Auction Action
Despite a downturn in Phoenix real estate, auctioneer Paul Sarver is carving out a strong niche with a weekly auction that offers brand new furniture—and some well-known brands—at prices far below those of the area’s traditional furnitur
January 2008 By Jo Fleischer
Every Friday night, hundreds of Phoenix-area residents—and a few furniture dealers—gather in a midtown showroom for a one-of-a-kind furniture auction that involves almost entirely new products, including everything from leather sectionals to complete bedrooms—from brands you’d recognize.
Paul Sarver, the 44-year-old owner of Phoenix Furniture Auction, is an industry newcomer who bought the business two years ago. Sarver previously worked in the financial services sector before he and two partners bought the 22-year-old auction house from Sarver’s former client.
Sarver owns the bulk of the business after buying out one of his partners early on. He has an unusual background for a furniture retailer, having served a 16-year stint in the Air Force. He’s also been a drummer for 34 years, and one night his band was playing a song by the rock band America in a club when members of the band (who scored hits with “Horse With No Name” and “Sister Golden Hair”) wandered in. The chance meeting led to Sarver joining the band for a worldwide tour in 1990-1991. He continues to fill the drum seat for a popular Phoenix band, Help Me Rhonda, but auctions keep him from playing on Friday nights.
A Furniture Revolution
Upon buying the business two years ago, Sarver said his goal was to “revolutionize the way people think of furniture auctions” by shifting from selling used and damaged goods to almost all new furniture, including higher-end goods. His showroom is filled with a wide range of merchandise that includes some prestigious lines by manufacturers who initially resisted selling through an auction. After all, prices on any given Friday night swing wildly, depending on the makeup of each week’s crowd of bidders and the intensity of the bidding action.
On a Friday night in late November, sofas sold for as little as $185 and complete dining room sets (of a type sold exclusively in Robb & Stucky stores) were being offered for $2,100, including an enormous china, a twin-pedestal table and six chairs. Sarver said the chairs alone retail for as much as $1,000 each.
In his office, Sarver pointed to a local retailer’s ad that featured an ornate four-poster bed for $1,797 and said, “In our auction, we sell that for $750. I also have closeouts where you can save 90 percent on what a (local) retail store sold it for.”
Rock-Bottom Prices
Sarver keeps those ads handy, and when customers come in during the week looking for something specific, he’ll urge the shopper to price the item in a local store and then return to see similar items come up for auction—with bidding starting at either zero or, in reserve auctions, a little bit above wholesale.
“I’ll tell customers exactly (what store) they can go buy it in. Until recently, I never put minimum bids on anything, but as the economy has gone down, we’ve been forced, in a few auctions, to place minimums on items. But those minimums are the (manufacturer’s) wholesale price plus 10 percent. That way, I’m not losing money, but the customer is getting a fantastic deal. There are a lot of companies I get built-in discounts from. We generally sell at 50 percent to 75 percent below any other furniture store’s pricing. I don’t have the overhead they do, and I don’t have the markup they do. My vision is to blow out mass quantities of furniture versus trying to get rich on any one item.”
A Real Estate Downturn
Whether or not a weekly auction is a “no-reserve” sale or not depends on the size of the crowd. The number of bidders has declined since 2005 along with a steep drop in real estate prices throughout the region. Sarver said there are more than 75,000 homes on the market throughout the Phoenix area, and more than 40 percent of those are in foreclosure.
Despite those market conditions, Sarver said the auction continues to thrive thanks to sharply priced deals and the loyalty of avid customers, who often return again and again with friends and family in tow. He said low prices aren’t the only lure. “It’s a totally different buying experience. People are excited, they’re having a good time. They don’t have the high-pressure sales (techniques) they normally would in some furniture stores. We joke a lot with the audience, and they have a really good time.”
It’s a no-frills operations, and on auction nights, the auctioneer carefully explains that all sales are “as-is,” there will be no returns, and it’s up to buyers to find a way to truck their purchases home. There are several third-party delivery trucks at each auction that successful bidders can hire.
