"Going once, going twice...sold!"

"Going once, going twice...sold!"

Contrary to images often seen in movies of crazed bidding for treasures, auctions are an often underutilized niche industry that offer a wide array of items at fair market value.

Auction companies, while relatively unknown to the general public, are located throughout the metropolitan region, regularly offering anyone the chance to bid on cars, homes, furniture, commercial property, antiques and more.

Items for auctions typically come from estate sales, which means that a stalled economy has no affect on the amount of business an auction company handles, as people will continue to die no matter where the stock market stands.

That said, the price levels for most items have fallen recently because auction participants aren’t as willing to spend as they have in years past.

“We’re selling just as much but for a lot of the items, things aren’t bringing in as much,” said Kevin Bunte, co-owner of Elgin-based Bunte Auction Service, Inc. “The top-end merchandise is still commanding a good price, but the above average to average to minor items are down.”

Typically, auction houses run one auction each month. They receive their items mostly from estate sales after being contacted by estate lawyers or bank and trust officials, said John Leonard, owner of Addison-based Leonard Auction, Inc.

The next step is to go to the estate and decide which items would sell well at an auction. Experience helps auctioneers choose which goods are auction-worthy, although some merchandise, like artwork, may need to be researched. They can then give the estate owner an approximate value of the items.

“A lot of times we see the same types of items over and over again,” Bunte said. “Collectibles, they’re worth x-amount of dollars and that’s about it.”

Each item is then catalogued in detail. Once all of the merchandise for a particular auction has been gathered, the auction house then advertises the upcoming auction through its Web site, through online auction sites like eBay and Craigslist, and through specialty antique publications like “Antique Week,” “Arts and Antiques Weekly,” and “Antique Trader.”

For property auctions, the marketing strategy is different, said Paul Rogers, senior vice president and managing broker for Inland Real Estate Auctions, Inc.

“If we’re in Chicago conducting an auction, we’re going to use the major media in Chicago,” he said. “Certainly the Chicago Tribune, Sun-Times, Crane’s Chicago Business and we may use the Wall Street Journal.”

Sellers for property auctions may be an individual property owner or often may be a bank that has acquired a number of assets through foreclosures and needs an auction company to effectively provide a solution to quickly clean up its books, said Rogers.

“Once we’re engaged, we can market the property and conduct an auction within two months,” Rogers said.

The turnaround time for estate sales is much quicker, which can be conducted as soon as the property is signed for and delivered to the auction house.

A typical auction lasts anywhere between six and eight hours, with 100 to 125 lots being sold per hour. This fast-paced environment leads to a cat-and-mouse game between the auctioneer, who represents the seller, and the buyer.

“At an auction, it’s a game,” said Bunte. “The auctioneer is trying to get the most money possible and the buyer is trying to get it as cheap as possible.

“I think one of the fears people have is they don’t want to be the first bidder and find out that they’re the only bidder and then feel they could have gotten it cheaper had they waited.”

The process involves an item being presented to the audience, sometimes using a projection screen, at which point the auctioneer asks for an opening bid and the bidding process begins.

“It’s very controlled for the most part,” Leonard said. “When we get to the end with the choice items, that does become more of a controlled chaos of sorts.”

When this open outcry format is used at property auctions, the bidding process lasts roughly three minutes per property. Yet property auctions also used sealed bid auctions, where the bids are received on a specific date and time and it’s a private bidding process.

One factor that might slow down the bidding process is remote bidders who are following the action by phone or the Internet.

“We’ve got somebody on our end on the computer accepting their bids and yelling out to the auctioneer,” said Bunte. “It’s a big, big headache to do that but it’s what’s got to be done now in this market.”

Participants in area auctions come from all over the Midwest, with each conducting their business in their own unique fashion.

“It affects different people in different ways,” Bunte said. “Some people you can see are really excited about it. They’re a little more jittery and you can tell they’re going to bid. And while that’s going on there’s a guy in the front row fast asleep waiting for his item to come up.”

By purchasing merchandise at an auction, buyers are able to get much better deals than if they had bought the items at retail price.

“With retail, you’re always paying your maximum amount and it doesn’t really represent a fair market value for a piece,” said Leonard. “Theoretically, the auction is bringing in fair market value.”

It is a process that is substantially underutilized and one that could help shoppers through the rough economic times to come, said Bunte.

“It’s the best way to do it,” he said. “But most people, they let it slip by and pay retail all their life and it just doesn’t make sense.”

Jeremy Stoltz, News Editor

Posted on Wednesday, December 24, 2008 (Archive on Wednesday, December 31, 2008)
Posted by jstoltz Contributed by jstoltz

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