Going .. Going.. Gone.. saving money at Auctions and Estate sales

By Steve Stone

We’ve all heard the ads.  A lady tells her friend about the house she bought for $27,000 from a foreclosure sale she heard about in a list.  We hear that cars are sold for $100.  Stories tell us that a woman bought a painting at an estate sale for $20, and it turns out to be an original  (Insert famous artist name here ) painting worth $40,000.  Does it happen?   The answer is yes and no.  Is that list worth buying?  The answer is no.

The reality is, items sold at auction likes these are often sold for much lower prices than regular items, but there is usually a reason.  I purchased a Porshe 924 in the 1990s for $2000.  The hidden repair costs were over $10,000.  In the end I sold it for $700.  That $27,000 house normally has three (3) strikes against it.  Strike 1 is usually condition.  The house was owned by someone who could not maintain the mortgage.  Chances are they did not maintain the house.  When I worked as a handyman, one of the realtors I worked for was a foreclosure expert.  She had me do repairs to bring the houses back to the level where they could get an occupancy permit.  That did not mean fixing up the house, it meant making them so the board of health allows them to be sold as a house. Most of the houses needed $20,000 to $40,000 dollars worth of repairs after purchase.  

Strike 2 is often location.  A foreclosure house in a decent neighborhood will almost always be bought by real estate flipper.  A flipper is someone who buys a run down property, does cosmetic repairs, and sells the house for high dollar due to its location and condition.

Strike 3 is usually financing.  Foreclosure houses are not often financed.  Lenders do not like to finance a house that has already been foreclosed upon, even for a different owner.  They know the repair issues and hidden problems in these houses.  Basically, if you want to buy foreclosed houses, you need an alternative funding source or your own money.

Part of the secret to finding hidden treasures is the word hidden. No list that advertises nationally and has you pay an out of town company, will have things you can not find yourself for free.  Foreclosure auctions, seizure auctions and estate sales are often found in legal notices.  Some in the paper, but all are posted in the county courthouse on a poster titled “Legal Notices.”  Real estate flippers use these notices, as do auto dealers and other professional resellers.  The reality of nearly free items at these sales is mostly a thing of the past, but there are still often wholesale level prices.  A simple trip to the closest county seat each month will give you several dozen auctions, some of which are not in that list you pay for.  

Places like Hoy Auction in Wake Forest have regularly scheduled auctions.  Their auctions are of goods they went out and got from estate sales and have up for bids.  You will not get a $20,000 item for $20, but you will get a good deal from them, and they will tell you if there are any true problems with an item.  Licensed auctioneers like Hoy are smart enough to know that if they cheat customers they will have an empty auction house.  An item might not be the value you hoped it was, but it will be in the condition they promise you.

There are good deals out there in auctions, yard sales, and estate sales.  To get those deals you have to do more than just go to these places and buy stuff.  You have to learn values.  Watch shows like “Antiques Roadshow” to see some real life stories of good and bad deals. Look around local antique stores or Ebay for retail prices.  Remember, many prices are regional, so that items worth $5000 in New York might be work $1000 here.

Estate sales and yard sales are large risk issues.  Items bought at these sales have no warranty, and people can lie about then if they want to.  Often, the people selling the items for an estate sale or a tag sale are not the owner, but someone brought in by relatives of the owner to clear a house out. They might be able to tell you if an item is a replica or a true antique, or they might not. Either way, all sales are final.  If you  pay for it, you have it in exactly the condition it is in, no refunds, no returns.

The secret is simple. Don’t just go and buy stuff that looks like it is valuable.  If you do that you will end up with a garage full yourself.  Buy stuff you need or want, but don’t want to buy new.  Find the prices of items new in the stores first so you know how much it costs new and with a warranty.  Then find out repair costs.  If you want a lawn mower like the $289 you see at the store, and you find one for $100, it might or might not be worth it.  If the motor is half shot, you might pay $100 for a mower you use 2 or 3 times before having to spend $175 to put a new motor in it.  Now suddenly you have a $275 used mower when you could have had a $289 new one with a 1 year full warranty. 

Auctions , yard sales, and estate sales are good places to find unique items to make your home and life different than anyone else’s, but they are not get rich quick schemes.  How many multimillionaires do you hear about who made their fortunes that way?  None. The list sellers actually make their money selling high cost books telling you how to find auctions and lists of sales to the public, making huge profits off of people’s hopes for a lottery like purchase.

© virtual Reflctions 2016