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.
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.