This sale at the company's 5199 Lafayette Road headquarters offers the usual grab bag of goods to its roughly three-dozen attendeeseverything from a set of jumper cables that goes for $6 to a hoard of designer furnishings stripped out of model homes, including dining room tables big enough to host the Last Supper, overstuffed leather sofas and little ceramic dogs used as "decorating accents."
Most of it goes for dimes on the dollar. To the average consumer, it's a chance to furnish the living room on the cheap. To the student of economic trends, it's a chance to observe the American marketplace at its most primaland, just perhaps, to take a reading on where the economy is headed in 2009.
'Seeing it coming'
The concept isn't as farfetched as it sounds. According to Chris Longly, director of public affairs and communications for the Overland Park, Kan.-based National Auctioneers Association, gauging economic activity by examining the auctioneering industry makes a lot of sense. An auction, he said, is the most effective way to determine what pretty much anythingfrom a Fortune 500 company to a Hummel figurineis really worth.
"Auctions determine market value," Longly said. "The largest auction takes place every day on the New York Stock Exchange. Thanks to the auction method, we know at the end of every day exactly where Wal-Mart stands. It's the same with traditional auctioneers. They're very in tune with what's happening on Main Street, not necessarily Wall Street."
Indianapolis-area practitioners of this millennia-old profession concur. The recession may have surprised some people, but not them.
"I guess we started seeing it coming about a year ago," said Norm Gallivan, president of Indianapolis-based Gallivan Auctioneers and Appraisers. "That's when I started noticing that there was a significant downturn. Obviously, everyone knows that in September it really hit hard."
Flickers of hope
But there may be signs of hope. Earl Cornwell Jr. of Earl's said he saw the downturn coming long before mainstream commentators started dropping the "R" word. And now, when all is gloom and doom, he's seeing the first, flickering signs of recovery. Perhaps, most important, requests for him to do bankruptcy appraisals have slowed dramatically.
"Last week, I think I did four or five appraisals," Cornwell said. "A few months ago, I was sometimes pumping out four or five a day."
Cornwell, who gets his information from observing "the average Joe" rather than reading The Wall Street Journal, also says that in the last couple of months prices for his wares have slowly firmed upanother bellwether sign of improved conditions.
"Our prices were down at auction over the summer, but they've rebounded," he said. "That's why I really think the economy is getting better. We're a good judge, because such a wide variety of people come to our auctions. We have people that are worth millions and people who can't afford to buy a new sofa or mattress."
But though the auction marketand, by inference, the economymay have found its bottom, it will be a long time before either attains the peaks reached several years ago. Especially for things such as antiques, real estate and cars.
"I was talking to an auctioneer the other day who said the bottom almost fell out of his antique business," said Kathy Baber, executive director of Indiana Auctioneers Association. "Because people were just not paying. It's starting to come back now, but it pretty much dwindled."
Jack Christy of Christy's of Indiana said he's seen the prices for fine collectibles tumble 50 percent to 70 percent, following a trajectory not too dissimilar from the boom and crash in commodities.
"They accelerated in price so rapidly they were almost like gold and oil, when they went way up without any justification," Christy said. "They've really begun to come down to what they're really worth. I think it's going to stabilize, but I question whether it's going to ever be at the level that it once was."
And don't even get him started about a sub-class of items called "collectibles" or "desirables." This group includes Beanie Babies, Longaberger Baskets and Boyds Bears. Such items, auctioneers concur, have about as much upside potential as Chrysler shares.
Surplus of goods
According to NAA statistics, the auctioneering business itself isn't going away anytime soon. The "live" auction industry (as opposed to the online industry, which includes eBay) moved about $270.7 billion in merchandise in 2007. The problem with 2008 (for which figures are not yet available) is the same one endured in so many industriesplenty of goods, but not enough buyers. Hence the drop in prices for pretty much everything.
As a result, auctioneers aren't bringing in record revenue or profit despite being as busy as ever.
"In the specialty equipment and machinery markets, we've seen prices down 25 [percent] to 35 percent from a year ago," Gallivan said. "There's a pretty good supply of machinery and equipment, and money is tight. Companies and individuals that have money to spend are getting great deals right now. But there are others that can't get the credit they need because their own equipment and machinery isn't worth what it was six months ago, so their borrowing base is diminished."
That same dismal math has conspired to choke the car auction industry, which accounted for about $87.8 billion in sales in 2007.
"Used-car dealers are buying less inventory at used-car auctions," Longly said. "The used-car dealer may want to go to the auction, but the bank won't fulfill his note for him so he can buy. So those auctions are really in tune with the economy."
But if car sales are a problem, real estate is radioactive.
"I've talked to a lot of auctioneers, and they'll tell me that they get 10 calls a week from sellers wanting to sell their homes," Longly said. "They'll look at them and maybe take one out of 10. Simply because, even if they can sell the property for the market price, that's not the number the sellers want. Not even close."
Or, even worse, the auctioneer can be left holding the bag when no one bids on the propertyor when someone offers a number so absurdly low that the seller won't take it.
"That's why right now I'm extremely careful about the real estate auctions I take," Cornwell said. "The real estate auctions that I take have to be almost a sure thing. Because if they aren't, you're not going to get them sold."
Not your usual downturn
The auctioneers agree that this particular recession seems to be different from earlier downturnsboth in its severity, its scope and in the fear it inspires in consumers.
"Before, you had people that maybe got laid off," Cornwell said. "Well now they're getting terminated. That's the big difference that I see with the economy today. These plants aren't just shutting the doors and saying we'll see you next week. They're locking the doors and turning off the lights."
Christy, whose company does a lot of business liquidations, sees another trendone that, at least in part, explains the collapse in prices for antiques. Very high-end luxury goods, he states, are somewhat immune from recession because the people who buy them still have money. Likewise, extremely low-end goods, such as a McDonald's hamburger, fare well with people of newly straitened means. But if you're a purveyor of anything in the middle, you may have a problem.
"We just liquidated a Spicy Pickle [restaurant] last week and we're going to do another one at Castleton [Square Mall]," he said. "You just don't see that white-collar buyer who's willing to pay $8 for a sandwich, when McDonald's is selling them for a couple of bucks. We see the same things in our auctions. People are buying things they can use rather than just things they can enjoy."
That said, he's also senses the first, feeble beginnings of an upturnan upturn that mirrors the sort of thinking that will eventually pull the stock market and the real estate industry and pretty much everyone else out of the current malaise. Auction buyers, it seems, are beginning to snap up bargains.
"I see the antiques and collectibles market picking up," he said. "People are saying, 'This $10,000 Victorian bedroom suite is now only bringing $3,000. I'll pay that because the price has to come back. They don't make Victorian furniture, and the price will come back.'"
As consumer thinking slowly shifts from a bunker mentality to bargain hunting, things could turn around. Just don't expect the turnaround to happen quickly. The auctioneers certainly don't.
"You can listen to anything you want, but until you're out there and you see it, feel it, deal with it, it's a whole different ballgame," Cornwell said. "This mess wasn't created overnight and it won't get better overnight, but if we were down in the basement, I think we're a couple of steps up from where we were five, six, seven months ago."