‘Absolute Junk’
It hasn’t always been easy for Sarver, a newcomer to the furniture industry, to find the kinds of deals that draw hundreds of bidders to a weekly auction. In the beginning, he was able to rely on discount deals the previous owner struck with some vendors, but there also have been a few painful lessons learned. “We’ve made some stupid buys, and we’ve had some furniture companies that took advantage of our lack of experience. We had one company sell us three truckloads of furniture (from a high-end case goods brand). It was supposed to be brand new bedroom sets and we took it sight unseen, but it was absolute junk. It looked like they’d cleaned out a warehouse where they’d been storing stuff since the ’50s. We lost a lot of money on that deal.”
But, Sarver said the company has also had incredible buying opportunities, such when a manufacturer was forced to liquidate truckloads of merchandise after losing a copyright infringement case to Thomasville Furniture Industries. “The court’s order said it couldn’t be sold through stores or by someone who advertised, and we bought it as 65 percent off wholesale and sold it for nearly $1 million more than we bought it for. For whatever reason, we have gone from one great deal like that to the next. We’re always looking for the next deal, and we’ve found them. In fact, it’s getting easier because manufacturers are offering us crazy deals. We’re buying bedrooms for $299 from companies that need to raise cash to pay their suppliers in China.”
Overcoming Mistakes
He said the company was lucky that it started two years ago when Phoenix was one of the strongest real estate—and furniture retailing—markets in the country. During that period, Sarver set a record for the company with $159,000 in sales in a single auction. An average auction these days is about half of that record amount.“We could afford to make some mistakes early on because our (weekly volume) was so strong,” Sarver said. “In the beginning, we were paying off the previous owner and then I bought out a partner. We’ve been smarter in the way we buy, and we now have our own truck, which has reduced the cost of shipping a lot.”
Sarver said his most important move was in shifting the business to selling nearly all new furniture. “When I bought it, (the previous owner) was selling consigned and damaged merchandise. Some of it was new, but, primarily, even some of the new stuff had some damage to it. I wanted to revolutionize the way people think of furniture auctions. I wanted to completely change what peoples’ perceptions are, and, eventually, I think others will follow suit. Nobody has ever tried selling new furniture in an auction. The previous owner told us we were crazy to even consider it. It works because people are willing to step up and bid a fair price. They’re ecstatic to bid $2,000 on a bedroom because they’ve priced the same one elsewhere at $4,500 or more.”
Viva Las Vegas
From time to time, Sarver said he will auction used items in good condition. Furniture Auction’s Warehouse now contains items the MGM Grand and The Venetian in Las Vegas offered to him for $250 per room, including ornate desks and lightly used sleeper sofas.
The company attracts crowds without newspaper or broadcast advertising. “We tried some radio and TV, but it didn’t work for us. It’s mostly word-of-mouth and I do advertising (paid search) and the Internet, so we come up near the top of any search you do on sites like Google or Yahoo. Our Web site averages 3,800 hits per day.
In recent months, Sarver had taken the business in a new direction by handling going-out-of-business sales for several local retailers on a consignment basis. In many cases, the retailers he’s working with have run out of cash due to slower sales and face having their stores padlocked by landlords who haven’t been paid. “I’ve gotten so many calls from (dealers) in that situation over the last few months, who say, ‘Please auction our furniture for us.’ Most (liquidators) would give them many 30 cents on the dollar, but I offer them the opportunity to put it on my floor, and I give them 65 percent of what an item auctions for,” he said. I’ve done seven furniture stores now, and I have recouped 100 percent of the (cost) those stores owed on that merchandise.”
Also, unlike other liquidators, Sarver can clear out a store’s inventory in two or three weeks.
The Future
Looking ahead, Sarver said his goal has always been to open a second location in Austin, Texas, which he hopes to do within two years. He’d also like to franchise the business. On a day-to-day basis, he’s focused on expanding his vendor base to include more well-known brand names. “The funny thing right now is that some of the vendors I go see at Market tell me they’d never sell to me, because they don’t want me undercutting the retailers here. Now that the furniture industry is down, they’re saying, “Maybe that auction guy is worth our time.’ So, I’ve been getting a lot of (reps) visiting us now. I try to keep my floor as varied as possible. I have everything from contemporary to baroque and traditional. I’d love to be able to sell Broyhill, La-Z-Boy or any of those names on my floor.”
