Has Uncle Sam got a deal for you - buying office furniture and equipment at government auctions

Nation's Business, June, 1993 by George Chelekis

Looking for great deals on office equipment and furnishings? You can find them at the federal government's auctions of billions of dollars in assets seized from failed financial institutions.

One example: A stockbroker recently paid only $5,000 for almost four truck-loads of office furniture. His booty included enough conference tables, credenzas, chairs, and desks to equip a 40-person office.

The Resolution Trust Corp. (RTC) is the federal agency charged with disposing of some $35 billion in seized real-estate and loan portfolios from failed savings and loans. The RTC is also trying to get rid of $10 billion in "personal property," ranging from office furniture and computers to art collections and Arabian show horses.

To handle its personal-property inventory, the RTC has created a separate furniture, fixtures, and equipment (FF&E) division, which holds auctions around the country. Business owners who frequent these auctions pay only a fraction of retail cost for used office furniture and equipment.

A Minnesota wholesaler found $700 office chairs selling for only $20 each, roughly three cents on the dollar. Less than two weeks after making his purchase, that broker resold the chairs for five times as much as he paid for them.

The auctioned furniture and equipment can even be brand-new, as in the case of a June 1992 auction of a Southeast Bank branch in Miami. Nearly all the merchandise was still in the original boxes because the bank was seized by federal regulators a few days before the branch was scheduled to open.

"But deals like those don't just fall into your lap," says Kurt Kiefer, a Fergus Falls, Minn.-based private auctioneer who has contracted with the RTC to sell a large part of its holdings that are not real estate. "You've got to go out and find them."

Kiefer advises prospective auction-goers to check the local newspaper's classified ad section for auction announcements. Another way buyers can get FF&E auction dates is by calling the asset-sales hotline at 1-800-782-3006.

Also, call RTC's national headquarters at 1-800-348-1484 and ask for the sales center nearest you. Upon request, the sales center will add your name to its mailing list. Private auctioneers are legally bound by government contract to send an auction announcement to anyone who inquires about RTC auctions.

When you attend your first FF&E auction, expect a flurry of activity. Merchandise can sell at a pace of 80 lots per hour (a lot can range in size from one item on up), and total sales average $150,000 per auction.

Success at an FF&E auction depends on how well prepared you are. Dealing with an auction's swiftness, adjusting your hearing so you can comprehend the words and numbers flying out of an auctioneer's mouth, knowing whether or not you are finding a great deal--these are challenges that first-timers must meet.

You can win more than half the auction battle by intelligently using the auction preview, an inspection period a few days or weeks before an auction takes place. "Novices don't realize there's an inspection period," Kiefer says. "And even when they hear about [it], they either don't attend or don't use that preview time wisely," by focusing on the merchandise they really want.

Don't think attending a preview will be like shopping at an office warehouse--there will be no price tags on the goods. You'll have to decide yourself how high you're willing to go against competing bidders.

Kiefer recommends that serious buyers bring a Polaroid camera to the preview and take pictures of what interests them. "Jot down notes on the back of the photo describing the inventory you're interested in buying," he suggests. "Then go out and comparison shop; call a few dealers and wholesalers and find out the going used market rate of what you want to buy." If a used lateral file cabinet retails for $300 but dealers wouldn't pay more than $75 for it, "set your bid at the wholesale rate and try to buy it for less," he says.

To get started at FF&E auctions, a business owner might bid only on an inexpensive lot, such as a large box of desk accessories. Even so small a purchase can make a trip to the auction worthwile. "You'd be surprised how many people will pay $14.95 for a stapler at a stationery store," says Kiefer--the same stapler that might sell for as little as 25 cents in a boxed lot at an auction.

At future auctions, you can build up to larger purchases--perhaps enough to furnish your entire office. You may even graduate to wholesaling to others for profit.