What Goes On At A U.S. Treasury Auction?
We've covered a lot of government auctions on this site and I'd always been curious about attending one so I jumped at the chance to check out the action in person attending the U.S. Treasury Public Auction put on by Rick Levin & Associates and VSE Corporation at the VSE warehouse in Riverside, California on June 9. There are quite a few differences between this type of auction and an auction house event.All the action takes place in the room, there are no phone banks or online bidding. Registered bidders receive their numbers and stake out a place in metal folding chairs in a slice of the warehouse that has been walled off. There's no ambiance here, people are looking for one thing, a real bargain.
These auctions feature items that were seized by or forfeited to the U.S. Treasury and other agencies including U.S. Customs & Border Protection, Immigration & Customs Enforcement, Internal Revenue Service, and Secret Service. Proceeds from the auction are returned to these agencies through the Treasury Asset Forfeiture Fund to continue their enforcement efforts.
The type of merchandise available varies widely. Old computer towers, used appliances and furniture were mixed in with watches, jewelry and even a 1979 Cessna. Some items, which included stun guns and a huge quantity of ephedra, were designated export only. The export only items are offered with the condition that the buyer handles all the licensing and federal permits before exportation. Huge bulk lots were also up for bid. Shown above are boxes of clothing, a total of 19,000 units which sold for $15,700.
The pace was fast. With nearly 200 lots to dispose off and only around three hours to do it in, the auctioneer and the two men keeping track of the bidding moved at a rapid speed. There were very few breaks in the action. Most of the people in the audience appeared to be experienced at the art of buying and made their decisions to keep bidding or stop very quickly. The majority of the items bought are going to end up being resold and the savvy bidders had made their choices of what they wanted to buy and how much they wanted to pay before they entered the room. Inspection preview days were held a few days before the auction and only lot numbers and slides reminded the bidders of what it was they were bidding on.
Are these auctions a good deal? Yes and no. In most cases what you buy is only worth what you can sell it for later. Some of the older furniture or computer equipment seemed to go for more than it would fetch at a swap meet or elsewhere. But there were also some deals. For example, a Cartier La Dona 18K white gold watch set with 51 diamonds sold for $10,000. Similar watches sell online for about double that price. The lot shown above, a 1.09 carat diamond in a white gold and platinum setting sold for $3000. The same ring, with the same quality of stone, could sell online or in a store for close to $5,000. Platinum and gold coins also sold for below what they would fetch on the open market. If ever a place could give you Rolex fatigue it would be this auction. There were so many Rolexes up for bid it was hard to keep them straight. These too were mostly deals especially toward the end of the auction when the relentless pace was making the bidders a little weary. As with any auction doing as much research as possible in advance and not losing your head in the sudden excitement of the auction floor are the best ways to prevent paying too much.