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Why not try auctions as a good source for acquiring used guns?

Why Not Try Auctions As A Good Source For Acquiring Used Guns?

Once a firearms dealer has made used guns a significant part of this business, there is an on going requirement to find such guns to add to the business' stock. One of the best sources for acquiring used guns for resale are auctions. In some cases auctions are also a good source for bargain priced new guns, ammunition, and accessories as well.

Firearms auctions can come in a wide variety from simple farm or estate auctions, where firearms make up a small part of the auction, to large, nationally advertised firearms auctions run by big name auction houses. Both can be excellent sources.

Some antique auction houses that deal primarily in furniture also have firearms as a small part of their business. State and local police in many areas conduct periodic auctions to dispose of firearms that they have confiscated, seized, or otherwise acquired. Similarly, state fish and wildlife departments sometimes have auctions consisting of guns that they have confiscated from poachers and game law violators. There are also "going out of business" auctions for gun shops, sporting goods stores, and hardwares stores that can have guns as all or part of the items to be auctioned off.

There are various auction houses that specialize in firearms and related items as well as auction houses that conduct infrequent firearms auctions as a part of their total business. Even the U.S. Post Office conducts periodic firearm auctions at the regional level to dispose of guns they have accumulated from confiscations, inability to deliver, or from being lost or damaged in transit and then having been paid off with insurance payments. All of these and more offer auctions that can be an excellent source of used guns for the dealer.

About Bidding

Most auctions will be the type where you participate actively in the bidding. The auctioneer will quickly identify the individuals that are interested in the item and will go back and forth between them, raising the bid in increments until only one person is left with the winning bid. Sometimes, as is usually the case with the postal auction, bidding will be done by mail, using a "sealed bid". In a sealed bid auction you have to figure the selling price you could expect from the items in the lot you are bidding on and work backwards, to figure out the price you are willing to pay. This bid is submitted in writing. At a specified time all bids are opened and examined with the highest bid for each lot winning.

About The Auctions

Each type of auction has its own peculiarities that a smart dealer can take advantage of. For example, estate, farm, or antique auctions that have some guns as a small part of the total auction will not usually draw in dealers from any distance. It is often possible to make prior arrangement with the auctioneer to establish a time in the auctions when the guns will go up for bid. This can save you wasting a whole day to bid on just five or ten guns. Without the competition form other dealers, it is often possible to get the guns quite reasonably.

At large auctions of expensive collectible firearms what can often happen is that the cheaper, more common guns will be largely overlooked while the rarer ones draw all the attention. This can also happen if the auction has a primary theme such as Winchester lever actions or Colt Single Action revolvers. Then the guns that do not coincide with that theme will often go overlooked by the collectors, who are there for that particular specialty. In both cases the dealer can often snap up the overlooked guns at a good price.

Postal Auctions

Because the postal auctions will have a high percentage of guns that are damaged, these firearms can be particularly good money makers for gunsmiths, dealers that have a gunsmith on their staff, or dealers who have a close working relationship with a gunsmith.

On one such regional Post Office auction a gunsmith friend and I combined forces. We both inspected the lot of guns, ammunition, and accessories and made up separate evaluations. We then combined our analysis and compared notes to arrive at our bid. It turned out that we had the winning bid.

We then combined forces again. My gunsmith friend repaired and refinished the broken guns while I sold the guns and other accessories. We made sure to share our expenses and time as equally as possible. When the dust had settled, we made a nice 66 percent profit on our purchases. Neither my gunsmith friend nor myself could have been as successful without the other's knowledge and skills.

"Going Out Of Business"


The "going out of business" auctions for sporting goods, gun shops, etcetera, each have their own peculiarities. It is my observation that expensive guns often go for a fraction of their market value at such auctions. Consequently, they often constitute the best buys and the best potential profits. Less expensive guns, on the other hand, often go for a price too close to full retail to be good buys. At one auction I attended, I remember watching a Ruger Standard Model .22 pistol be bid up over full, new retail in the excitement of the bidding.

