Wednesday, July 27, 2011

When Buying Used Makes Sense

We have all known people in our lives who would never think of buying something used. They might feel that the idea that buying something new means that they are getting the very best or they might feel that they could get ripped off. The implication is that buying something used is for people who will “settle” for second best or will take risk in order to save some green.

That assumption is, at the very least, flawed. There are a number of types of purchases where buying in the used market is the smart way to go. It is far better to know when buying used makes sense than to cave into some vain notion that all purchases must be new items. The plain facts are that buying new is not always the smart way to go.

Buying used makes sense when new is not necessarily the best.

There are two reasons why new might not be the best: 1) The was released to market too early and should have had more testing; and 2) Some Vintage or Pre-Owned products have value that can’t be bought in the store.

Let’s address the first reason.  There are times when a product is released upon the market when it really should have been tested longer. For items that mature the longer they stay on the market, wise buyers stick with the used category of that product type. A great example is technology such as computers, operating systems, advanced software programs and even games.  Buying the previous iteration will ensure that any bug fixes have been addressed and that you will have a superior product.

Did you know that a clouded crystal on a Rolex can often increase its value?  This is just one of the ways a vintage or pre-owned piece can be better than buying new.  Sometimes in order to get the “best” you have to buy pre-owned.  For instance, a 1958 James Bond Edition Rolex Submariner can sell for $80K.  Quite expensive, but also considered to be a rarity. 

When depreciation is extreme

Many products come with a “new” sticker price that is there to cash in on strong demand. The result is as soon as that product leaves the store, the depreciation kicks in and the resale value plummets. New cars are the most notable example of this market phenomenon, but it can apply to many product categories.  For instance, only four months after launch, the Motorola Xoom tablet was selling used for 20% below new.  That’s quite a steep jump for a hot technology product.

To save money, buy item that undergoes this kind of price erosion used. Become skilled at finding products in the used marketplace with very little wear and tear. You get what is basically a new product at a used product price. That is smart shopping.

When there is an active sellers market

The used marketplace has changed dramatically in the last decade. The rise of Internet auction and used items sale websites have changed the landscape of all of the retail world. Craigslist and eBay jump to mind as places where you can find a vast supply of high-quality used merchandise that can give the new product markets a run for their money.

These online markets have impacted a number of market niches severely. Book and music venues have all but vanished from the retail world outside of cyberspace. You can still buy items new in these categories, but the used product auctions draw just as much traffic as online merchants who sell items new.  PriceAdvice can help you navigate the used market with pricing information and the best used deal listings.

As a customer, this is all good news. What it means is that you can very often find perfectly good items in the used markets both online and in your community that reduce the need to buy new products as often. However, it also brings with it a new world to conquer. Make it your goal to learn all you can about how to tap the resources of the used markets before you make an investment in any significant new purchase. Not only does it make sense to buy some items used rather than new, it makes even more sense to always research whether there is a used item alternative to any significant purchase because you just never know.

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