Online auctions help sell surplus property

Ever wondered what to do with that old 200,000-gallon water tower that’s sitting around collecting dust? Franklin County, Ohio, leaders did and decided to put it in an online auction. “A small municipality could save a lot of money [by buying our tower],” says Jeff La Rue, public information officer for the county. “Normally it would cost $500,000. A small city or county could buy it for $10,000 online.”

Like many other local governments, Franklin County officials were attracted to online auctions because they can reach a large number of potential buyers and can cost less than traditional live auctions. For cities and counties that are trying to generate income and cut costs, those qualities make online auctions popular tools.

Jennifer Maready, financial analyst for Jacksonville, N.C., discovered online auctions as a way to dispose of surplus goods through the North Carolina League of Municipalities. Previously, Jacksonville had only live auctions. Now, city employees can download a photograph and complete a form to sell an item online.

The city put its first items up for auction — three vehicles that were posted for 10 days — on the Internet in July. “We were happy. The vehicles sold for what we considered their average values,” Maready says.

The online auction company the city used, Montgomery, Ala.-based GovDeals.com, charges 7.5 percent of the final sale price, Maready says, which is less than the 8 to 12 percent cost of live auction sales. Because of the online auction, the three surplus vehicles sold in July will not take up garage space or maintenance and insurance dollars waiting to go to auction.

In addition to surplus equipment, online auctions are helping cities and counties sell tax-defaulted properties. In May, San Bernardino County, Calif., sold 1,600 parcels and generated $41.7 million in revenue through an online auction hosted by Silver Spring, Md.-based Bid4Assets. Bids were placed from as far away as Germany and Canada as well as from 27 U.S. states.

Online auctions that specialize in government assets and properties offer a variety of services for buyers and sellers. Bid4Assets, for example, offers overtime bidding, which means that if bidding is still going on when the auction is scheduled to end, the auction will not end until the last bidder has had a chance to place a bid. GovDeals will manually verify bidders’ identities before allowing them to participate and offers no up-front fees. It also provides unlimited free training for local government employees for online auctions.

Because the online tools have become so popular, local governments have many auction providers to choose from, including FirstGov, the federal government portal, which offers auction services to state and local governments. “We initially were considering using a company called E-Surplus auction, but as we proceeded to register, we thought their selling prices were low — most cars online were in the hundreds — and their fees too high — 8 percent of the purchase price,” says Jackie Waggoner, Douglas County, Kan., purchasing division manager. Eventually, the county decided to try eBay because it charges $82 per vehicle.

In the past, the county either accepted trade-in offers or sent the surplus goods to a live auction house. In a comparison of revenue generated through live auction vs. online auction, the county discovered that it generated approximately $1,900 more per vehicle for 2002 model vehicles and $1,400 more for 1997 models — an estimated increase of $12,300 for seven vehicles — by selling online. The proceeds went back to the county’s general fund.

The online auction trend is likely to continue as more local governments use the tools to generate higher sales and save money. “The only disadvantage has been the initial time to set everything up on eBay and learning what works and what doesn’t work,” Waggoner says.

But perhaps the best part of online auctioning is the weather. While traditional live auctions depend on a clear sky and require overtime pay to staff events, the weather on the Internet is always the same.
— Sibley Fleming is an Atlanta-based freelance writer.