Paul Sarver, the 44-year-old owner of Phoenix Furniture Auction, is an industry newcomer who bought the business two years ago. Sarver previously worked in the financial services sector before he and two partners bought the 22-year-old auction house from Sarver’s former client.
Sarver owns the bulk of the business after buying out one of his partners early on. He has an unusual background for a furniture retailer, having served a 16-year stint in the Air Force. He’s also been a drummer for 34 years, and one night his band was playing a song by the rock band America in a club when members of the band (who scored hits with “Horse With No Name” and “Sister Golden Hair”) wandered in. The chance meeting led to Sarver joining the band for a worldwide tour in 1990-1991. He continues to fill the drum seat for a popular Phoenix band, Help Me Rhonda, but auctions keep him from playing on Friday nights.
A Furniture Revolution
Upon buying the business two years ago, Sarver said his goal was to “revolutionize the way people think of furniture auctions” by shifting from selling used and damaged goods to almost all new furniture, including higher-end goods. His showroom is filled with a wide range of merchandise that includes some prestigious lines by manufacturers who initially resisted selling through an auction. After all, prices on any given Friday night swing wildly, depending on the makeup of each week’s crowd of bidders and the intensity of the bidding action.
On a Friday night in late November, sofas sold for as little as $185 and complete dining room sets (of a type sold exclusively in Robb & Stucky stores) were being offered for $2,100, including an enormous china, a twin-pedestal table and six chairs. Sarver said the chairs alone retail for as much as $1,000 each.
In his office, Sarver pointed to a local retailer’s ad that featured an ornate four-poster bed for $1,797 and said, “In our auction, we sell that for $750. I also have closeouts where you can save 90 percent on what a (local) retail store sold it for.”
Rock-Bottom Prices
Sarver keeps those ads handy, and when customers come in during the week looking for something specific, he’ll urge the shopper to price the item in a local store and then return to see similar items come up for auction—with bidding starting at either zero or, in reserve auctions, a little bit above wholesale.
“I’ll tell customers exactly (what store) they can go buy it in. Until recently, I never put minimum bids on anything, but as the economy has gone down, we’ve been forced, in a few auctions, to place minimums on items. But those minimums are the (manufacturer’s) wholesale price plus 10 percent. That way, I’m not losing money, but the customer is getting a fantastic deal. There are a lot of companies I get built-in discounts from. We generally sell at 50 percent to 75 percent below any other furniture store’s pricing. I don’t have the overhead they do, and I don’t have the markup they do. My vision is to blow out mass quantities of furniture versus trying to get rich on any one item.”
A Real Estate Downturn
Whether or not a weekly auction is a “no-reserve” sale or not depends on the size of the crowd. The number of bidders has declined since 2005 along with a steep drop in real estate prices throughout the region. Sarver said there are more than 75,000 homes on the market throughout the Phoenix area, and more than 40 percent of those are in foreclosure.
Despite those market conditions, Sarver said the auction continues to thrive thanks to sharply priced deals and the loyalty of avid customers, who often return again and again with friends and family in tow. He said low prices aren’t the only lure. “It’s a totally different buying experience. People are excited, they’re having a good time. They don’t have the high-pressure sales (techniques) they normally would in some furniture stores. We joke a lot with the audience, and they have a really good time.”
It’s a no-frills operations, and on auction nights, the auctioneer carefully explains that all sales are “as-is,” there will be no returns, and it’s up to buyers to find a way to truck their purchases home. There are several third-party delivery trucks at each auction that successful bidders can hire.
