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what is a 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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what is a liquidation auction?

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

  2. 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.

  3. Liquidation Auction Technically a liquidation auction sells a company’s 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.

  4. What’s 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 company’s 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.

  5. Can You Get a Good Deal at a Liquidation Auction? The term “liquidation” usually means “low price” in people’s 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.

  6. 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. It’s 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.

  7. 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.

  8. 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.

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