Debunking 4 Common Myths About Liquidation Auctions
Liquidation auctions are a great way to buy and sell various items in an easy, efficient, and cost-effective manner. Whether you’re looking to liquidate your unused stock or used inventory, auctions are a great way to recover your loss margins.
Our team of professional liquidators at Michaels Global Trading have been handling auctions in Toronto for many years, and we’ve found that many businesses have misconceptions about what actually happens at an auction, or even what they can do for you. However, there is more to buying and selling than meets the eye. Here, we try to dispel the 4 common myths about liquidation so that you can use them to your advantage in the future.
Myth #1: Items at Auctions are Either Scrap or Too Expensive
One of the biggest myths surrounding liquidation auctions is that they offer scrap items that have no value or that they are really high-cost luxury products that most businesses do not require. This is far from the truth as auctions sell all sorts of things! Professional liquidators in Toronto will carefully appraise all the items to determine their true value, and products that are not fully functional will never be sold. Reputable auctioneers will uphold their reputation by ensuring the items up for bid have been thoroughly inspected, cleaned if needed, and are ready for use by the buyer. Some liquidators will also hold scrap auctions, but unless it is explicitly demarcated as a “scrap auction”, you will never find scrap parts or items at an auction.
This is similar for items that have too high of a cost. Liquidators will generally try to include a wide range of prices so that the items have the fastest sale time. In Toronto, there are auctions for everything ranging from heavy machinery to excess inventory clothes and flatware. Therefore, there is no reason for an auction to cater to only high-end items on a regular basis.
Myth #2: It’s Better to Sell Your Items for Scrap
Commercial auctions are a win-win for both the buyer and the seller. Excess inventory and items that are not needed for various reasons are able to be sold in a way they couldn’t in a regular market, thus making the seller some quick cash. You also get a better rate than if you were trying to sell your assets for scrap. For the buyer, they have access to industry-standard items at a discounted rate, with the possibility of bulk buys as well. Therefore, you get a much better rate at a commercial liquidation auction than if you were selling your assets as bulk scrap.
Myth #3: Auctions are Too Much Effort
Whether you’re a buyer or a seller, selling items at an auction is definitely not a waste of time. Consider the effort it takes to prepare your products for sale or auction. There is inventory to be sorted through, descriptions to be written, and pricing strategy to be developed, not to mention the cost of transporting the goods to the auction site and renting out a warehouse space to hold the auction. It is overall a time-consuming process that can be frustrating and difficult to manage, in addition to the everyday demands of running a business.
Working with professional liquidators, on the other hand, can be a great way to minimize the difficulties, as they will take care of all the back-end demands for you. At Michaels Global Trading, we ensure that you get fair offers on your business assets, with great communication to help you with your liquidation needs. Working with liquidators allows you to participate in auctions and get the great returns that liquidation provides, but without the headache.
Myth #4: The Highest Price Offered is the Amount I Get
Although a typical auction model follows the highest bidder strategy, as a seller, you have a couple options as to what type of auction you want your liquidator to conduct. These different options allow you to explore different pricing options, and are as follows:
- Absolute auction. This is the most common kind of auction held in Toronto, and it happens with no minimum reserve or starting price. The final bidding price on the day of the auction is the final price at which the asset will sell. Absolute auctions attract a lot of buyers, especially if your liquidator has great industry connections, which brings in a higher price on auction day.
- Minimum bid auction. This type of auction allows you to decide the minimum price at which you want to sell a particular asset. Your liquidator will guide you on a good minimum to set, as it requires industry experience and research to decide the best price. After this, bids can come in only higher than the minimum price you set.
- Reserve price auction. As a seller, you’re able to set a reserve price before starting an auction. This allows businesses to accept or reject any or all offers made at the auction. Setting a reserve price is dependent on many factors, such as the status of the market and temperament of interested bidders, and is the best way to receive maximum value from the sale. It is best done in consultation with your liquidator, as they will know your market trends, thus allowing you to meet your objectives for the auction.
So, if you own used equipment, excess inventory, or are a business looking to make fast profits on stock that you no longer need, then auctions are a great option for you. Contrary to the myths about liquidation, they can save you a lot of hard work, effort, and time, especially if you work with reputable professional liquidators. Reach out to us any time for a quick consultation or to help organize an auction. To book an appointment, call Michaels Global Trading today at 888-471-5066 or contact us here.