The Garage Sale Reseller

Our natural instinct when assessing a potential resale item is to simply compare the price we get it for at the garage sale to the sale price we expect to get on eBay, based on doing a search of eBay completed listings or using Terapeak. Generally, using this rough schematic won’t get you into too much trouble, but it could lead to you being less efficient than you could be. So, you often find yourself asking, “should I buy this?”

There really isn’t a strict calculus that’s available to make these decisions unless you’re a super-data-geek, so rely on intuition and your instincts. You can’t avoid mistakes, so don’t sweat it when you make them. The great advantage of this business is that in most cases, 90% or more of the final sale price is composed of your value adding activities – cleaning, fixing, testing, listing, packaging, shipping, etc., so your upfront investment in a lot of your items is lost painlessly. My personal method is to simply knock around 20% off of the expected gross sale price, and then see if I still turn a profit that feels worthwhile given the amount of work I expect to have to put in.

If you REALLY want to crunch the numbers, here’s a good rule of thumb in determining whether one of your many costs should affect your decision to buy an item: if it’s a fixed cost, meaning you do not alter the cost by purchasing the item, ignore it; if it’s a variable cost, assign it a reasonable “dollar value” and subtract it from your expected profit. Once you’re already at a garage sale, for example, the time and gas you spent getting there should be irrelevant in your evaluation of an item. However, everything you’d need to do with the specific item you’re considering, such as clean it, list it, and pack it are all costs you should measure against your profit. I would rather take an easy item (e.g. a wireless router) that will make me $10 than pick up a vintage item I will have to clean or fix that makes me $20.

Here are some factors that shouldn’t affect your decision to purchase individual items, but should affect how you plan your sales each weekend:

• Car Fuel and Wear. In addition to the extra gas you have to put in your tank, don’t forget the additional miles you’re racking up on your vehicle each week. Suppose you only drive a meager 100 miles per weekend – that’s still an extra 5000 miles per year. I easily do triple that, on top of my regular driving schedule, which means more oil changes, more wear on my brakes and tires, and more of a risk of component failure.
• Added Risk of Driving. More than just dealing with your car’s maintenance, there’s also the issue of the risk to yourself that you assume by spending so much time on the road. In my second week of garage sale hunting, I got in a car accident because I was in a neighborhood with some pretty crazy drivers. Thankfully, I wasn’t hurt, but since I rear-ended the person the accident was my fault and I was shafted with a $500 repair bill.
• Losing your Weekends. It’s easy to get wrapped in planning your sales and rationalizing adding an additional sale to your route (e.g. “it’s only 10 minutes away from this other sale I’m going to, I might as well stop by). But when you’re planning your route, take into consideration the amount of time you plan to be out. I know that when I wake up at 6 AM and I go to sales until even only noon, I come home very tired and my day is effectively ruined productivity-wise.

Now, here are some factors that should be running through your head as you hold an item in your hand and consider buying it

• Time Spent Testing/Fixing/Cleaning, Listing, Packaging, and Shipping Items. Some items are a real pain in the ass, plain and simple. Remember that when you check on eBay for item prices to take into consideration the item’s condition. One of the reasons you get such great bargains at garage sales is because the items are far from new. So with each item, you need to spend some time testing it to make sure you’re not selling a lemon to an eBay buyer. You also need to clean it, and replace any missing parts (this happens to me most often with cell phones with missing batteries or chargers). Then, you have to research other listings of the item and figure out what to put in your listing to attract buyers. Lastly, you have to package and ship the item, which can be a real trial if the item is fragile or big (I have often found myself without a proper box, requiring me to go out and find one).
• eBay & PayPal Fees. Make sure to knock off roughly 15% off your gross sale price to account for the cut that eBay and PayPal take. eBay final value fees are quite brutal, especially after a recent change. You can see their fee table here. PayPal, on a regular business account, takes $0.30 plus 2.9% of the payment (this includes shipping costs).
• Risk of non-functional or incomplete item. At a sale, it’s too inefficient to hang around thoroughly checking each item you buy. Inevitably, you’re going to come home with an item and find a nasty surprise: missing part, it powers on but doesn’t actually do what it’s supposed to do, you mistakenly thought the item was a different and more valuable one, etc. Some of this is truly inevitable. However, some categories of products will pose more problems than others in your experience, information which you can use to help you walk away from trouble items. For example, computer components have good resale value but there are often a lot of open questions about their condition that the seller can not answer. Hence, if I see a computer hard drive that I can resell for $50 and the seller wants $25, I push my offer down to a point that more appropriately matches the risk of the item not working.
• Risk of problems with buyer. A more general version of the above, take into account the potential buyer. Is there an aesthetic defect or potential technical defect that would upset someone who spent their hard-earned money on the item? This is mostly sidestepped by describing the item accurately in the listing, but note that eBay sellers have had problems with buyers even when they did so. Buyers can even leave you bad feedback if they’re dissatisfied with an item, even though it’s their fault for not reading the listing.
• Health Risk. Garage sales can be dusty, grimy, and even moldy. Some of the best sales come from pack rats and compulsive hoarders, but the chief drawback to this is that items have been sitting in a musty room or garage for years. I find myself sneezing and coughing at some garage sales because the items have nearly evolved into biological weapons. So when you look at a real nasty item, weigh the payoff against the allergies or potential lung infection you might get before you bring an item into your car or your home. Usually stuff will be clean and out in the clear, but there are great financial opportunities in dirtier places – just remember to look out for mold and other health hazards.
• Sell-through (and clutter). A rookie mistake I made early on was checking for the sold prices of the items, but not considering how many of the items that were listed actually sold. Terapeak’s tool thankfully aggregates this info for you into a single percentage. Balance the sell-through against the inconvenience of keeping the item around. Some items are more clutter-y than others, so take into account how you’ll be able to store the item. Can things be stacked on top of it? Are you going to be encouraged to list the item quickly? Is the item an eyesore?
• Opportunity Cost. Finally, you do have a finite amount of time each weekend to be spending listing items on eBay. This means that you can also only list a finite number of items. What you want is the cross-section of items you encounter in your garage sale hunt that are the most profitable to be filling those, say, 20 hours. So yes, you may come across an item that is a slam-dunk profit of $10, but if you already expect having enough $20+ profit items to fill your weekend, pass it up. Profitable items aren’t going anywhere – this isn’t the apocalypse!