What is a Liquidation Auction?

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What is a Liquidation Auction?by Deb
Weidenhamer,President CEO
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Liquidation Auction

• Although used interchangeably with other types
  of auctions, a liquidation auction technically
  refers to a company selling its assets.
• These assets could be unsold inventory,
  office furniture, or anything else of value the
  company owns. The auction may be a voluntary
  event by a business, or involuntarily conducted
  as a result of bankruptcy or legal judgment.
• As with all types of auctions, bidders
  have the opportunity to snap-up quality items at
  deep discounts.

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Liquidation Auction

• Technically a liquidation auction sells a
  companys goods to raise funds for creditors.
  However, sometimes various types of auctions are
  called the same thing.
• For example, some people may use the term
  liquidation to refer to a surplus or government
  auction. This blanket term is often applied to a
  variety of auctions and used to mean everything
  must go.
•  
• This discussion will focus on the
  liquidation auction as one of the steps in
  closing a business. Typically managed by an
  outside auction house, these auctions may be
  voluntary or forced as a result of bankruptcy or
  legal judgment.

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Whats Sold at a Liquidation Auction?

• Generally, anything the company owns of
  value will be sold at a liquidation auction.
• Auction items include unsold inventory,
  the companys office furniture, supplies and any
  other assets the company owns.
• High value items like artwork or antiques
  might be auctioned separately. Auction proceeds
  first go to creditors. Any left-over funds get
  distributed to shareholders.

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Can You Get a Good Deal at a Liquidation Auction?

• The term liquidation usually means low price
  in peoples minds. As with all types of
  auctions, buyers can get really good deals on all
  types of products, from electronics and household
  items to big-ticket items and rare antiques. Many
  auctions provide an inspection period so bidders
  can determine good buys. However, all items are
  sold as-is with no returns allowed.
•  
• Many people view liquidation auctions as a
  business opportunity. By purchasing items at low
  prices, bidders can resell these items for a
  profit. The growth of sites like eBay and other
  online marketplaces confirm an upward trend for
  these activities.
•  
• A nice thing about auctions is the control
  attendees have in terms of item prices.
  Everything is negotiable in an auction from start
  to finish. Since bidders determine the price of
  an item, good deals are quite common.

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What are the risks?

• Items are sold as-is, cannot be returned and the
  auction service assumes no liability for any
  product problems. So, people must bid carefully
  and make sure to carefully inspect items if
  possible.
•  
• In addition, purchases must be paid when
  the bidding closes using cash or credit cards.
  Its important to learn the auction service
  requirements prior to attending. Some auctions
  may require a hold on a credit card or some other
  form of upfront payment. These practices
  encourage serious bidders.
•  
• Although good deals abound, bidders must
  be careful not to get caught up in prices being
  driven up artificially. If a company of public
  interest goes bankrupt, bidders may view the
  merchandise as souvenirs and they may sell for
  more than they are actually worth.

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How Do You Find Out About Liquidation Auctions?

• Because most of these sales are of public record
  and require notice, auction houses advertise them
  in prominent local newspapers.
• Interested bidders can also visit the web
  sites of auction houses and get on their mailing
  lists. The auction services will keep you
  informed of upcoming auctions and provide
  information on items coming up for sale.
• In addition, auction services may give
  advance notice to their customers regarding
  preview events for inspecting auction items prior
  to bidding.

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About the Author

• Deb Weidenhamer is President of Auctions Systems
  Auctioneers Appraisers, Inc., based in Phoenix,
  Arizona. They specialize in auctions and
  professional appraisals. Visit us at
  http//www.auctionANDappraise.com or call
  800-801-8880 for more information about
  liquidation auctions.