Sunday, January 11, 2009

Economic news from Auctioneers

I spent the last 2 days at the Colorado Auctioneers Association annual convention in Denver. If you are not aware, I attended Auctioneer School last Sept with intentions of becoming an auctioneer for Charities and Benefits.....if you need an auctioneer, please call!.

The largest market for auctions in the country is real estate, and while this is not a business I am likely to get into, everyone else there seemed to be licking their chops at the idea that there is all this foreclosed real estate sitting around needing to be auctioned off. However, there were a few attendees there who already established in the business, and they point out one key problem: yes, there is more to sell, but no qualified buyers, and no financing for them. Particularly, banks who own foreclosed properties are not willing to provide financing when they are sold at auction. So, that means qualified buyers at auction need cash.....not an easy buyer to find.

Another interesting story I heard was from a gentlemen who runs an auction house in rural Colorado. He said he had an auction in August, just as things were starting to hit the fan in the financial world, that included precious metals, primarily gold and silver. At the time, silver was trading at $9 an ounce, and gold in the $700's. However, the metals he had to sell (all in raw form like bars or jewelry or otherwise added value) were selling at auction for far more than the than the world market price. Apparently, fear of a coming financial collapse had already set in.

Meanwhile, the talk was also that crowds were up at auctions for things like furniture and antiques, as everyone was looking for bargains, but dollar volume was down, as the crowds were not willing to spend. It's likely some people who attend auctions intend to re-sell what they buy for more money. That buyer is gone.

As a student of economics, if was interesting to listen to the stories these guys (and auctioneers are almost all guys, likely white ones in cowboy hats) told about what they were seeing in their businesses. There is no better indication of supply and demand in action than an auction. If you want to learn something about current market conditions, talk to a guy with an established auction business.

No comments: