What is an auction?
Auctions are the way in which houses, cars, boats, and other items are sold. The process can be confusing to people who don’t do it often, but there are ways that you can understand the process better, which in turn will help you to make money from auctions.
First of all an auction is a fast paced competitive process. This means that whoever bids the most wins the item up for bidding. This is because there are no set prices for items at any given auction so everyone starts out with an equal opportunity to get what they want.
There are several types of auctions that you might see while shopping or browsing around different websites or stores including live auctions, silent auctions, Dutch auctions and blind auctions.
Types of auction
The typical auction where there is an auctioneer, possibly a reserve price on the item, and bidding continues in real time until there are no more increased bids. These can be held electronically or in person.
Silent or blind auctions
These types of auctions present the goods, and they have a set finish time. Anyone wishing to make a bid places it in a sealed envelope and they are all opened after the auction has finished. The winner is then whoever has put in the highest bid. The big risk of this type of auction is overpaying to ensure you get the item(s) that you want.
Dutch auctions are designed for people who have multiples of the same item to sell.
Fans of the popular TV show Storage Wars will already be familiar with this kind of auction. In short, the contents of storage lockers which the owners have stopped paying rent on are sold in an auction. In the show, the prospective buyers are shown the contents of the locker or unit from the door. They are not allowed in or to touch the items. If the unit is small, you may be able to see all the items from the door, but if the larger, or the items are stored in other things such as boxes or furniture, this type of auction is a massive gamble. The more you buy and sell the contents of these units, the more familiar you will get as to what to look for piles of stuff shoved in black bags is less likely to have a valuable amongst it, whereas items which have been well packaged and stored nicely are more likely to have that expensive item hidden away.
Websites such as I Bid on Storage has brought storage auctions to the UK audience, and now you can even bid on these auctions online!
How to make money from auctions
My post on charity shop and car boot sale flipping is one of my most popular, and so I decided it was time to look at another reselling opportunity which is quite often overlooked. TV shows such as Bargain Hunt have opened up the world of auctions to the general public and as it shows in the programme, auctions can be a great way to make (and lose) money.
For those of you not familiar with the show, two teams of two people are given some money to go to a car boot sale and buy some items which will then be sold at auction. The team who makes the biggest profit (or has the smallest loss) is the winner. They are teamed up with an “expert” but it is still very much pot luck as to who is there at the auction house on the day.
Whether you want to buy items from a car boot sale, charity shop or even an auction itself, and sell it for profit at another auction, there really are plenty of ways to make money from these exciting sales. The first auction I went to was one in London at Sotheby’s and they were selling major pieces of art works that were going for millions of pounds (I wasn’t there to buy, don’t worry, just there to experience an auction). You don’t need to go to big, well known auction houses like Sotheby’s and Christie’s, a quick search online will show local auction houses and companies who run auctions at local venues.
You can of course hit car boot sales, antiques fairs and and anywhere else where people are selling items, but the key really is research!
In the furniture and fashion niche, upcycling is a popular way of improving items that you have purchased, to sell on at a higher price. This can be a great way to make maximum profits. You need to consider the time and money that you will spend on upcycling your items though, and factor this in your calculations. Unless you are working on very high ticket items, it is unlikely that upcycling for resale will make you a lot of money long term. If you are doing it as a hobby, and you enjoy the work you are putting in, then it is great as a side hustle.
What you need to know before you attend your first auction
What are you going to be buying and selling?
Before you attend your first auction, you need to do your research. As mentioned earlier, in Bargain Hunt, the competitors show how easy it is to make a loss. Before starting your reselling career you need to do your research. You need to decide what kind of items you want to buy to sell at a profit, and understand the demand and specifics. It will be easy to lose money buying items that you think will sell without knowing this information.
Buying via online auction sites such as eBay means you can make your purchases from home, allowing you more time to do your research and investigations on the individual items, however the competition for these items is much higher as the items are available to a much wider audience, which can also in turn lead to higher prices.
Whether buying from an in person, physical auction house, or an online one like eBay, you need to consider the auction fees for both buying and selling. As well as sellers fees, some auction houses charge a buyer’s premium too, so make sure you are clear on these fees and charges before entering the auction, as these can cause a big dent in your profit.
