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Auction Value Vs. Market Value (And Why They Matter)

Wednesday, September 30th, 2015
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When you’re buying or selling items at auction, you are most likely focused on values and prices. If you’re auctioning an item, you want to make a profit, and if you’re bidding on an item, you want to know you’re getting a great deal.

You can know how to confidently buy or sell at auction by knowing the difference between auction value and market value. It is also beneficial to understand what dictates market values and auction values.

Differences between auction value and market value

What is the real difference between an item’s market and auction value? The market value of something simply refers to the price the item is selling for right now in the current financial market. So, if you purchase a tractor from a well-known tractor supply store, the price you would pay would be the market value. However, items will rarely sell for market prices at an auction.

Most items sell at around auction value prices, which is the price the item is being auctioned for. Typically, this amount is higher than the market price, which means that the seller will make a profit. The buyer likely gets a pretty fair deal on an item valued at a slightly higher market price by purchasing it at auction. For both parties to get a good deal, the bidder must purchase items when the market value is high. The seller must offer items at a high auction value in order to get a good deal.

Understanding market value

Traditionally, the market value price of an item is dictated by the laws of supply and demand. If the public shows a high demand for an item, it is valued at a higher market price. This can create a higher auction value. If an item is rare or hard to find, buyers are willing to pay more for it in the open market and at auction. These factors should be considered carefully by both buyers and sellers. Be sure to do some research about specific item markets and remember that some items will have more emotional or historical value than market or auction value.

Understanding auction value

Despite what many believe, the auction value of an item isn’t necessarily representative of what the item is worth. Sometimes specific items bring millions of dollars at auction, but this may not represent the true market value of the item. The excitement of auctions often stimulates bidders to spend more money in the spirit of winning.

Some sellers may also raise the auction price of an item higher than it should be in order to make a profit. As a buyer, you should research any items you wish to purchase before you go to auction. Knowing how much items should really sell for can help you make a wise buying decision, without getting caught up in the excitement of bidding.

Research specific item markets before buying or selling at an auction

As a buyer or a seller, you should conduct research before you go to auction. This is the only way you can ensure you are getting or selling an item for the right price.

  • What is the market like right now for the item you are buying or selling?
  • What is the average price of similar items?
  • Are there any emotional or historical factors that may affect the market value of your item?
  • How much have similar items sold for at previous auctions?
  • Consider how the market may fluctuate in the future and if now is the right time to sell or buy. An item may not be worth as much money now as in the future.

Remembering these tips can help you determine if an item is being auctioned at a fair price or not. It can also give you leverage in negotiating a better deal. Researching specific item markets before participating in an auction can save you from overpaying or missing out on potential profits.

Emotional value over market or auction value

When you’re at an auction, especially as a seller, you may hear the term “emotional value.” This means that you’ll find it difficult to put a price on an item that holds significant emotional meaning to you. For sellers, this means that you will likely want to ask a higher price than people are willing to pay. For buyers, you could be willing to pay over market value to own it, which means you could spend more than you bargained for if you get caught up in the auction fever.

Many things in life are governed by emotion, not market or auction value. Emotional value can make deciding a price difficult for buyers, especially for an item you really desire and that is worth almost any price. Sometimes, you have to listen to your heart when you purchase items. If the item holds more emotional value, the market and auction values will not be as important to you.

Want to learn more about live auctions?

If you would like to know more about auctioning items or bidding on items and an auction, contact High Plains Auctioneers at (806) 244-6776. You can also Contact Us by email for more information about our auctions and services. Don’t forget to check out our Upcoming Auctions!