Want bargains? Go to the crappiest auction house you can find

If the recession has you jobless, overextended, or just plain broke, selling old stuff on eBay can be a fantastic way to raise quick cash.

If you're willing to take it a step further, developing expertise in a specialized area -- e.g. books, old video games, dolls, etc. -- can develop into a fantastic supplementary source of income that doesn't depend on the viability of your employer. All you have to do is figure out what sells on eBay, and buy it for less money at flea markets, thrift shops, yard sales, and auctions.

But in order to make money, you have to buy stuff cheap. With yard sale and flea market season coming to an end in many regions, that pretty much leaves auctions as the primary source of merchandise. But which auction? Here's my advice: the crappiest, least organized one you can find.

In his book "Picking Winners," legendary horse betting guru Andrew Beyer offers this advice to prospective gamblers: Don't bet at the Kentucky Derby. Why? There are too many skilled, knowledgeable, handicappers there for great inefficiencies in the odds to exist.

In order to succeed long-term in horse-racing, you have to bet not on the horses that are most likely to win but the horses that are the most "undervalued." That is, a horse priced at 20:1 who's chances of winning are really 10:1. Instead, Beyer suggests going to small, out of the way racetracks where mis-pricings are more likely to occur.

Similarly, the best auction house is likely to present too efficient of a marketplace. If 200 knowledgeable dealers are at the auction every week, what are the odds of you knowing something that they don't and scoring a great bargain?

In the past week, I've been to two country auctions -- with lots selling at anywhere from $5 to about $500, mostly in the sub-$100 range. One was at a well-lit auction house that advertises frequently and has a good Web presence. Everything that I wanted I got outbid on and there were no stones left unturned in terms of marketing: Everything was advertised as it was, and there were plenty of people there who knew what stuff was worth. This does not make for good deals.

Then I went to a smaller auction closer to my house, with boxes and boxes of stuff -- mostly absolute crap -- sold without a catalog. The auctioneer just walked around the room picking up lots and offering them.

During the preview, I sorted through an enormous lot of books -- more than seven large boxes -- containing mostly absolute garbage -- old paperback children's books. But toward the bottom of one of the stacks of boxes was a large amount of John F. Kennedy ephemera (books, magazines, and a really cool 8mm video reel) -- and a handful of buttons for his Presidential campaign.

I was able to buy all seven boxes for a total of $10 and, while I immediately threw out 90% of the lot, I'll still be able to clear a few hundred dollars. I also bought a nice lot of vintage records for $20 -- including a lot of Elvis and Hank Williams, along with a sealed copy of John Lennon's Imagine album.

Not an amazing haul, but a pretty good day at the auction -- and those bargains never would have been had at a well-lit auction where everything was meticulously cataloged and posted on the Internet for the convenience of hundreds of dealers.

So if you're looking for bargains -- for your home or for resale -- borrow a tip from Andrew Beyer, and head to a crappy auction house. Another way of thinking about: Find an auction that you would never trust to get top dollar for stuff you would want to sell -- and buy there.
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