Computer auctions can be a great way to save money in the long run. However, it’s buyer beware out there. It can be hard to ensure that you’re getting what you’re paying for:
Terrell, the director of corporate facilities at Maxtor Corp. (San Jose, Calif.), is a professional buyer. In the past three and a half years, he’s bought $3.5 million worth of equipment and furniture for about $1 million.
While Terrell may be a more astute buyer than most, he is not alone in scavenging auctions for bargains. In late March Richard Perla went to an auction in Dedham, Mass., looking for a computer for his business, Eastport Sea Products, a wholesale seafood company in Eliot, Maine. “We looked at IBMs and Compaqs, but with software they ran $6,000 to $8,000,” says Perla, whose company processes 20 to 30 invoices daily and pulls in $500,000 annually. Perla went to the auction with $1,000 in his pocket, enough for a deposit on a $4,000 computer. He went home with a computer he purchased for $895, hoping there was nothing wrong with it.
Auctions can bring bargains, but PC prices at auction often equal or exceed discount computer store prices. Part of it is the auctioneer pumping up the buyers’ adrenaline; another part, the frenzied crowd. “Anything can be sold,” said Kirk Dove, president of Ross-Dove Co. (San Mateo, Calif.), which held the Dedham sale. “People are initially surprised that there is competitive bidding. They find out that auctions really aren’t fire sales. With certain brand names, we can hit the same prices as the discount houses.”
On behalf of ITT Commercial Finance Corp., Ross-Dove was selling $3 million worth of goods that had belonged to a chain of Boston-area ComputerLand franchises. ITT had financed the stores’ inventory and was a secured creditor, which entitled it to reclaim the goods when the stores couldn’t sell them. The 50-year-old auctioneering firm took a 10% commission on the approximately $1 million it pulled in for ITT’s inventory. Some 1,600 people packed the auction.
The auctioneering company (which is owned and run by Kirk, his brother Ross, who serves as chairman, and his father Millard) only recently got into selling high-tech goods. Until 1984 it sold real estate and restaurants. But in 1984 Ross read about now-bankrupt Osborne Computer Corp. in the local newspaper and approached the firm to sell its furniture. Ross-Dove also ended up selling Osborne’s computers in a series of 12 successful auctions.
But the company earned its fame as a high-tech auctioneer after it sold off Convergent Technologies’ WorkSlate division. That was the first auction Ross-Dove held for a solvent high-tech company and the first in which Ross-Dove could use the client’s name to attract buyers. A torrent of clients followed, including
Apple Computer, Businessland, General Electric Co., Hewlett-Packard Co., and Xerox Corp., all wanting to unload outdated or excess inventory.
Ross-Dove auctions off any and all items that a company wants to unload, which may include typewriters, computer chips, boards, PCs, mainframes, and capital equipment–even a Mercedes or Rolls Royce now and then. Much of the equipment is a year or two old, some new, some used, some demo models, some just plain broken. Ross Dove says that 50% of auctioned equipment is brand-new, factory-sealed, and comes with a warranty.
But before being blinded by big savings, potential buyers must realize that the operative words at an auction are buyer beware. Goods are sold as is, with no warranties, unless they are factory-sealed. “We don’t want to stand behind our goods. We’re a little company that sells about 1,000 items at weekly auctions,” says Ross Dove.
Maxtor’s Terrell cautions buyers to watch out when bids reach 90% of retail because there’s no guarantee that the products work. He explains that unsophisticated buyers sometimes get caught up in the emotion of an auction and try to win at any cost, even paying more than retail price for an item.
The old saw “You get what you pay for” doesn’t really apply at auctions. Sometimes you get a lot more, sometimes a lot less.
Valigra, Lori. “Computer auctions offer bargains: but buyers beware – many items are not guaranteed to work.” Lotus 4.3 (1988): 14+.