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BENEFITS TO THE BUYER:

• Smart investments are made as properties are usually purchased at fair market value through competitive bidding
• The buyer knows the seller is committed to sell
• In multi-property auctions the buyer sees many offerings in the same place at the same time
• Buyers determine the purchase price
• Auctions eliminate long negotiation periods
• Auctions reduce time to purchase property
• Purchasing and closing dates are known
• Buyers know they are competing fairly and on the same terms as all other buyers
• Buyers receive comprehensive information on property via due diligence packet
• 1031 Buyes and Investors loves Auctions because of legal deadlines

Answers for Buyers at Business Assets and Liquidation Sales

Q: What do you suggest about inspecting items?

A: Make time to view items before you buy them, even if only on the morning of the auction. If bidding online, remember that photos may be for representation only. Read descriptions carefully and try to attend the inspection if you are local to the sale.

ALWAYS INSPECT BEFORE YOU BUY. Many auctions sell on an as-is, where-is' basis. This means no guarantees. Auction companies do this not because all items are faulty. Rather, they may not have the time or facilities to check everything included in a sale.

Therefore, do not assume `as-is' means `no good'. Look before you buy and occasionally take a chance if uncertain as to quality... you may be pleasantly surprised.

Q: How do I pay for items at an auction of business assets or a liquidation sale?

A: Many auction companies will not take checks and/or credit cards; this means cash or cashiers check only...be prepared! Deposits may be required to obtain a bidder's paddle, or simply upon the award of a bid. Either way, you will most likely be responsible to leave a deposit for your purchases on the day of the auction. Full payment is always required before purchases can be picked-up. Occasionally, an auction company will require that full payment is made within 24 hours of the auction, even if you do not intend on picking up your purchases for several days.

Q: How is the auction sale organized?

A: Some sales (typically art, antiques or collectible auctions) take place in a theater style format - bidders sit and bid based on a catalog of items. Other sales (typically business equipment) are conducted using a walk through format - bidders follow the order of the sale throughout the auction facility, walking from lot to lot. As walk through sales can be more exhausting than theater style sales, it's always nice to be prepared.

Q: Do I need to register before bidding?

A: Some companies require you to register upon entering the auction site. Others permit you to inspect before you register. In either case, the registration process will usually require you show some form of identification and may require you to leave a cash refundable deposit. If asked to sign something, make certain you understand the terms of sale before you sign as you will be held to them. Providing a business card may speed up the registration process.

Upon registering, you will be provided with a bidders' number and, often, a sale catalog.

Q: How are items sold in a business asset or liquidation sale?

A: Items will be identified by 'lot' numbers. These numbers indicate the order of the sale, beginning with lot number 1 and continuing in sequential order through the last lot of the auction.

Lots may consist of one or several items. In the event a lot consists of more than one item, be aware at the time of sale whether the lot will be sold 'by the piece' or as one 'lot.' Items sold by the piece usually indicate the piece count on the lot tag or in the catalog. If, for instance, one lot number indicates a quantity of 3 widgets, and the auctioneer says sold at $5.00, this will be charged at 3 times $5.00 or $15.00 total. If, however, the lot tag, the catalog or the auctioneer indicates the lot will be sold 'for one money' or 'as a lot', a $5.00 hammer price will be charged at $5.00 total.

Keep in mind that an auctioneer has the right to change an item, when offered up, to a piece count or a lot at their discretion. A good auctioneer will make clear announcements to ensure the audience is aware of any such changes.

Q: How much assistance should I expect from the auction company on auction day?

A: Auction companies, like any business, vary greatly. Some auction sales have plenty of staff available to answer questions and provide assistance. Some do not. Many auctioneers conduct sales throughout the country, traveling with a small staff. These personnel may be too busy on auction day to answer questions. If you want to leave an auction satisfied, expect as little help from the auction company as possible. If you are unfamiliar with what you are interested in buying, invite a friend or associate to join you at the auction.

Q: Any advice on bidding at a business asset or liquidation auction sale?

A: Know your top price before you begin bidding. Don't, however, be stuck on the notion that you should only buy something if it's dirt-cheap. Auctions can save you money -- sometimes allowing you to buy at 10¢ on the dollar. Often, though, competition doesn't allow such savings.

Therefore, consider what something would cost you if you purchased outside of the auction format. Also consider if you will be able to find the item elsewhere. Then set your price at what you can afford. Remember, if you need something, a 20% savings is a 20% savings. There are many philosophies on how to bid successfully at an auction, but the bottom line is if you are willing to pay more than anyone else, you will win the bid.

The auctioneer may start the bidding by asking for a specific price or may take a bid from the audience. If a bid is requested, you may want to throw out a bid below what you are willing to pay. While you can try bidding any amount, you will only slow down the auction or be ignored if you attempt a ridiculous bid.

Once the bidding is under way, the auctioneer will request incremental increases. These can be accepted with the wave of a hand, by holding up your bidders' number or with a verbal acknowledgment. If, however, you wish to offer an amount lesser than the raise the auctioneer is requesting, you may yell out such a price or make a hand gesture which indicates a half bid (usually done by holding out your hand flat with your palm facing the ground). Keep in mind that the auctioneer may or may not accept a bid less than the increment requested for several reasons. The bidding may be too active or the increment too small (i.e. a $10 raise on an automobile).

Don't be concerned if during active bidding the auctioneer does not see you; remember...it's the last bid that counts. As a matter of fact, you may want to wait until the bidding begins to slow before you get involved. However, don't wait too long or you may loose out. As you attend auctions, you will develop your own strategy. Perhaps you find that shouting out an aggressive bid intimidates your competition, or maybe you find it worth the risk to try and get your bid in 'just under the hammer.'

Q: What does it mean when the auction offers “choice” on items?

A: Occasionally, an auctioneer will offer 'choice' on several lots. This means that several lots will be offered at once -- for instance lot #s 110 through 115. When the auctioneer says sold, the high bidder will have the option to purchase one or more of the lots. The remaining lots may then be offered at the same price to others who participated in the bidding and then to the floor, or the auctioneer may choose to offer the remaining lots, requiring the successful bidder to take all.

When items are offered as choice, keep the following in mind. If you are interested in a single item or a small quantity, don't hold back hoping the balance is offered to the floor. Many times, dealers or retailers will win a choice bid and take the entire quantity. Choice bidding requires end-users to out bid dealers. Considering that dealers usually turn around and sell their purchases for as much as twice what they pay or more, you're by no means paying more than you should.

Q: What do I do if I am the high bidder for an item?

A: When the auctioneer says sold, be certain you hold up your bidder number so that the sale can be properly recorded. Listen to the auctioneer repeat the sale price and your bidder number to be sure it's correct. After you have been awarded the bid, you may be required to pay a deposit to the cashier. If you are done bidding, you may be able to pay and pickup immediately. Some auctions, however, will require items to be picked up during a checkout period which is typically announced before the auction

Once you are awarded a bid, by law you are obligated to the sale. It is very important that you are aware of this before you bid, as most auctioneers will not let you back out of a purchase. Even if you have not yet left a deposit, an auctioneer can still choose to take you to court over a reneged bid.

Q: If I am the successful bidder, when and how can I pick up the goods I have purchased?

A: You may have a limited time in which to pick-up your purchases. You may also be responsible for carting out your own purchases. While this doesn't apply to real estate, and may not apply to art, antiques and collectibles, this is common at any business closure type of sale. Know these terms before you bid as they may affect how much you're willing to pay, especially if you must hire someone to assist you. If bidding online, remember that the same pickup requirements will likely apply to you. This means making your own arrangements to have your purchases removed with several days of the auction.