Why Auctions Work!!!

The need to liquidate assets and disperse belongings may arise from a variety of reasons, but there is one definitive thing during this process… Auctions are the best way to get the most for your items in comparison to Tag/Estate Sales and here’s why auctions work:

Here’s Why:

Auctions encourage competition. Auctions are exciting and instill a sense of urgency in buyers. Because of the general nature of auctions, bidding sets a price floor for an item with no price ceiling or cap. This encourages an upward negotiation of price which is advantageous to the seller. In comparison, a tag sale lists a price on an item. This establishes a price ceiling with no floor, instead. Typically, as the tag sale nears closing, the item can be negotiated to a lower price which comes at a profit deficit to the seller.

Auctions encourage serious buyers. They are fast paced and if a buyer wants an item it forces them to be engaged. Auctions also help eliminate people from just snooping around or browsing through your belongings without any intent to purchase. That can be beneficial in terms of privacy and security. Along with this, auctions are entirely transparent. There are no closed doors at an auction. The seller can see the item sold in real time. Many times, estate sale companies want to have a blindfold on the seller so they can be their own judge, jury, and executioner throughout the process. Auctioneers, on the other hand, work directly to get the most for the seller- that’s why auction works.

Security makes auctions work:

Auctioneers are professionals! There are governing bodies for auction organizations and companies, whereas estate companies do not have any industry standards or oversight. This means that auction companies have professional training and have access to educational resources to bring you the best experience! They also have a greater sense of the art of marketing. Many estate companies will run an ad in the local paper or hang a flyer in the coffee shop on the corner. When it comes to marketing, though, auction companies are in a league of their own. They create marketing plans and campaigns to help you get the best outcome in terms of bidding and consequently, profit. Auction companies also have a code of ethics that guide and have protocols they must adhere by, the same is not true for estate companies.

Auctions give the most to the seller. Generally speaking, tag sales are simply inadequate. Even if the tag sale went absolutely perfect, it still nullifies the ultimate goal of the sale which is to obtain the optimal value for the goods. There is no way to drive the price up for items and the concept of supply and demand is completely ignored. Tag sales go by the “early bird gets the worm” principle. An item that draws a lot of attention in auction is going to increase in price. But that same item is going to go for a flat rate to the first buyer in an estate sale.

Auctions rely on salesmanship. Auctioneers benefit most when the seller benefits most. It’s a mutualistic relationship. Similar to the lack of marketing in tag sales, there is no salesmanship in tag sales. A price is listed and then you hold out hope that someone will come along that is actually willing to pay that price. This can also be attributed to the fact that several estate services are antique collectors or resale dealers whose main focus in on the items and not the seller. When you hire a company, there first priority should be their customer- not their customers assets.

Bottom Line:

Why Auctions Work? Auctions are the ultimate price discovery mechanism, they create excitement, and they have no contingencies. Auction companies go to the greatest length to get all parties the most out of the liquidation effort. Bottom line- Auctions Work.

David Whitaker | Iowa Land Guy

Want more information from a fellow professional auctioneer? Check out Mike Brandly’s take on this topic.