auction houses have a preview period when you can inspect the goods before purchase. Talk to the auctioneer about the item. "Ask questions prior to the sale about what it will probably bring in the auction," Paine says. "Then figure out how much you'd be willing to spend."

John Roebuck says that jewelry and art sold at auctions often go for less or more than their true value, because some dealers lack expertise in what they're selling. Make sure that art, Oriental carpeting, furs or gems are properly appraised before you buy.

Every deal is not a good deal, but deals are certainly out there. "This is the time to buy," Roebuck says. "It's not necessarily the time to sell, but definitely the time to buy."