‘Absolute Junk’
It hasn’t always been easy for Sarver, a newcomer to the furniture industry, to find the kinds of deals that draw hundreds of bidders to a weekly auction. In the beginning, he was able to rely on discount deals the previous owner struck with some vendors, but there also have been a few painful lessons learned. “We’ve made some stupid buys, and we’ve had some furniture companies that took advantage of our lack of experience. We had one company sell us three truckloads of furniture (from a high-end case goods brand). It was supposed to be brand new bedroom sets and we took it sight unseen, but it was absolute junk. It looked like they’d cleaned out a warehouse where they’d been storing stuff since the ’50s. We lost a lot of money on that deal.”
But, Sarver said the company has also had incredible buying opportunities, such when a manufacturer was forced to liquidate truckloads of merchandise after losing a copyright infringement case to Thomasville Furniture Industries. “The court’s order said it couldn’t be sold through stores or by someone who advertised, and we bought it as 65 percent off wholesale and sold it for nearly $1 million more than we bought it for. For whatever reason, we have gone from one great deal like that to the next. We’re always looking for the next deal, and we’ve found them. In fact, it’s getting easier because manufacturers are offering us crazy deals. We’re buying bedrooms for $299 from companies that need to raise cash to pay their suppliers in China.”
Overcoming Mistakes
He said the company was lucky that it started two years ago when Phoenix was one of the strongest real estate—and furniture retailing—markets in the country. During that period, Sarver set a record for the company with $159,000 in sales in a single auction. An average auction these days is about half of that record amount.“We could afford to make some mistakes early on because our (weekly volume) was so strong,” Sarver said. “In the beginning, we were paying off the previous owner and then I bought out a partner. We’ve been smarter in the way we buy, and we now have our own truck, which has reduced the cost of shipping a lot.”
Sarver said his most important move was in shifting the business to selling nearly all new furniture. “When I bought it, (the previous owner) was selling consigned and damaged merchandise. Some of it was new, but, primarily, even some of the new stuff had some damage to it. I wanted to revolutionize the way people think of furniture auctions. I wanted to completely change what peoples’ perceptions are, and, eventually, I think others will follow suit. Nobody has ever tried selling new furniture in an auction. The previous owner told us we were crazy to even consider it. It works because people are willing to step up and bid a fair price. They’re ecstatic to bid $2,000 on a bedroom because they’ve priced the same one elsewhere at $4,500 or more.”
Viva Las Vegas
From time to time, Sarver said he will auction used items in good condition. Furniture Auction’s Warehouse now contains items the MGM Grand and The Venetian in Las Vegas offered to him for $250 per room, including ornate desks and lightly used sleeper sofas.
The company attracts crowds without newspaper or broadcast advertising. “We tried some radio and TV, but it didn’t work for us. It’s mostly word-of-mouth and I do advertising (paid search) and the Internet, so we come up near the top of any search you do on sites like Google or Yahoo. Our Web site averages 3,800 hits per day.
In recent months, Sarver had taken the business in a new direction by handling going-out-of-business sales for several local retailers on a consignment basis. In many cases, the retailers he’s working with have run out of cash due to slower sales and face having their stores padlocked by landlords who haven’t been paid. “I’ve gotten so many calls from (dealers) in that situation over the last few months, who say, ‘Please auction our furniture for us.’ Most (liquidators) would give them many 30 cents on the dollar, but I offer them the opportunity to put it on my floor, and I give them 65 percent of what an item auctions for,” he said. I’ve done seven furniture stores now, and I have recouped 100 percent of the (cost) those stores owed on that merchandise.”
Also, unlike other liquidators, Sarver can clear out a store’s inventory in two or three weeks.
The Future
Looking ahead, Sarver said his goal has always been to open a second location in Austin, Texas, which he hopes to do within two years. He’d also like to franchise the business. On a day-to-day basis, he’s focused on expanding his vendor base to include more well-known brand names. “The funny thing right now is that some of the vendors I go see at Market tell me they’d never sell to me, because they don’t want me undercutting the retailers here. Now that the furniture industry is down, they’re saying, “Maybe that auction guy is worth our time.’ So, I’ve been getting a lot of (reps) visiting us now. I try to keep my floor as varied as possible. I have everything from contemporary to baroque and traditional. I’d love to be able to sell Broyhill, La-Z-Boy or any of those names on my floor.”
Fact Box
