(Editor’s note: During the month of September, we’re publishing a series of articles about selling a collector car. Today, Andy Reid looks at selling at a live auction.)
Imagine yourself in Arizona for auction week and your collector car is on the block. You decided to sell it at no reserve and are nervous because you figure the car is worth around $400,000 but you decided to take the chance by offering it with no reserve, meaning high bid gets the car. The auction company marketed your car well but you’re still afraid bidding could top out at $150,000.
The first bid is comes in at $175,000 and sits there for what seems to be a full minute. Finally, there’s a second bid, and at $350,000. You relax a little.
But wait, there is a new bidder who offers $650,000. You start to celebrate inside.
Yet the car is not hammered sold. The first bidder offers $800,000. Now you’re excited. There’s another bid. It’s at $1 million, and then $1.3 and the bidding goes to $1.7 before it is hammered sold.
By the way, this is not fiction. It really happened with a car I helped to consign to auction a few years ago. Such things can happen at a live auction, but there is a lot to know before you decide such a place is the right place to sell your car.
In the previous two stories I wrote about selling your collector car, I discussed selling privately and through an online auction. Both are great options. However, if you want to swing for the fences, you may need to sell your car at a live auction to hit that home run.
The first thing that you should know is that selling a collector car at a live auction not only can be the way to get the most money for your vehicle, but also the costliest way to sell it.
There is a seller’s commission and it will be higher than that charged by most online auctions, running anywhere from 8 to 15 percent, and there also is often a consignment fee to have the auction add your vehicle to its docket.
Consider, too, that if you are selling your car at a live auction, it is a good practice to be at the auction in person. This means that if the auction is not taking place locally, you will need to transport not only the car to the auction at your expense — typically at a cost of $1,500 to $5,000 — but yourself as well.
If the auction is, say, one during Monterey Car Week, hotel rooms will cost no less than $300 a night. And don’t forget that you probably will need to rent a car while at the auction.
On a positive note, if you are selling at an auction that is held in conjunction with other events, such as Amelia Island, Pebble Beach,] or Hershey, you can spend some of your time enjoying those other events held in conjunction with the auction.
What this all means is that the costs of selling at a live collector car can add up quickly. That being said, the benefits from selling at such an auction can be staggering.
Take, for example, the Risky Business movie-used Porsche 928 that sold at Barrett-Jackson’s recent auction in Texas. The car sold for nearly $2 million, the most ever for any 928, and certainly a home run for the consignor.
But remember, as well, that this was a car with movie and celebrity — Tom Cruise — provenance.
Nonetheless, the people running live auction companies are in business to sell cars for the most money possible, increasing not only what they get as commissions but what you get at the seller.
If you have a car that is a special in any way — perhaps an interesting ownership history or is significant for its rarity or is simply a perfect restoration — a live auction likely is the best place to sell it.
Having reported all of the above, there are things to keep in mind to maximize your vehicle’s value to prospective bidders:
Don’t wait until the last minute to consign your vehicle. You need to have at least a 4- to 6-month lead time if you expect the auction company to have space available on its docket and to provide it with enough time to properly promote and market your car.
Do some research regarding auction results to see how much money different auction companies are getting for cars similar to yours. This is easy to do, simply go to the auction company websites and search the results of their recent sales. Be sure that you are looking at results of sales held within the last year because prices on cars move up and down over time.
Narrow your potential sales partners to two or three auction companies, give each a call and speak with a consignment specialist. You will be asked a number of questions about your car and be told ]what you might expect as a sales price. This is not a hard and fast number, merely an estimate. With any auction there are no guarantees. If you go with that company and the hammer price falls short of the pre-auction estimate, you cannot sue successfully. If you think the estimate is too low, go with another company.
During this conversation, the auction company will let you know what the seller’s commission is and what other related costs will be. If your car is a truly unique vehicle that is in great demand, you may be able to negotiate those fees to be lower. This is not usually the case, but if you have a car such as the first Shelby Cobra built that was owned by Carroll Shelby, I would be amazed if the company did not negotiate with you on fees.
Be sure to ask if the auction company has a photographer to send to photograph your car for the catalog as well as someone to write the catalog description. Almost all of them do so and unless you are a photographer of the skill of a Michael Furman or a Dirk de Jager, and can write like the late Brock Yates, let them handle these duties because I guarantee they are better at this than you are.
