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Auction Value Vs. Market Value

Wednesday, September 30th, 2015

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. Be sure to do some research about specific item markets and remember that some items will have more emotional value than market or auction value.

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 auction value prices, which means the price the item is being auctioned for. Generally, this amount is higher than market price, which means that the seller gets to 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, which could 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 the buyer and the seller.

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 may stimulate bidders to spend more money for an item in the spirit of winning than it is actually worth.

Some sellers may also raise the market price higher than it should be in order to make a profit. As a buyer, you should research 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 auction

As a buyer or a seller, you should conduct research before you go to auction. What is the market like right now for the item you are buying or selling? 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. You may be able to get a better deal by waiting to buy something. It is important for both buyers and sellers to consider these factors in order to make the best decision.

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 term essentially means that you can’t put a price on an item that holds significant emotional meaning to you. If you are at an auction and you finally find a desired item, you may be willing to pay significantly over market value to own it.

Many things in our 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 go with 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.

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.