Another thing I have noticed at such auctions is that new in-the-box guns also often sell for well under normal dealer's prices. Also, new ammunition and accessories invariably sell for a fraction of normal dealer's prices. Consequently, these items can all constitute excellent buys and profit makers. And, because these new guns, ammunition, and/or accessories have never been sold in a retail sale, they can and should be sold as new, unless, of course, they have any noticeable "handling" damages to them.

Some Rules To Follow

There are a number of rules you should follow if you plan to attend auctions.

* First, most auctions publish a catalog or a list. By all means buy one. It is an absolute necessity for identifying the guns you might want to get for your business, taking notes on condition and your highest planned bid, and for following the progress of the auction.

* Almost all auctions have an inspection period. It is imperative that you take advantage of it. When a firearm is being held up by the auctioneer you might not be able to tell that the stock is cracked, the bore is pitted, and the metal refinished. It is far better to look the gun over in advance than to make a mistake later.

One of the things you can do to help the inspection and evaluation process is to take a kit of items along that includes such items as a bore light, a cleaning rod, some patches, and some cleaning solvent. Also, it is important that you bring along price guides and reference materials that can help identify and price the guns in the auction.

* After the guns have been inspected, establish the price you would be willing to pay for each before the bidding begins. Basically, this would be the price you would be willing to pay for the gun if it came into your shop.

The easiest way to identify this is to establish the expected retail price and subtract out the desired profit margin. Once you establish this price, do not exceed it by more than part of a bidding increment. For example, if your maximum price is $175 and the bid is at $160, with bidding increments of $20, you may want to bid $180. However, once the bid is at or higher than your maximum--drop out of the bidding. It is all too easy to get caught up in the excitement of the bidding, going higher than you should have. Establish your maximum price and stick with it. It is also important to realize that you may be bidding against a collector who is willing to pay up to full retail price. He doesn't have to make a profit--you do!

* It is extremely important to find out in advance the buyer's terms and acceptable means of payment. At some auctions, whatever your final bid was is what you actually pay. At others, there is a buyer's premium. This is a fee, usually around 10 percent, that is added to the bid price as part of the auctioneer's fee. If the auction has a buyer's premium, it is important that you adjust your maximum price down to compensate for it, or it will come out of your profit margin when you go to resell the piece.

* Some auctions are strictly a cash-and-carry operation, while others take credit cards. Some will accept local checks, others will require a "line of credit" letter from a bank before they will accept a check. I have attended auctions where a 10 percent cash deposit would hold an item until full payment could be made. Regardless, you must know in advance of the auction the requirements for payment or you may find yourself unable to buy anything.

* I am aware of some auctions, particularly police auctions, that only allow sales of firearms to state residents. If you attend such an auction in a state other than your own, you will have to arrange for a local resident or dealer to operate as your agent.

* If you get to an auction and find that you have friends in attendance, it is best to compare notes--especially on guns that both parties are interested in. Discuss and establish who is willing to bid higher. Then, let that person bid on the piece without competition from the other. Many times friends can save each other a lot of money in this way.

* Some auctions have what is known as a "reserve bid". What this means is that if the bidding does not reach a certain level then the piece is not sold. As a rule, I would avoid auctions that have many items with reserve bids.

* Often auctions will have bidders register for a bidding number. This enables the auctioneer to keep an account of the items you have won the bid on, so that you can pay all at once, at the end of the auction. Others will require payment after each bid is won. It is hard to generalize since each auction is different. Some make it easy for the buyer and others make it awkward.

If you have never attended a firearms auction you are missing a lot of fun and a grand opportunity to buy guns and other items for your business. Auctions can be located through advertisements in national firearms trade papers and journals, advertisements in local papers, and by contacting auctioneers, police agencies, and the other agencies that I have mentioned who auction off firearms.

I predict that once you have attended an auction or two, you will make auctions a regular part of the way you acquire used guns for your business. Properly employed auctions can be an important factor in increasing your volume of used gun business and profits.

PHOTO ; Inspection period at a major firearms auction. It is imperative that you check out the guns that interest you or you may end up with something you wished you had not bid on.
COPYRIGHT 1989 Publishers' Development Corporation
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Copyright 1989 Gale, Cengage Learning. All rights reserved.

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Author:Karwan, Chuck
Publication:Shooting Industry
Article Type:column
Date:Feb 1, 1989
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