2 Rules Broken - $1000 Profit - 1 Reason

When you buy and sell in the secondary market, you live by general rules of what to buy and what not to buy.  If you are lucky, they are taught to you over a period of time.  If you should, learn through experience, primarily bad decisions (you lost money) the lesson can be rather painful at times, however it's usually much better retained.  Losing $300 on a purchase is much more painful than the excitement of making a $300 profit.  In fact, I've heard some studies say seven times more painful. 

I have had the privilege of experiencing both...many times.  I was the kid who had to touch the stove to learn it was hot.  True story.

These general rules, or guidelines usually revolve around categories or themes.  For instance, everyone knows that gold sells,  but so do nautical related items, railroad related items and Civil War memorabilia.  Even cheap broken watches, if you get enough of them together, will sell.

Now there are exceptions to all rules, which is where it gets tricky.  You can't just blindly go around buying everything related to ships and boats.  The usual answer to any question of "Should I buy this?" is, "It depends."

There's another rule that you'd be wise to learn.  Any time the seller knows much more about the item or items they are selling, you the buyer, are at a disadvantage every single time and the general rule is, you do not buy from them.  That doesn't mean you can't make money off the transaction, it just makes the process a whole lot tougher.

I'll let you in on a few rules on what not to buy.  Its arguably more important than what TO buy.  As a rule, do not buy vinyl records, cassette tapes or 8 tracks.  And by all means, do not buy them from someone who makes their livelihood off selling various forms of media. 

But I did, and I'll tell you why in a bit.  I have to set the stage first.

A few months back I was perusing an online classified website when something caught my eye.  I clicked on the title which sent me to the listing.  There was no picture, only a few sentences and a phone number.  The title was something along the lines of this:  8,000 8 tracks for $200. 

I'm interested in eight thousand of pretty much anything.

So, I pick up the phone and call.  An hour later I'm standing in an outdoor storage unit in 100+ degree heat, looking at an absolute MOUNTAIN of boxes.  They were filled with 8 tracks.  Dirty 8 tracks with paper labels that were in pretty bad to horrible condition.  The boxes all had a layer of dust on them and the 8 tracks themselves were dirty to the touch.  Actually, they were dirty enough to have stains on the plastic itself.  It takes a lot of abuse to get this many 8 tracks in this bad of condition.  But as I looked more, they were structurally sound (from the random sample I could see) and the tapes weren't damaged for the most part.  The felt pads were mostly gone but that was to be expected.  I knew so little about 8 tracks prior to going it almost isn't worth typing this sentence.

I looked around the rest of the unit.  It was filled with records, cassettes, cds ect.  The man (we'll call him Chuck), you see, was a media dealer at the flea market.  The story went that he had bought these 8 tracks from one person at a garage sale a year ago and hadn't gotten around to them.

I liked Chuck.  It isn't often you find a reseller that's a decent individual but there are ways, even with very limited time, you can feel out a persons intentions.   By the fact he shook my hand firmly and looked me straight in the eye while introducing himself after I had pulled up, spoke to his character.  Being a reseller myself we spoke the same language to an extent and my primary complaint (although very real and valid) was the amount of time it would take me to sort through these and then finally tackle the question of how I was going to sell them, one at a time, little lots, all at once... I almost left when he declined my offer of $100.  He understood where I was coming from but for $100 he would just keep them and deal with them later himself.  One fifty would do the trick.  Now, I'm a bit stuck here.  Number 1: The rule is NOT to buy 8 tracks, Number 2: He buys and sells media for a living, and is almost twice my age (never discount general life experience), and at this point the biggest concern is Number 3:  It is possible that he has already gone through these, taken out the better stuff and left the rest to sell to one person.  I also knew that I almost had to buy them if for no other reason than the intrinsic recycle value of the plastic itself.  At the very worst, I'd break even and only be out my time...a lot of time.  I'd have to take the paper labels off each one, crack it open, take out the tape and wash all the dust and dirt off the plastic and then lug it all the way to the recycle center.  So, I decided to make my decision off of one thing.  One thing that years of experience has honed and sharpened.  I can't explain it to you very well with words since its more or less an instinct or emotion.  I decided to ask him one blunt question and based on his answer (word choice, body language, length of response and what his eyes had to say), I would buy the collection or pass.

