Sell your extra stuff. If your in credit card debt, sell everything you reasonably can. There are all kinds of cognitive biases (loss aversion, the endowment effect, and post-purchase rationalization) working together to make you want to keep stuff that you wouldn’t buy today, even at the price you could get selling it used.
You’d be happier with the cash than some of the random things you’ve managed to pick up throughout your life. Usually this means, donations, craigslist or E-bay, but sometimes you need to sell something and eBay or craigslist just doesn’t make a lot of sense. In that case you might want to sell it on consignment.
What is consignment?
E-bay is in fact a good way to think about selling something on consignment. Basically, you’ve got something you’d like to sell, and someone who owns a store allows you to use their space to sell the thing. If it sells, you get some of the money but the store gets a cut. You only get paid after the item sells, but you still own the item until it sells.
When to sell something on consignment?
Basically, sell on consignment only when you think you’d end up with more money than your alternatives, a garage sale, eBay, or craigslist. When you do this with eBay they take a cut (10% last I checked), but it is generally smaller than if you wanted to sell the thing at a physical store.
Generally when you sell something on consignment you can only expect to get 50-60% of the sale value of the item. At first glance it might seem that eBay is the better deal, and quite frankly for most things it is; it has a broad reach, it has relatively low fees, and turnover is fast. However, you need to account for shipping costs.
If you have a really big heavy item, it probably doesn’t make sense to sell it on eBay, because shipping costs will eat substantially into what you might have gotten out of the item otherwise. An obvious example is furniture. So that gives us reason #1 to sell something on consignment:
It’s too big to ship economically.
The other major reason is that it is an item that people are reluctant to buy online. Some of these might be collectors items, or other things which have value that can vary wildly based on the condition. For example musical instruments can be tough to sell online because it can be hard to tell the quality of the instrument without actually giving it a test play. So reason #2:
People feel more comfortable buying this item in person.
The last major reason is perhaps especially rare. Any item that needs to be purchased right before it is used. Here you’re looking for normally people think of impulse purchases, but really what you want is emergency items. If you need a some kind of specialized pump for your pool because the last one broke, you probably need it today. You’ll have best luck with tools and some specialized hardware stores are willing to sell tools on consignment. That gives us reason #3:
The time between when you realize you need it, and when you must use it is short.
How to sell something on consignment
After you’ve figured out what to sell you need to find a shop that will sell the item. You have basically two choices for this, specialized consignment and second-hand stores where nearly all the items are sold on consignment, and a store that sells the type of item you’re trying to sell. It’s worth asking around for the commission that the store will take on your item.
Generally I find that commissions are 40 to 50% of the total sale price. All things being equal you probably want to sell the item on commission at a store that specializes in that particular item, not a consignment store. For example, if you have a grand piano you would like to sell, consider having a piano store sell it rather than a consignment store. The clientele at a piano store is looking to pay retail for a piano, the clientele at a consignment store is looking to get a good deal on something. You’ll probably get a higher overall sale price at the retail store.
Major Caveat – Time
Selling items on consignment can take a long time. For expensive items it can sometimes take years. You may also need to keep an eye on the store owner to make sure that they don’t forget that your item was consignment and not part of their regular inventory, so check back every six months or so, and make sure you get some kind of receipt.
This is also one of the major benefits. You don’t need to wait for your item to sell on ebay, you drag it to the store today, and then it’s one less thing cluttering up your life.