I am regularly asked how to sell on eBay. I actually used to really hate selling on eBay. When you take into consideration the commission they charge, plus the PayPal fees, and the effort involved in the photographing, listing and postage of the items , I just could never be bothered. Last summer I spent half of a Sunday doing a car boot sale, and that’s not including the time it took to sort out all my stuff, and get it loaded in the car. You also have to pay to get in to a car boot sale and when you compare the fees, you will see that it is pretty comparable (unless you are selling really expensive things at a car boot sale). You also get to do it from the comfort of your own home. I’ve also found a better way to manage my postage.
You can have a certain amount of listings for free on eBay per month (placing the listings are free, but you will be charged a fee if the item is sold) so you can list them at no risk. This is a great way to test the water and see if your items will sell knowing that it won’t cost you anything if it doesn’t sell.
How will you be selling your items?
Depending on how you will be selling your items, you may need to consider other costs. Auction houses and eBay charge a commission as well as other fees, whereas selling items in person via Facebook marketplace, Shpock or similar face to face methods, there will be no cost to sell them. If you are selling remotely, as well as fees, you need to consider postage and packing costs. If you are selling items face to face, remember to follow safety guidelines, making sure someone else knows where you are and who you are meeting.
Selling on eBay
A lot of people who buy to sell prefer to sell on via eBay. You do have to pay fees, but your items are shown to a much wider audience. With the introduction of the Global Shopping Programme (where you ship to a UK location and the buyer pays for them to forward it on) you really are not limited by geography when reaching your buyers.
Here’s my top tips for selling on eBay:
- Photograph the item thoroughly and use as many of the free pictures as you can.
- Describe everything as accurately as possible. Outline (and picture if possible) any faults or issues that a buyer might have with an item. This will prevent any issues arising after a sale.
- Weigh the item before you sell it. There’s nothing more annoying than making a loss on an item because you have got the postage wrong. I now dispatch my items with MyHermes as it is so much easier to work out the cost. You can add insurance for an extra pound and you can drop your items off to loads of small corner shops, meaning the days of trying to get to the post office on your lunch break are over. Just make sure you check for their product restrictions on what you cannot send.
- Start your listing on a Thursday evening to last for 10 days and to end on a Sunday evening. Research has apparently proved that this is the best time to end an eBay auction.
- Start your auction at a price you would be happy to receive for the item. The way I see it, if I start it at 99p, and that’s what I get for it, that’s still 99p more than I had before! Obviously if your item is rare or valuable, price it sensibly. It is more likely to receive extra bids if that is the case but again, start at a price you would be happy with just in case you get that last minute one bid at the starting price.
- Buy It Now or Best Offer are becoming more and more popular methods – mainly down to the fact that our generation are used to getting things quickly, so waiting up to 10 days for an auction to end, before the item is even dispatched is putting people off.
- I always try to dispatch items within 24 hours of payment being received, but my listings say 48 hours to give me that extra time. If that is too short a time for you – be sure that is made clear in the listing. If there are any delays or issues, keep communication open with your buyer. Once it is dispatched, you can select the option to mark as dispatched. Your buyer will then know it is on the way. This should prevent you being chased.
- Leave it a few days and then leave the buyer feedback. You cannot as a seller leave a buyer poor feedback which I always find annoying. If there is an issue or a problem, then go through the eBay resolution centre. It still won’t affect their feedback but it least it will be logged against their account.
- When you buy things online (from eBay or anywhere else) keep the packaging if at all possible. Padded envelopes and boxes can always be reused. It can also save you a lot of money. If you do need to buy packaging materials, shop around. Buying last minute from the post office can cost a fortune. If you can, bulk buy and store the materials. Poundland does sell padded envelopes etc, but you can get them for a much cheaper price if you bulk buy from a stationery store or online packaging supplier. This only works if you have somewhere to store the stuff – but it doesn’t really take up that much space.
Auctions are a way to get old items from people who have no use for them just by paying a small fee. The price is usually much less than what you would find in the store.
The conclusion is that auctions can be a great way to make money, but it takes time and patience to learn the ropes before you can start profiting.
The goal of this guide has been to provide an overview of auctions, how they work, and how you can make money from them. Let us know in the comments below if you found anything particularly helpful, or if you think we have missed something out!