The ins and outs of buying at auctions - advice - Managing Your Small Business: Purchasing - Brief Article

Nation's Business, Feb, 1996

An auction can be an excellent way to get great deals on business equipment provided the attendee is familiar with the auction's procedures and requirements. Ed Underwood, an auctioner with Crown Auctions, in Athens, Ga., which auctions real estate and general merchandise, offers these suggestions:

* Learn the terms of sale before you go. Many auction companies now accept only cash or a cashier's check. Some accept a business check only if it is accompanied by a bank letter of guarantee, especially if the buyer isn't known to the auction crew. If the terms of sale are not explained in the advertisements for the auction, call the auction company before you go.

* Check the ad for designated inspection times, when buyers can look in advance at the goods being sold.

* Before the sale of groups of items, listen carefully to explanations of certain terms. An example is choice," which means that when several identical items are being sold, the highest bidder can choose to take any or all of them at the same price for each. Many a bidder has lost out by waiting to bid on the last item, hoping for a lower price, only to see the first bidder take all of the items, Underwood says.

* Expect to pay sales tax on the goods you buy, unless you are a dealer. A small business's tax identification number does not exempt it from taxes, says Underwood.

* Be prepared to pay a buyer's premium - the auctioneer's commission added to the sale price. Typically, it is 10 percent of the sale amount according to Underwood.

* Ask how much time you have to pick up equipment you have purchased. It can be a problem for firms buying large items such as supermarket cases, which may require special transportation arrangements. Usually, goods must be removed soon after the auction, sometimes even the same day.

If you are looking for companies that specialize in auctioning certain types of goods, you can contact the National Auctioneers Association, m Overland Park, Kan. The organization sells a listing of its nearly 6,000 members for $5; it can be ordered by calling (913) 541-8084.

Cheek to see if the auction company is listed in the Yellow Pages, is willing to put you on its mailing list without any purchase requirement, and agrees without hesitation to provide all the information described above.

If the company operates m one of the 36 states that require licensing of auctioneers, call the state licensing board to verify the firm's license and ask if there are unresolved complaints against the company.