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How to Buy at Auction

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by Christopher Smith  More from Author

Advice for First-Time Bidders

Once upon a time, a select group of well-dressed individuals–usually representing various specialty auto dealers–would occasionally gather beneath large tents or gaping steel-roofed structures to buy classic cars. These cars were always–always–presented in completely stock condition, because any sort of modification, aftermarket component, or otherwise benign adjustment that wasn’t part of the original design would seriously detract from the value. These were the cars that would make for an easy flip once the right phone call to the right collector was made, because these collector car auctions of yesteryear were pure business. Once the paperwork was finished, the all-original collector car would be shipped to its new home, usually a museum or a climate-controlled garage, where it would remain until the owner either grew tired of it or deduced that it had appreciated enough to sell for a profit. The car would then be sent back to the auction block, thus repeating the entire cycle and ensuring the continued way of life for those in the collector car business. And since it was such a tight-knit, closed-loop process, newcomers to high-end classic car auctions faced some significant challenges in what was generally a dealer-only, business-before-pleasure operation. That’s not to say a rookie couldn’t attend, but sharing the floor with affluent gentlemen who harbored decades of knowledge and experience was an intimidating thought to say the very least.

And then, something quite extraordinary happened as we entered the 21st century. During one of the larger collector car auctions in Scottsdale, Arizona, classic car connoisseurs watched in awe as a highly-modified, mass-produced Chevy Nomad station wagon outsold a very rare, vintage Ferrari Daytona Spyder, and thanks to live television coverage on the Speed Channel, the entire automotive enthusiast community watched the event unfold. Veteran auto journalist Brock Yates, who had been commentating on the event for Speed, remarked that traditional collectors were “rolling over” at the notion that a vintage Ferrari–one that followed all the unwritten rules of what a “proper” collector car should be–was somehow worth less than an old station wagon shell dropped onto modern driveline components. To most of the television audience, watching that Nomad claw to a final bid price of $150,000 was merely entertainment, but those with some smarts in the collector car world knew it was more than just people bidding up a nice car. This was a turning point in the business, or rather, a shift away from business as usual, and with a single hammer strike, the business of purchasing all-original, museum-ready automobiles turned into a passion of buying cool cars that people craved to own–and drive–no matter the cost. The era of the restomod had begun.

The distinction between these two eras of collector car auctions is extraordinarily significant for our purposes here, because it also represents a shift in demographics at these events. Sure, the dealers and old-school buyers are still alive and kicking, but they’re now overshadowed by the scores of private individuals who venture into the arena, looking to purchase a car NOT for a personal collection or museum, but to have as a special weekend driver or cruise-night champion. As such, much of the intimidation factor that accompanied the old auction ways has disappeared, and with numerous high-end auction companies such as Mecum, Kruse, RM Auctions, Russo and Steele, and of course Barrett-Jackson (the company responsible for the $150,000 Chevy Nomad mentioned above) staging auctions all across the country, odds are there will be one relatively close to you at some point throughout the year. Of course, purchasing a car from a classic car auction isn’t quite as simple as just showing up and leaving with a svelte ride. In many respects, the lower intimidation factor has reared itself in the form of higher ignorance levels, and that lack of information can have disastrous effects for first-time bidders who may neglect looking before leaping. And though television coverage of major auctions has certainly played a significant role in bringing these venues into mainstream America, simply watching the action on TV isn’t enough to fully prepare an auction newcomer for the experience of actually being in the crowd, listening to the auctioneer’s rhythm, and basking in excitement of the chase. How then should auction newbies best seek out their bidder education? Here are some suggestions with a few key words from collector car connoisseurs and auction heavyweights Dana Mecum, president of Mecum Auctions, and Gary Bennett, vice president of consignment with Barrett-Jackson.

 

Get Your Feet Wet

Localized, small scale auctions take place on an almost daily basis, and for folks completely green to the auction environment, visiting one of these smaller formats should be a prerequisite before graduating to something larger. It doesn’t matter what’s being sold, or even if anything is purchased. These events are usually free to attend, and they can deliver a basic education on auction fundamentals, such as reserve (item requires a minimum bid amount to be sold) versus no reserve (item will sell no matter how low the final bid is.) Another option is to attend one of the major auctions simply as an observer, which can be a rewarding experience by itself as most of the major venues feature a rich vendor arena, swap meet, and in some cases a traditional sales field where folks can purchase classic cars through a more traditional process of haggling and deal making.

 

Research the Auction Company

Though most auction formats are virtually identical, each company generally has their own unique way of conducting business. Nearly all the major organizations require a bidder’s fee as part of the registration process, but the fees can vary depending on the size of the auction and whether or not it’s a reserve or no reserve affair. Beyond the specific details, Barrett-Jackson’s Gary Bennett stresses the importance of exploring intangible details such as credibility and reputation first and foremost. Such action can help gauge the quality of vehicles a potential bidder can expect, and to what depth a company will go to take care of issues and potential problems after the auction is done.

“Before anyone decides they’re going to get into this hobby, they should research the auction company they’re considering going to,” says Bennett. “Call people that have done business with them, ask them how they were treated. Go online, read blogs; I would do all the due diligence I could prior to giving any auction company any of my money.”

