Eight ways to prevent an auction hangover
A fool and his money are soon parted. Well, after almost 30 years of buying, selling, and observing at hundreds of auctions, I’d like to say that’s not true. But it is. So, as we head into the 2018 Scottsdale Auction Week, I’d like to offer eight pointers to keep us all from being The Fool.
1. Register, Review, Refine
If you haven’t already, get pre-registered for any auctions you plan to attend. You only have so much time on the ground before the auctions start, so don’t waste it in line trying to get credentials. Once you’re registered, review the online dockets and catalogs to make a list of cars that interest you. Then, refine the list by taking a long, hard look at your choices. Catalogs are designed to romance you into buying cars you never thought about before. Therefore, avoid what could end up being a one-night stand. If you have always wanted a 1967 Corvette, don’t put a 1946 Chrysler Town & Country on your list because of great photography. Be true to your collecting goals.
2. Don’t believe everything you read. Especially in auction descriptions.
“Trust, but verify” should be more of a mantra here than it was for the Reagan administration. More importantly, pay attention to what isn’t mentioned. For example, if the description doesn’t specifically say a car has its original engine, you can almost certainly assume it does not. Statements such as “original drivetrain” or “original paint” aren’t always as clear-cut as they may seem at first. And it isn’t always a seller attempting to deceive, often they are just repeating what they were told upon their purchase and have no idea their car isn’t all it is supposed to be.
Keeping #2 in mind, don’t be the guy who spent more time saving 10 dollars a day on his rental car than researching a $500,000 auction purchase. Before you get to the auction, get to work on a checklist. Google the serial numbers. Most will pop up, often showing some past sales or other priceless info. You can also Google phrases that include the make, model, VIN, and auction house to see if you get any hits. Search the Internet forums for the type of car you’re considering; most have an “Up for Auction” section where they’ll post upcoming sales and discuss. Still coming up short? Contact a known expert on the make and model, often an invaluable source of great info and worth whatever small fee you may have to pay.
4. Screw the round of golf
You’re here to buy a car. So skip the buffet and the world-renowned golf course that TripAdvisor mentioned. Get to the sale. The earlier you can be on-site at the auction the better. Catalog-style auction houses all have their specialists and their contact info listed. When you’re on the ground, call them up and ask for an appointment to inspect the car, or cars, you’re interested in with them present. Don’t wait until the preview day, or worse, auction day, if you can avoid it. Often showing your interest and scheduling an appointment will offer the opportunity to take a test ride, review any documentation, and do a physical inspection that won’t be possible when the auction is underway. There is also a good chance you can meet and have a conversation with the consignor, which is a great way to get a feel for what you are buying and the person selling it.
5. All Systems Go
Did the car check out? If so, compare the auction estimate, if available, to the Hagerty Price Guide and Hagerty Valuation Tools numbers. Search old auction results for what similar cars have sold for, if such comps exist. [The Hagerty HVT Insider app is a handy way to do this, by the way.] Keep in mind that in a reserve auction the low auction estimate is typically the number the car will be “for sale” at. Then using all of this data, decide on what you want to pay. As hard as it is, come auction time use this number to keep yourself from getting swept up in auction fever and paying more than you want to.
6. Watch and Learn
On the day of the auction, arrive early. Find a good seat, and feel out the room during the preview. Wander over to the car or cars you’re looking at. Watch when others others inspect a car, possibly identifying something you missed. Strike up conversations; see what others think of the car or what kind of price it may bring. Gauge interest. Just remember, like a good game of poker, no player wants to show their hand, so don’t expect full disclosure or a glowing review of the car from everybody. When the auction starts, take your seat. Observe the auctioneer, the ringmen, the crowd, the phone bidding desk. Note the bidding activity; is the room buzzing or is the auctioneer working for every bid? Are cars selling below estimate or briskly meeting and exceeding reserves? What is the sell-through rate? All of this will give you an indication of how your time at bat will go.
7. When in doubt, hire an expert
If any of the above sounds daunting, it should. No matter what you are buying there are significant sums of money involved. And think about it: The consignor, the auction house, the auctioneer, and the ringmen are all there to do one thing—sell cars for the highest price possible. And then there is you, the Lone Ranger, holding down a chair waiting for the three minutes to step into that ring and attempt to come out with a good car at a fair price. A lot of variables, right? Help your chances by hiring a pro to help you. An expert can not only help inspect the car but also help you arrive at the right price to pay, navigate the entire bidding process, and help with the paperwork and logistics that follow if you end up buying a car.
8. It missed, now what?
In the odd chance the car went unsold on the block, now is the time to quickly tell the auction company of your interest. Post-block deals are common, and best hammered out while the consignor is still disappointed in the no-sale and starting to look at the harsh reality of shipping the car back home. And the auction company would rather earn some commission, as well as add to its sales total, rather than have a no-sale drag down the sell-through rate and profits. So now the cards are a little more in your favor. This is the time to negotiate an “all-in” offer, where the auction company may forego some of its fees and/or the consignor may reduce their minimum net proceeds to simply get a deal done. But no matter what, never try to be a “fence jumper” and negotiate a deal directly with the seller outside of the auction. Most auction listing contracts prohibit this, and also, it pays to have the auction on your side here helping negotiate a deal on your behalf for all of the reasons listed above.