Government Auctions Grow Up

Caveat Emptor
Russ Fritz, a small-business man in Jacksonville, Fla., has had good luck buying from government auction sites. Fritz, president of Omega Enterprises, a vehicle remarketer, procures many of his vehicles from sites like these.

"You can get some great deals if you know what you're doing," he says. "I bought a lot of 2,000 ammunition cans for 15 cents per can and sold them for $4 per can. So for a $300 investment, plus time and shipping, I made $8,000." He was able to salvage another recent purchase, a truck with a blown motor he bought for $104, by installing another engine. "It ran fine, and I got a deal," he says.

Fritz is site-agnostic, preferring instead to follow the deals. In addition to visiting GovernmentAuctions.org, he has purchased equipment from sites like E.surplus.com, and PoliceAuctions.com, handled by Vortal Group Inc.

Although government auction sites can yield good deals, it helps to have had experience in the auction world, says Mike Bagherian, president of Tazz Construction Inc., a small business in Rockville, Md.

"You have to be somewhat of a gambler, and you have to be liquid," he says. "There are times when I sweat it a little."

But Bagherian says nerves of steel can pay off. Not only has he bought tools for his business at 70% less than he would have paid at a local hardware store, but he has even ventured out to buy items for himself. He procured his latest purchase, a late-model Mercedes with about 7,000 miles, for about 40% less than he would have paid at a dealership.

There are even times, he says, when the unexpected can occur. A recent purchase of 80 acres in Mexico yielded a call from behemoth Conoco Oil, requesting permission to drill for oil on the property. The company offered Bagherian a paltry $5,000, a price he turned down, at least for now.

In many cases, experience with the auction process can really pay off. Bagherian recently was tempted to buy a property in Jackson City, Miss., with a new warehouse for less than $100,000--a great deal, on the surface. "But I started calling around, and I found unpaid back taxes and toxic soil in the area. I also found that four other people had looked at the property and rejected it," he says. In the end, Bagherian took a pass, but checked back with the site and learned that someone had purchased it soon afterward.