"Be honest with me, have you already gone through these and taken all the better ones out?"  I asked him and he replied "Nope, I have no idea whats in there other than whats on the top of the boxes where I peeked in as I was piling them up."  I believed him, and I was right.

I'm not sure what its called but I'll call it "Dealer Intuition". 

It was the sole reason I purchased the collection. 

  Dealer intuition is something that is developed over a very long period of time.  You need it to be able to gauge what I call "lot integrity" in times when you have not dealt extensively in the category or theme in question.  In a large lot or collection, if it is a genuine one (built up over time), it will follow loosely to the economic rule of 80/20.  Which, more or less, says in this case, given the collection is genuine and not picked through, "80% of the money you'll make off of this collection will come from 20% of the 8 tracks".  It isn't always exactly 80/20, it could be 92/8 or 60/40 but its always there, in some fashion.  The actual numbers aren't important but the concept is critical to understand.    Dealer intuition senses if things "add up" so to speak.  Its a feeling more than anything really.

There were 51 quadraphonic 8 tracks in that lot.  51 8 tracks that grossed, combined, about $1000 in a 7 day period.  Sounds pretty good when, other than literally every waking moment for 6 days straight I sorted 8 tracks, I was only out $150, a half tank of gas and three very dirty t-shirts. 

Greet The Seller - Garage Sales 101 - Step 1

The most important part of going to garage sales (or any other secondary market buying outlet) is greeting the seller.  A simple but genuine "Hello" or "Good Morning" as you walk up to the driveway is critical for the later stages of negotiation.  You've got to think about them (The Seller), put yourself in their shoes.  They've worked hard to set up their garage sale, in some cases very hard, to set up their things, price their things, put up signs and get enough singles and fives to make change for people.  Depending on the size of the sale, it can take days of preparations, many, many hours of time.  They are social people.  They like people, and talking with them.  If they didn't, they sure wouldn't take the time to set up a sale, and try to direct complete strangers to come to their residence to buy their goods.  Now, I speak in generalities and while there are always exceptions to the general rules, this one has very few.

They also woke up early that day to set up, earlier than you did most likely.  They are finally ready and prepared, half an hour before their scheduled start time.  They are already tired.  They normally would have much better things to do with their Saturday than this.  Oh, and here's a little secret that I've found to be more true than not; They do not think their items will sell, especially first timers.  They do not think their sale, no matter how high the quality of their items, or the steal of a deal prices they marked things with, will be successful.  They fear this.  They loathe the thought of lugging everything BACK in from whence it came.  But as the first people show up to their sale, they soon forget, and this is why...

If you've ever hosted a garage sale, you'll notice that not too many people greet you, or even acknowledge your presence for that matter, as they rummage around your stuff.  Many times they are disrespectful, make a mess and treat you as if you are only there for them IF they need you.  They touch all of your stuff, buy or don't buy, then get in their car and leave.  If you should be so lucky to have several people at your sale at once, its even worse.  Now you are being talked to.  You're being pulled in several directions at once and well, people forget their manners...  This person is asking if your vacuum cleaner works, another is offering $2 on something you have marked at $5 and another is asking how much this, this and that is...  Car doors are opening and closing, people are coming and going and yet, there aren't very many greetings.

Now, you show up at this sale, lets say its 930am.  The sale started at 8am and as you walk up, you see the seller in a very visible state of stress.  They don't like being pulled in that many directions at once and wish that guy who smells and the lady messing up the nice pile of folded clothes would leave already.  As you approach the premises, they are collecting money, making change, answering questions and briefly, there is a lull in activity. 

Now.

Now you greet the seller. 

"Hello", "Good Morning" "Hi there".  The seller, especially the first timer, will immediately like you better than anyone else they are dealing with.  In fact, I've been met with a response of surprise or mild shock many times upon greeting the seller.  Think about that, they are actually SURPRISED that someone walked up to their house and greeted them.  Finally, they think, finally some semblance of humanity in this zoo of the secondary market (and trust me, it can be, complete with animals...).  It shows a level of respect to the seller.  You are validating them as a person and, if ever so slightly, showing a sign of respect by announcing your presence as you walk onto their property and gauge your interest in their possessions.


First impressions are all you have when you go to a garage sale.  Very rarely will you go back to a sale you have already been to (or at least you shouldn't) and being the most liked at the moment, whether consciously or subconsciously, can mean the difference between getting the "yes" to the offer that has already gotten a "no".