Most auction experts say their business generates profits regardless of the state of the economy, but they admit that the current recession is encouraging more people to turn to auctions as a reprieve from their debts.
John Campen, managing partner of Campen Auctions, says these days many sellers who call are not looking to make money on a sale, they just want to earn enough to be made “whole.”
    But selling at auction can often be a blessing, say Campen and other auctioneers, as often an auction will generate a higher price than a standard sale—and produce a quicker deal.
“Through competitive bidding, we determine an item’s true market value—what the marketplace is willing to pay,” says Chris Longly, director of public affairs for the National Auctioneers Association. For example, a house sitting on the market for two years might have been worth $250,000 before the recession, but no one knows the true value today, insists Longly. If you take a risk and set a price, you could be so high that the house won’t sell or so low that you leave money on the table. An auction will establish a clear value.

A $268.5 Billion Business
Nationwide, the auction industry generated an estimated $268.5 billion in gross revenue last year. Automobile auctions alone are an $83.8 billion-a-year business, Longly says.
Typically, auctioneers earn their cut either as a flat fee (varying by auction company) or a commission on the sale.
In addition to running the auction, an auction house appraises items and advises on minimum prices, and helps sellers determine how to package their items to make them more enticing, O’Keefe says.
Generally there are two types of auctions: absolute and reserve price. For an absolute auction the item must go to the highest bidder. In a reserve auction, there’s a pre-set price that only the auctioneer and the owner know, and if the property does not meet that price, there is a no sale.
There are certain skills needed to run an auction house and be an auctioneer. The big misconception is that you need to talk fast—not true, Longly says. Rather, auctioneers are marketing and brand advertising gurus. An entrepreneurial spirit is what drives an auction. Auctioneers must create the event and bring in the buyers to sell the goods. To do this well, they need to have a strong understanding of technology; it isn’t enough just to place an advertisement in the newspaper anymore.
To become an auctioneer, you must go to school to take your state license exam O’Keefe says. You must learn how to call an auction, the different types of auctions and the laws, liabilities and accountability that govern auctions. 

 A Wide Variety of Deals
The types of goods being sold at auction vary from homes, cars and collectible art, to guns, household goods and jewelry. Also popular these days are storage unit auctions, Longly says. If renters become delinquent in payments, the storage unit companies are forced to clear out the spaces and sell the unclaimed items to recoup their losses.
Storage unit auctions are so active in Gainesville that to hold down costs, the 25 storage unit companies locally keep auctioneers on retainer and pay them for the day, rather than by commission, O’Keefe says.
For buyers, storage unit auctions are a crap-shoot, since the contents are sold to the highest bidder “as is” so winners never really know what they’re getting until the sale is complete and they start digging inside.
    While auctions are growing in popularity, the prices of items being sold are going down because so much merchandise is on the market, O’Keefe says.
Len Freeman agrees. He is vice president of the Florida Auctioneers Association and owner of Good Earth Realty & Auction Company. He says his company is handling fewer auctions in its area of specialty—farms, land, and commercial and residential real estate. “What we are seeing now is the trend of prices coming down as supply goes up,” he says.
    O’Keefe says she gets daily calls from people wanting to sell quickly—perhaps out of financial need to pay bills—but she cautions them that even with vehicles, it is difficult to predict the outcome. More and more savvy buyers are coming to auctions and keeping the prices low, she says, including bargain hunters and first-time buyers, Freeman adds.

Breaks for Businesses
    On the plus side for business owners, auctions create opportunities to find good values, Longly says. These days, buyers looking for bulldozers, backhoes and such may find bargains. Also, there may be good values in restaurant.
    “We sell the tables and chairs, silverware, stove, the deep freeze,” Longly says. “The buyers are entrepreneurs who prefer slightly-used cash registers for a business they want to start or an existing business looking to expand.”

Creativity Key to Profit
    O’Keefe says many auctioneers are looking at new ways of operating to yield the greatest profit. She uses the silent auction format for a client selling high-end artwork and unusual collector’s items. With a silent auction, the seller can have more control over the final price because the auctioned items start at a minimum price and increase in set increments. Also, O’Keefe says, people get excited about silent auctions because they don’t know who’s bidding against them.
“There are many different exciting ways to make money in this industry right now,” O’Keefe says.  “Auctioneers and estate sales people only need to figure out how they can stimulate the public interest in what they have to offer.”