Estate Sale connections, situation and questions

[medicdubs96]

Preface-
I'm a new home based FFL and I know and did know when I got into this I wasn't going to be raking it in with new gun sales. I have a Full time profession that make a good living doing but I like guns and the gun business even more. My entire intent is to make some extra cash and gain experience and knowledge in the business, so that when I retire I can do this part time and possibly with a store front when I move out of state. I am mainly interested in resale of used firearms from estate, estate sales, divorces, and inherited firearms folks don't want. I've done fairly well in a short period of time and my goal is to build my capital to be able to purchase larger and larger "collections" without needing a loan either from my personal finances or a business loan.

Situation-
I've been working on establishing and building my connections with estate sale companies and divorce Lawyers. I made a phone call today and spoke with a lady who runs a Estate sale company. I gave her my intro, what I do and what i was look for. I asked her how frequently she came across firearms and would she be willing to set something up for referring folks to me. She said she does come by allot, 800+ a year on average and 250 on a low year. I offered to kick back a % of what I paid for the guns to her. I have previously done this with other estate companies and they were open to the idea and said they would call me.

She asked what kind of Kickback she would get. Here's where I'm a rookie, but according to my math and what I can resell the guns for I figure somewhere around 5% of what I pay to the seller.(ie; $10,000 to the seller, I kick back $500). She said she has a licensed dealer who pays the customer 95% of blue book and she's been working with him for 14 years. This was my first WTF. I have been told and have figured that it should be around 60% of BB value. She then said that he kicks back 20% of what he paid the seller to her.

Now this makes no sense to me, $1000 gun, he pays the seller $950 then he gives her $190, then he sells it. So, he's essentially making $10 on that gun, and thats assuming he gets full price.

I asked if she knew whether or not he was just a collector with a 03 or a Dealer. She didn't seem too sure. I laid out why it didn't make sense to me for a 01 or 07 to deal like this. Obviously I can't compete with a FUD looking to pay essentially full price. She was unsure of what type of license he has, but she has a copy. I asked her to take a look and if he had anything other then a 03 it's not making sense. Even if he has a 03 here in CA(yeah I know) there are allot of restrictions for him. She did say that when she has come across what she described as "street sweepers" he wouldn't deal in them.

She made mention of him buying about 150 SKS's in one bunch. Yes Most SKS's are legal in CA. That doesn't sound like a collector and I can't imagine paying 95% of BB for SKS to resell.

So help me out here, is she full of ****?

What do you guys pay for used guns?

What do you think I should be kicking back by percentage?

[kemasa]

I suspect the book value isn't what you and they think it is.

[colt11]

It could be a really old blue book....

[colt11]

Why not offer to price the guns for her next time, and then the other guy in so she can compare pricing. I know I've bought old guns with the price paid in 1975 showing on the gun's box. I would be happy to pay 95% of 1975 pricing.

[medicdubs96]

The above thoughts about old BB's have crossed my mind. I'm just trying to do a sanity check. I was really blown out of the water by her response and numbers. It sounds like BS, and I've had realistic responses out of other estate folks, so this threw mw for a loop.

What percentage do you all think is right for a kickback?

What's your target foe percentage paid to value of the gun?

[Gryff]

Originally Posted by medicdubs96

She said she has a licensed dealer who pays the customer 95% of blue book and she's been working with him for 14 years. This was my first WTF. I have been told and have figured that it should be around 60% of BB value. She then said that he kicks back 20% of what he paid the seller to her.

She's either lying or has no clue what she's talking about. There is no dealer out there who will buy collections at 95% of value as a standard.

I'm not an FFL, but I have some experience with this from my other hobby (vintage fountain pens). I would say that you should be offering to buy at 40-60% of street value, depending upon desirability of the items. She should then be receiving 5-10% as a finder's fee based on quality and frequency of referrals.

[familyfarm]

I think she is full of crap. Typical finders fee is ~10%. No FFL03 can buy/sell enough to do what you are thinking and not get classified as a dealer. So she is either exaggerating the other competitor's numbers or he is trying to lose money.

I am curious what county you were able to get a home-based FFL. Seems like many counties no longer allow it and I would like to do something like that when I retire.

[CSACANNONEER]

Find out who the FFL is. I'll give him a great deal and sell him everything I own at 90% of current bluebook.

[medicdubs96]

Originally Posted by familyfarm

I think she is full of crap. Typical finders fee is ~10%. No FFL03 can buy/sell enough to do what you are thinking and not get classified as a dealer. So she is either exaggerating the other competitor's numbers or he is trying to lose money.

I am curious what county you were able to get a home-based FFL. Seems like many counties no longer allow it and I would like to do something like that when I retire.

Los Angeles County but I don't fall under LA County rules I happen to live in city that has it's own PD, Business licensees and Business code. I did have to put up a bit of a fight but was able to convince the powers that be that they didn't have anything to stop me from doing so as the laws are written.

Their greatest concerns was traffic to/from. I was able to show them that they have people who ran businesses from their homes(with issued business licenses) that do "other then office work". I gave examples of manufacturing, massage and even Henti Tattoos. I also made the argument that having clients come to my home to pick up, do paperwork wasn't any different then a accountant, lawyer ect. that had a customer drop off/picked up from a home based business.

I am mostly in the business of buying and selling used guns. I do however do do new gun sales too. I have a office that is attached to my garage that is alarmed, heavily reenforced door, no windows, TL30 safe and camera surveillance. Security was also a concern for the PD but I was able to meet and exceed all of his concerns.

I'm doing this now so I can make some money for the business, establish contacts and gain experience. I plan on moving out of state but would like to continue with used guns, estate and collections buying and selling. And since I can go anywhere in the US and buy guns it might make for some neat adventures. Kind of like American Pickers with guns. I've done OK so far and really enjoy doing it.

[medicdubs96]

[QUOTE=familyfarm;22109216]I think she is full of crap. Typical finders fee is ~10%. No FFL03 can buy/sell enough to do what you are thinking and not get classified as a dealer. So she is either exaggerating the other competitor's numbers or he is trying to lose money.

I agre. I think she is either wack, negligent or FOS, I told her she needs to look at the copy of the FFL she has, If its a 03 It's most likely not legal for him to deal this way. I told her she should see a 01 or 07 on his License.

[Burbur]

Originally Posted by medicdubs96

I agre. I think she is either wack, negligent or FOS, I told her she needs to look at the copy of the FFL she has, If its a 03 It's most likely not legal for him to deal this way. I told her she should see a 01 or 07 on his License.

Yup on multiple points.

03 cannot deal in this fashion. 01 or 07 only

She is FOS, dealer she is working with is FOS, perhaps she was trying to blow you off. If she is ignorant/negligent, she could be committing a financial crime by not working in the best fiduciary interest of the estate.

If you would be kind enough to offer her a double blind taste test, you might open her eyes. Just make sure that the existing dealer doesn't know you are working the case too, or else, he might play fair for once to show her he is a good guy.

Numbers don't lie, your assessment is spot on and smells horribly of BS.