Don’t Lose Your Head at Auction : Sales: There are some good buys to be had--if you know what you are doing and don’t get sucked in by a scam.

Ask Emil Derdowski about buying at auction and he’ll tell you some mouthwatering tales.

Once he bought two industrial-sized spools of heavy ribbon for $50. Unknown to the auctioneer, the ribbon was made of Kevlar--the sturdy material in bullet-proof vests. He resold it for $7,000.

He resold a $100 pallet of toner for $3,500. Sixteen cases of developing fluid that Derdowski got for $5 later brought him $2,000. Once, on a hunch, he bought a strange-looking machine for $300. It turned out to be a sought-after tool in aircraft manufacturing, and he sold it two days later for $5,500.

“It was all oddball stuff that nobody else wanted,” Derdowski explains. “And, of course, I’m only telling you about the best deals.” Once he paid $300 for several cases of hair curlers that he couldn’t unload for months.

Derdowski’s tales serve as a graphic illustration of how profitable buying at auction can be. While similar success stories actually are rare--most people overpay for goods, and auction fraud is becoming a growing problem--visions of big profits have apparently had an impact. Auctioneers say the business is booming, thanks to a huge upsurge in retail buyers.

“The industry is growing by leaps and bounds across the U.S.,” says Eddie Haynes, president of the National Auctioneers Assn.

Although there are no national statistics detailing the value of goods sold at auction or the number of people attending the hundreds of auctions held each week, one indication of the industry’s growth is membership in the NAA. Despite the lackluster economy, membership rose 5% in the last year and is up about 20% from 1989.

Individual auctioneers also say that attendance is soaring, particularly at consumer-oriented auctions of big-ticket items, such as cars and real estate.

The problem is, making a buck by buying at auction is the exception rather than the rule.

“There’s a big deal this year because people are hyping these books that say you can buy a Mercedes-Benz for $50 and a trawler (fishing boat) for $100 at government auctions,” says Ken McCormack of McCormack Auction Co. in El Cajon. “That’s all BS. I’ve done a lot of U.S. Customs auctions, and I can tell you, if anything, people are paying too much.”

Indeed, it is far more common to get hit with “auction fever” and pay a fortune for second-hand goods that come with no guarantees, warranties or product support, auctioneers say. Worse still, a type of auction charlatanism is emerging with a vengeance, particularly in California, where the budget for the state’s auction commission was eliminated.

“All the guys who left the state when the auction commission was created are starting to come back,” grouses one auctioneer who asked not to be named. “They give our entire industry a bad name.”

The auction scams run the gamut from shady accounting that hurts consignors--those who sell their goods at auction--to deceitful advertising and sales techniques that can cost buyers a fortune.

Among the key things to look out for:

* Bidding the “air” or the “wall.” Auctioneers who want to boost the price of goods will use house accounts to drive up the price of certain items.

Here’s how it works: Each buyer at auction is given a number. That number is what’s used to call out the bids. (“I have $200 from buyer number 12. Do I hear $250?”) Auction houses frequently assign themselves a number too.

Now, let’s say the bidding starts and one bidder is particularly tenacious. At some point, the other buyers might drop out, but the auctioneer keeps calling out competing bids by using his house number as the bidder. If the auctioneer is clever, he can boost the price of the item by hundreds of dollars, and the buyer will never be the wiser.

* Bogus “police” auctions. Some advertise auctions of “seized” goods to give consumers the mistaken impression that the government will sell this property for a song--after all, they didn’t pay for it. Often, in fine print, you’ll see that it isn’t a police auction at all. Some of the goods were simply purchased from police departments and are now being resold.

Why is that important? The auctioneer who bought the goods isn’t likely to let them go for less than cost.

* Misrepresentations. Original “signed” artworks: Bronzes. Jewelry. Oriental rugs. At times, these goods are far less valuable than promised. And at auction, goods are sold “as is.” Buyer beware.

Many legitimate practices can also cause consumers to pay too much for auctioned goods, experts say. Most notably, a good auctioneer tries to whip crowds into a buying frenzy. Those who aren’t careful can simply pay far too much.

There are ways to protect yourself from both devious and honest (but detrimental) practices, however. The simplest is to approach each sale with patience and caution. Those who check out goods ahead of time, and take written notes on what they want to buy and how much they want to pay, are frequently the most successful buyers.

To guard against “bidding against the wall,” pay attention to who else is bidding. If you hear one number mentioned frequently, try to find that buyer. If the buyer is nowhere to be seen, use extreme caution.

As for bogus goods, don’t pay any “real” money--more than a few dollars--when you don’t have the expertise to determine what the item is worth. Often it boils down to the old cliche: “If it sounds too good to be true, it probably is.” Even at auction.

Buyer Beware

How can you get a bargain at auction? Here are a few tips from auctioneers and experts:

Do your homework. Check out auction goods before the sale and try to determine wholesale and retail prices for what you want.

Figure your top price. Remember you’re getting things “as is” or “where is,” so you should pay less than retail. Scribble down the top amount you’d be willing to pay for any given item and don’t bid once prices rise beyond that point.

Be patient. Don’t buy unless the price is right. That may mean you’ll sit through an entire auction--or several auctions--without buying a thing.

Go early and stay late. The best buys are often at the very start or very end of the auction. At the start, it’s because the auctioneer wants to generate excitement. At the end, it’s because a lot of bidders have already left.

Mid-week is best. Saturday and Sunday auctions are usually too crowded to generate good buys, auction experts say. Better bets are auctions held during the work week.

Contrary counts. If you want the advertised goods, you’re going to face a lot of competition. And that means higher prices. Figure out who’s there, what they want and consider bidding on the less-popular items.

Don’t fall for hype. Make your own determinations about the value of the goods being sold, regardless of what the auctioneer says. There’s little you can do if the auctioneer describes your painting as “authentic” and it turns out to be faux .