16 September 2015

The pros and cons of selling at auction

Classic car auctions get a huge amount of media attention and the general assumption seems to be that it’s the most common way for people to sell a classic car. In fact, auction sales make up only about 3% of sales (by volume, not dollars) and there are very definite pros and cons to selling via auction. Here are some of the most notable:

PROS

Auction Companies Generally do an Excellent Job of Marketing: Auction companies, particularly the high-end ones that conduct catalog sales, spend a tremendous amount of time and money publicizing their sales, and photographing, researching and describing cars. The costs of printing and mailing catalogs are astronomical. Disappointing results at auction are rarely the result of lack of marketing on behalf of the auction company.

Auction Companies Take Care of the Messy Stuff: In private sales, the responsibility for dealing with issues of title and payment fall on the shoulders of the seller. Auction companies deal with the business side of things for the seller and in doing so, provide a valuable service.

Auction Companies Bring Qualified Buyers to the Table: Auctions have been around for thousands of years and the basic concept has not changed—assemble as much quality merchandise as possible in a small geographic area and pack as many ready, willing and able registered bidders into said space as the fire marshal will allow. It’s a winning formula when done properly.

CONS

You Can’t Choose Your Spot: The difference between prime time (a middle lot on a Saturday) and or the last one on a Sunday after the room has cleared out is immense. In addition, you don’t necessarily want your vehicle lumped in with multiple examples of the same model. In general, the auction company sets the lineup, and unless the seller has a ton of clout, he or she doesn’t get a say.

Shipping Costs Add Up: You have to get your car to the auction and for most sellers, that means shipping it. For East Coasters consigning a car at Pebble Beach, it can amount to almost $3,000. And if your car doesn’t sell, it’s another 3 grand to get it home.

Risk: Some auction companies don’t allow you to set a reserve (the minimum amount you’ll take) if your car is under a certain price. This means that the highest bid over the block owns the car, no matter how far below the pre-sale estimate the bid is. For some people, it’s simply too low.

10 Reader Comments

  • 1
    David stauffer California , San Francisco Bay area September 17, 2015 at 01:17
    I have been selling lower end special interest cars (under $10,000 at "classic car auctions" for several years. in the last 18 months I have noted that I can sell the same cars from my dealership for the same or more money, without shipping, entry fees, and commissions. I recently have been contacted by the companies I have been dealing with, and it seems they are desperate for consignments....interesting
  • 2
    Mike San Diego September 17, 2015 at 13:58
    I agree with Brakeservo on most points he made. You can also get screwed like I did when the Auction Co. has the fix in for a VIP buyer to get your car and to get other bidders that may be interested in your car to back off of the bidding at a certain point so the preferred bidder gets the vehicle and then he backs off on bidding on another vehicle so that the other preferred bidder can get it at a better price. They totally negotiate backroom deals with their VIP clients and the seller gets much less for his car. Happened to me in Scottsdale this past January.
  • 3
    Chad Pennsylvania September 17, 2015 at 14:45
    Another con is not being able to test drive the vehicle prior to purchasing it. And the vehicle inspection cannot be as thorough as it would be for a non auction deal.
  • 4
    Patti MI September 17, 2015 at 08:24
    In the cons arena, you didn't mention the auctioneers take when selling the car. Just sayin'...
  • 5
    charlie NEW YORK CITY September 17, 2015 at 08:53
    Advertize in special interest papers, mags, club news letters, works every time.
  • 6
    Brakeservo new mexico September 17, 2015 at 10:11
    One needs to remember at all times that as a car owner/consignor the auction companies are not your friends! Their sole interest is earning commissions, they don't really care if you as a seller or buyer are satisfied with the transaction. Also, the placement of your car in the auction run order greatly influences the outcome - too early or too late there will be no serious bidders in the room except for those looking to "steal" cars. Running a car no reserve is extremely dangerous - some auction companies are known to put desirable no reserve cars either at the very beginning or end of the auction, then they have an insider buy the car at a great price and they re-run the car several auctions later at a more favorable run order and pocket the profits. I"ve also had auction companies promise me favorable run times but I failed to get it in writing at the time, then when I arrived at the auction I found my cars were either amongst the very first or very last in in these cases I got screwed. I don't care how good the reputation of the auction company supposedly is, none of them care about consignors so be very, very careful.
  • 7
    Ed waller WNY September 17, 2015 at 00:13
    Reasonable advice, but get to the point - auctions work if more than one person there wants your car. For unique low production cars, auctions are your best shot to make a deal - even if you don't sell on the block.
  • 8
    niki Spokane September 17, 2015 at 12:46
    floormen with the seller push hard to get reserves removed..saying it will increase bidding activity and raise sale price..well a few times it may, but watch..usually the hammer drops right away at that price. The auction company makes money when cars sell. As a buyer you don't get to really check out the car and start it, listen to it, drive it..a pig in a poke. There may be a reason it is at an auction, not a private sale where buyers can thoroughly check out the car. If going to buy, you need to know who the players are..the usual dealers will drop out at wholesale prices..a guy who just loves the car will pay stupid money for it.
  • 9
    365Lusso Seattle September 20, 2015 at 13:19
    Just want to give kudos to Hagerty for an article like this with the excellent & frank following comments. I have several cars I've been on the fence about how to sell--not any more. That kind of behind-the-scenes finagling is a no-go.
  • 10
    Bill Marcy Hackensack NJ September 21, 2015 at 20:17
    I have been going to car auctions since the Seventies, as a car dealer for most of that time. I have been a buyer and a seller. Don't get me wrong, I have been on the losing end of a crumby deal occasionally, but as far as I'm concerned, that was not the norm. Truthfully, when I got screwed, it was usually because I did not do my homework. If you are buying, it is really up to you to check a car before you buy it. You can't run up on a car that is on the block, buy it because it looks like a bargain and be mad when you find out that it isn't as nice as you thought. If a car is worth ten grand, you won't buy it for seven grand without a reason. Remember, there is always money in the room and someone ready to take advantage of a bargain. As a seller, there is always a tendency to think our cars are worth more than they really are, so when it brings a lower price, the seller feels cheated. My advice is to know the rules of the auction, some are different. Do your homework. Know that the auction and the auctioneers almost never know the cars personally, they are merely repeating the seller's statements, whether true, or untrue, they are doing their job. Most of the auctioneers I have known and I know many, will keep taking bids until they can't get any more. Most auctioneers are dedicated and highly professional.

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