 

Have the Funds Available Ahead of Time

Some auction companies may require proof of funding–usually in the form of a certified bank letter or cashier’s check–before you can even register as a bidder. For those that don’t, it’s important to have your financial arrangements made well in advance of the auction. Don’t wait until auction day to transfer funds or cash in certain investments, and don’t count on the auction company to be sympathetic should financial difficulties arise on-site. A certain level of responsibility is required before folks step up to the big leagues.

 

know what you are looking for

One of the biggest shock factors a first time bidder will encounter is the sheer number of cars available to choose from. Without having some type of criteria in mind, getting lost in a sea of iron and steel is not out of the question. Far too often, newcomers will jump into the field without any real game plan, relying on their general car smarts to keep them out of trouble. Usually, such generalized knowledge isn’t enough to identify key model-specific components that can greatly affect the value of a vehicle. It’s one of the biggest mistakes made by first-time bidders.

“People tend to overestimate their own intelligence,” offers Bennett. “And with thousands of cars to choose from, you can be very easily confused. If you know what you want, research that model so you know what to look for. And don’t hesitate to ask questions.”

 

Insurance and Transportation

Most major auctions have at least some kind of on-site provisions to assist bidders with insurance and transportation at the time of sale, either through a wide assortment of vendors or in-house programs. While making such arrangements ahead of time isn’t always necessary, prudent bidders generally have a plan of action in the works, even if it’s just a stand-by arrangement. Folks thinking about dropping a winning bid and driving their new purchase home should think again, because while it can be done, state and local taxes are owed on-site unless the car leaves the auction grounds on a trailer. Fortunately, transportation companies abound, running the gauntlet from high-end, covered transporters to open trailers and rollback trucks. Expect to pay between $500 and $1,500 for shipping, depending of course on the type of transport and the final destination.

 

Arrive Early and Ask Questions

When auction day finally arrives, don’t go for the fashionably late entrance. Getting there early will give newcomers extra time to see the auction up close, and to familiarize themselves with the various auctioneers and their unique rhythms. According to Dana Mecum, early morning is also the best time to solve problems and ask questions.

“Arriving early can address many of the concerns and anxieties first-time bidders have,” says Mecum. “If you show up to your first auction at 2 p.m. on Saturday, nobody is going to have any time to answer your questions or help you along. At 9 a.m., however, there’s nobody in line.”

Both Mecum and Bennett agree that asking questions–lots of questions–is vital for a first-time bidder to have a great auction experience.

“It can be tough for some people to ask questions,” says Bennett. “Guys never like to admit they don’t know something, especially when it relates to cars. The biggest mistake people make at auctions is being unwilling to ask questions. A lot of people buy cars and they don’t really know what they bought.”

Bennett also suggests that bidders be wary of cars that don’t have anyone around them.

“That’s a red flag to me, if you can’t even track down the owner to ask questions about the car. It tells me that they just want it to go away.”

“Talk to sellers,” says Mecum. “Inspect the cars. People’s opinions are different, so don’t just go by a description. Ask questions about anything you’re unsure of now, because once the car is on the block, it’s too late.”

 

Don’t Go Alone

If at all possible, don’t attend a major auction without a partner in crime. Aside from the benefit of an extra set of eyes to help examine bid-worthy autos, having an extra conscience to be the voice of reason when the lights are flashing and the crowd is cheering can help keep things in perspective. Even if that someone isn’t well versed in the automotive realm, having an objective opinion can mean the difference between a sound investment and a tragic impulse buy.

 

TV Monitors and Bidder Assistants

First-time bidders may find themselves struggling to keep up with the pace of the auction, but since the auctioneer absolutely depends on the bidders to keep the money flowing, making sure no voice goes unheard is a vital part of every auction’s mission statement. Should the back and forth price wars become too much to follow, most large scale venues have a bevy of monitors displaying current bid information. The best resources however are the bidder assistants–also sometimes known as ring assistants–whose primary job is to make sure every bidder gets a chance to bid. They’re also responsible for making sure the bidders know exactly what’s going on, and to that end they are able–and willing–to stop the auction if necessary until all questions are cleared up. Remember though, that while the bidder assistants are there to help with the sale of the car, bothering them with technical questions about the car itself while it’s on the block is an auction faux pas. That should’ve been addressed prior to bidding, and if there are any doubts as to the mechanicals or history of the vehicle, it’s best to not bid at all.

 

After the Bid

While most transactions after the hammer drop take place without incident, every now and again problems and mistakes can crop up. It’s important to remember that, while the auction company’s primary responsibility is to the seller; all parties involved are very much dedicated to addressing any issues that arise and solving them in a matter that satisfies everyone. Depending on the severity of the issue, that can sometimes mean a complete voiding of the transaction, as long as all parties can come to an agreement. Regardless of the issue, keeping a level head and a respectful demeanor will go much further than a bevy of cuss words and crazed rantings.

High-end classic car auctions are no longer the domain of dealers and exclusive collectors, and as long as the cameras continue to roll in auction halls, the influx is likely to continue. Last year, 70 percent of the buyers at Barrett-Jackson’s Las Vegas event were first-time bidders, and they collectively accounted for 72 percent of the sales from that venue. Mecum and Kruse report similar first-time increases, and they all acknowledge a changing demographic–one that tends to shop with their hearts more than their minds–as the main reason behind it. The attire might be a little less formal than that of days gone by, the shrill war cries of bidders and ring assistants alike may echo a bit louder, and the iron on the block may be a bit more radical and customized, but when it comes to immaculate rides and shopping excitement, collector car auctions remain a favorite choice for discriminating auto shoppers.

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