Top 10 Liquidation Auctions Do’s and Don’ts
Buying from liquidation auctions can be a very lucrative choice, especially if you are buying these items for profit. There are thousands of people throughout the country who are part of the liquidation and wholesale auction circle and in general, these events can be seen as a great way to get inventory for your business. Before you run out and start bidding, however, there are some do's and don'ts that you should be aware of that could be the difference between failure and success.
1. Do Research as Much as Possible
One of the first things that you simply must do before buying anything from liquidation auctions is to research the firm that is holding the auction. Sometimes this will be a well known retailer, sometimes an independent wholesaler. Though you can find great deals with both types of sellers, you should get to know the firm in question as well as the items that are being sold. Remember, the more you know about the transaction from the start, the better business decision you can make.
2. Don't Trust Guarantees
If you are new to the business of wholesale liquidation, there is no doubt that, if you haven't yet, you will be very tempted by a seller who claims they can guarantee profit from their buyable lots. The best advice that you will ever get in this business is to remember that there are never any guarantees. Yes, a seller can tell you a retail value of a lot and yes, they can make a guarantee that you will make that amount of money, but never, ever listen to that. Here's why...suppose you find a lot of mixed electronics that retail for $66,000 according to the seller. However, this mixed lot has some new, some used, some refurbished, etc. The odds of you selling a refurbished or used smart phone at a new price are slim to none, so already, that $66,000 is probably not attainable. Can profits be made? Absolutely. Should you trust a guarantee in this business? Absolutely not.
3. Do Buy What You Can Sell
When shopping at liquidation auctions, it is important that you stick to what you know, especially when just starting out. For instance, if you have a background in clothing, but find liquidation inventory made up of electronics, you will probably want to skip it until you have done some research in that area. You know you can sell clothing, so stick to what you know until you are ready to expand.
4. Don't Buy Illegal Products
Sometimes in this business you will come upon a seller who is selling products that may not be exactly legal to sell. It may not be that these products are harmful or that similar products are illegal, it could be something like this liquidation inventory didn't go through customs or are items that aren't on the books. It isn't worth it, even if you find a great deal, so skip it.
5. & 6. Do Expect a Profit, but Don't Rely On One
Because you are buying the inventory at liquidation auctions at such low prices, you can generally expect to make a profit on your purchase. However, you should never rely on a profit when you are buying and selling liquidation inventory. If you can't afford a lot at an auction, don't buy it.
7. Do Keep Shipping Charges in Mind
Many people choose to buy their inventory at liquidation auctions online...and they can often get a very good deal. However, you will definitely need to keep the shipping charges in mind as you may be responsible for those on your own. A pallet of liquidation inventory can literally weigh a ton or more, so it will be up to you, in many cases, to get that inventory to your holding area.
8. Don't Neglect Your Instinct
People who buy at liquidation auctions will often say they "felt" as if it were a good buy or something "told them" to bid. This is their instinct and will often be right...so if you get that feeling, why not go with it, especially if your instinct is right in other areas of your life.
9. Do Practice Buying
If you are brand new at liquidation auctions, it can be in your best interest to practice, or at least observe, an auction in real time. Auctions that are live are often quick, dirty and over just as fast and they begin and this can make your head spin. By taking in a few liquidation auctions before you buy, both in person and even online, you will be better prepared when it's your turn to make a purchase.
10. Don't Forget to Ask Questions
Finally, when buying at liquidation auctions, don't forget to ask questions before the auction is complete. Most sellers will be quite happy to answer any questions you have and it is important for you to get this information in order to make an information buying decision.
1. Do Research as Much as Possible
One of the first things that you simply must do before buying anything from liquidation auctions is to research the firm that is holding the auction. Sometimes this will be a well known retailer, sometimes an independent wholesaler. Though you can find great deals with both types of sellers, you should get to know the firm in question as well as the items that are being sold. Remember, the more you know about the transaction from the start, the better business decision you can make.
2. Don't Trust Guarantees
If you are new to the business of wholesale liquidation, there is no doubt that, if you haven't yet, you will be very tempted by a seller who claims they can guarantee profit from their buyable lots. The best advice that you will ever get in this business is to remember that there are never any guarantees. Yes, a seller can tell you a retail value of a lot and yes, they can make a guarantee that you will make that amount of money, but never, ever listen to that. Here's why...suppose you find a lot of mixed electronics that retail for $66,000 according to the seller. However, this mixed lot has some new, some used, some refurbished, etc. The odds of you selling a refurbished or used smart phone at a new price are slim to none, so already, that $66,000 is probably not attainable. Can profits be made? Absolutely. Should you trust a guarantee in this business? Absolutely not.
3. Do Buy What You Can Sell
When shopping at liquidation auctions, it is important that you stick to what you know, especially when just starting out. For instance, if you have a background in clothing, but find liquidation inventory made up of electronics, you will probably want to skip it until you have done some research in that area. You know you can sell clothing, so stick to what you know until you are ready to expand.
4. Don't Buy Illegal Products
Sometimes in this business you will come upon a seller who is selling products that may not be exactly legal to sell. It may not be that these products are harmful or that similar products are illegal, it could be something like this liquidation inventory didn't go through customs or are items that aren't on the books. It isn't worth it, even if you find a great deal, so skip it.
5. & 6. Do Expect a Profit, but Don't Rely On One
Because you are buying the inventory at liquidation auctions at such low prices, you can generally expect to make a profit on your purchase. However, you should never rely on a profit when you are buying and selling liquidation inventory. If you can't afford a lot at an auction, don't buy it.
7. Do Keep Shipping Charges in Mind
Many people choose to buy their inventory at liquidation auctions online...and they can often get a very good deal. However, you will definitely need to keep the shipping charges in mind as you may be responsible for those on your own. A pallet of liquidation inventory can literally weigh a ton or more, so it will be up to you, in many cases, to get that inventory to your holding area.
8. Don't Neglect Your Instinct
People who buy at liquidation auctions will often say they "felt" as if it were a good buy or something "told them" to bid. This is their instinct and will often be right...so if you get that feeling, why not go with it, especially if your instinct is right in other areas of your life.
9. Do Practice Buying
If you are brand new at liquidation auctions, it can be in your best interest to practice, or at least observe, an auction in real time. Auctions that are live are often quick, dirty and over just as fast and they begin and this can make your head spin. By taking in a few liquidation auctions before you buy, both in person and even online, you will be better prepared when it's your turn to make a purchase.
10. Don't Forget to Ask Questions
Finally, when buying at liquidation auctions, don't forget to ask questions before the auction is complete. Most sellers will be quite happy to answer any questions you have and it is important for you to get this information in order to make an information buying decision.