A final thing to find out is how the company plans to market your car before the sale. This can be one of the most important things for delivering the best possible sale price.
Next, call the second auction company on your list and do exactly the same things as above. With all of this information in hand, you can make your decision about where to consign your vehicle.
Regardless of which company you select, you will need to make sure you have all the paperwork expected for selling a car — title, insurance and any other documents needed by the auction company, plus documentation of restoration if the car is not in original condition, receipts for recent work, etc.
Another important question you will be asked is if you would like to sell your car at reserve or with no reserve. A reserve is the lowest bid for which you are willing to sell your vehicle. No reserve means you will agree to sell to the highest bidder, regardless of the amount.
There are auctions, most notably Barrett Jackson, which sells the vast majority of its consignments at no reserve. The hope is that, knowing there is no reserve, bidders will be incentivized to raise their bids knowing the car is going to be sold. This can sometimes create what amount to a feeding frenzy and the result can be a vehicle that sells for a record price.
According to Barret-Jackson chairman Craig Jackson, a no-reserve auction is the purest form of such sales and, he said, has continued to prove that no reserve creates the best results. The reason is that people don’t want to travel to an auction with the idea that they might not be able to buy a car. When the cars are all kept at no reserve, it works like the stock market — the market price is what it sells for.
The no-reserve lure can also work by grabbing a bidder at the auction who finds a car he was not even looking for but then bids of it knowing it is going to sell.
“The no-reserve auction creates the energy in the auction room that creates the best atmosphere, and the magic that happens at no reserve,” Jackson said.
The Risky Business Porsche 928 is just one recent example of no-reserve magic. Another was the 1965 Aston Martin DB5 convertible at RM Sotheby’s Monterey auction. The car’s pre-sale estimated value was $2.25 million. Bidders took it up to $3.195 million.
Now for the reserve side of the coin. If you desperately need a guarantee that your collector car be sold at a minimum price that you cannot go below, then you should set a reserve. Keep in mind, however, that you risk not selling your car and will be out all the costs of getting that car and yourself not only to auction but back home again.
To set a reserve price, consider values suggested by the Hagerty Price Guide and work with auction company and its car specialists to set a figure that makes sense. If you do this, you have a better chance of actually selling your car.
Keep in mind as well that if your car is a no sale at a live auction, whether because of the venue or a reserve set too high, the high-bid price will be linked forever to your car, and can make it difficult to sell for more than the high bid in the near future.
The decision of reserve and no reserve is up to you. If you are comfortable that your car will sell for a reasonable amount at the exact auction you consigned it at, I recommend going the no-reserve route.
When you arrive at the auction site, be sure your car also has arrived and has not sustained any damage during transport.
If it has arrived in good shape, be sure that the battery is not dead and that there is gas in the car. Non-running cars do sell, but for much less than running cars, and sometimes they only don’t run is because they are out of gas. Don’t be that person that runs out of gas on the way to the auction block.
Your car is likely to need an additional detailing, so if the auction company does not have this as a part of their service, ask about the people on site who can do this. Sure, you can do it yourself, but I’d have someone else attend to this as you are likely to be under some stress already.
During the time of the auction preview, you should be available to the auction specialists to answer any questions they get about your car from potential bidders. Do not bring a bunch of stand-up signs for your car, just be available. Answer as openly and honestly as you can, and do not answer questions not asked. Also, do not discuss what you want for the car or what the reserve price may be.
Ducting the sale be sure to be in the room and available to the auction personnel. They may have questions during the time your car is staging or on the block. If you have a reserve set and the bid is approaching that figure, you may be asked to lift or remove the reserve. This almost always leads to more bids well above your reserve and is a standard practice.
Don’t drink and drive — or sell. Another piece of good advice is not to have a few drinks to relax as your car goes toward the auction block. You need to be at the top of your game when your car crosses the block. If you want, have that celebratory beverage after your vehicle is hammered sold.
After the car is hammered sold you will need to fill out some paperwork, so don’t disappear. Also consider that you might want to take your winnings and buy a car at the same auction to replace the one you sold. Almost every auction company can apply the price your car sold for to a car you are buying.
I know this is a lot to digest, but in closing I want to tell you that selling cars at a live auction is an amazing and energizing experience and some of the most fun you can have in the classic car world.