Thursday, May 29, 2008

Measure local market values using craigslist

One thing I spend my time doing is checking the various postings on craigslist. My current interests include the "Materials", "Farm+Garden" and "Wanted" categories with occasional peeks at the "Free" listing. The postings are updated daily with more new listings than reposts, but if you are a daily checker like myself, you can see who is desperately trying to get rid of something.

Because I have spent so much time on craigslist (it has been over a year I have faithfully checked the listings), I have a sense of what the value of an item is. For example, I purchased a bread maker for $20 from a person posting on craigslist (still use it in fact), but from my hunt for a bread maker and subsequent purchases, I have a better sense of the value of such an item. Therefore, I know that someone asking $50 is less likely to sell it than someone who asks $20. My feeling is $25 is the market limit unless it is a really high-end bread maker and the buyer knows it value. Otherwise, the seller is unlikely to find a buyer.

So what I have I learned about used items other than the market value of a bread maker?

Do some market research
I have wanted an antique wood commode for a while. Using the search function, I found some listings that fit and looked at the items found. Between my mom's suggested value and the items listed on craigslist, a commode, all oak wood, with a decent finish and small amounts of cosmetic damage (e.g., scratches) will go for at least $200. Larger than average pieces or those containing marble are generally higher ($400 or more).

Looking at similar (if not identical) items you are interested in either purchasing or selling will give you a sense of what the local market will price the item. This requires patience and an investment of time unless the item is routinely listed (e.g., dressers).

Find buying opportunities.
If you spend each day on craigslist and see the same item listed for the same price repeatedly, this is a potential buying opportunity for you--but only if you truly need and will use the item. As a regular visitor, you will see these repeated postings and the dresser offered at the same price for the last three weeks is not likely to be more attractive in the 21st posting. However, if that piece is something you have considered, contact the seller and make an offer. Since the dresser has not sold, you have nothing to lose but the time you took to contact the seller. Be serious about your offer (per your market research) and truly intend to follow through, but this may mean you get what you want at a price that is closer to what you can afford and the seller has a success.

Learn to bargain.
I am still trying to implement this concept fully. That is, offering a lower price that is not an insult to the seller. I have offered $25 for a $30 item listing or $45 for a $55 item successfully, but I am not sure where the line between getting a better value and insult is. Trying to buy items from sellers on craigslist offers you the opportunity to practice bargaining. Since most of my contacts occur via e-mail, it eliminates the pressure that can arise in face-to-face transactions.

Start by asking if the seller would be willing to accept $20 for the $25 item and see if it works. If it does not, you save money by not purchasing anything and the seller can move onto the next potential buyer. Each success will make you more confident to try bargaining further, potentially improving your deals in other nontraditional bargaining locations, like the clothing store or a large-chain electronics store. Practice can only build your skills.

Figure out what sells and what does not.
This lesson is best learned when you try to sell something yourself. The market may be too saturated (bread makers) or too specialized (a traverse double rod at a width of 57"), but you will learn what disappears and what lingers. I sold my used RAM less than two hours after I posted it, contrary to my expectations. I thought the market was too limited, but was quickly proved wrong. However, my swag curtain is still in my possession after an interested e-mail that went nowhere.

Otherwise, repeated listings of an item may give you some insight into how well that item moves. Craigslist is a great local resource for buying and selling items (and even requesting wanted items). Utilize it to your benefit and you may find some great bargains as well as tips on how to sell items more quickly.

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