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How to Sell a Car at Auction
Primer for Newbies
Refresher for Veterans
|This article first appeared in the April 2010 issue of Collector Car
Market Review (C) Copyright 2010, VMR International, Inc. All
It’s no secret that the keys to selling your collector vehicle at auction are research, preparation and presentation. It requires only a small time commitment on your part to maximize your vehicle’s sale probability at auction.
For starters, you must research and come to understand the actual auction process. First find an auction that offers cars similar to your own. Why? It’s more likely that it will attract buyers that will be interested in your car, too. Next, investigate the policies, procedures and fees of your potential auction companies. You’ll likely be charged both an entry fee and a commission on the sale, which vary from company to company. Premium run times (when your car crosses the block) almost always bring an extra charge, too. Early and late time slots generally have fewer people in the audience to bid on your car, so the the extra cost is often worthwhile. Finally, find out when and how you will be paid if the car is sold. Try to find collectors that have already been through the process, and ask questions about their experience with the process and the auction company, and if they were satisfied with their service. Above all, ask them if the auction company met their obligations as spelled out in their consignment contract. Unfortunately, in the world of big time auctions all too often the small time enthusiast/collector gets passed over to meet the needs of big time and/or frequent players, leaving him/her with poor service and little practical recourse.
Next, you need to determine the value of your car. Not your own pie-in-the sky value, or the price one was reported to have sold for at a high profile auction, but a realistic price based on multiple auction sales, comparable classified ad listings and multiple price guide sources. An important component of this is that you properly evaluate the condition of your car. We’ve talked to countless hobbyists who think they’ve got a priceless jewel, when in fact it’s a gem only to them. It’s imperative that you’re honest with yourself during this process and arrive at an accurate value.
From this, set your lowest acceptable value, or the lowest price that you will sell your car for. This number should be a bit below your reserve, as it will allow you some negotiating room if bidding gets close to reserve and you move to post-block negotiating with one or more bidders.
Now that you’ve determined your price, decide how you will enter your car. Will it go through at a set reserve, or are you willing to roll the dice and go no reserve? As a no reserve entry, the vehicle will sell to the highest bidder, regardless of price. There are ways around this, such as buying back the car (known as “buybacks”) to avoid letting the car go at too low a price. If you go that route, you’ll also have to pay the buyers fee, making the whole thing nothing more than a costly exercise. Because you are both the seller and a bidder buybacks enter an ethical gray area, but it is a fairly common practice. With a set reserve, you tell the auction company the minimum bid that you will accept. If that number isn’t reached, you take the car back home. Often, the auction company offers a lower entry fee to vehicles consigned on a no-reserve basis. They’re willing to give up a little up front knowing that they’re guaranteed adding a buyer’s fee to their total revenue on the vehicle. Some auctions are all no reserve, so the reserve option is not available.
The paperwork involved in entering you car in an auction can get confusing for the first time consignors. Rest assured, however, the auction company has this all down to a science and will guide you through it every step of the way. You’ll have to fill out and sign a consignment form. The first thing you’ll need to do is prove ownership, so you’ll need your title. If there is a lien on the car, it gets a little messy. Check beforehand with the auction company, as many of them do not accept consignments with liens.
The consignment process is where you’ll have an opportunity to describe your car. Give detailed information such as history, restoration work, recent work or service, any awards it has won, and any other information that will make it stand out from the other vehicles in the auction. If it runs and drives well, state it – often this is exactly what buyers are looking for. Be honest and open about what the vehicle is and reveal any flaws or problems. If you don’t do this, it can (and often does) come back to you after the sale. Depending on the auction companies’ policy, this could take the form of refusal to release payment, legal action, arbitration, or other action that is far more of a hassle than it’s worth. Plus, it’s just wrong.
One of the most important things you can do has nothing to do with the auction at all. Spend a day cleaning and detailing your vehicle. Clean everything. Inside, wipe down the seats, door panels and dash (get all the gauges, knobs and switches), vacuum the carpet, and try to remove any stains. Underhood and underneath, remove as much dirt and grime as possible, but only so much as makes sense. For example, if the rest of your car is in #3 condition, don’t spend an inordinate amount of time trying to bring these areas above that. Conversely, if your body and interior are spotless, it’s a good idea to make the rest of your car that way, too. Lastly, give it a fresh coat of wax. Mechanically, try to replace or repair anything that detracts from its presentation. A faulty exhaust or fluid leaks are two examples. Make the vehicle run as well as possible. If it needs a tune up, give it one. Make sure the battery is ready to go, too. When it’s your turn to drive up to the block, you want to make the best impression possible. Spending several hours sprucing up your car will show prospective buyers that the car has been well cared for. It’s also quite possible that you can raise the condition rating of your car at least half a grade, and several hundred to a few thousand dollars in value. It’s time well spent!
Finally, auction day is here. Go to the sign in area and let them know you are ready to go. If you haven’t given them the title, do so now. If it is title exempt, they will at least need the VIN. Have a complete understanding of their consignment and sign in policies and requirements before you get there. Go to the staging area early and get your car positioned and set up. Display any trophies it may have won. It’s a good idea to display a “storyboard” of the vehicle. This typically has a full description of the car, including copies of any original documentation and any unique or special characteristics it may possess. If you restored the car yourself and have pictures documenting the process, bring them along, too. Lastly, it is very important to stay with the car. You want to be there to answer questions and advocate for your car. Show people around. Yes, many of the lookers will be just that---lookers. But you’ll get a few serious potential buyers, too, and what you say here could clinch a winning bid.
Once your car hits the block and bidding starts, pay attention to the action. If your car sells, great! If not, may still not be lost. If the bidding came close to the reserve, often the auctioneer will ask you if you want to drop the reserve. He will then try to jump start the bidding in order to get the price up. Failing that, it will go to the current high bidder. Alternatively, the auction company may close the bidding and then try to get you and the high bidder (or others), to close the deal “post block”. Both of these scenarios bring in the “lowest acceptable price” we talked about earlier. Remember it and stick to it, as you arrived at that number in a clear headed and calculated manner, not under the pressure of the auction atmosphere. If your vehicle sells in this manner, you are still responsible for all auction fees and commissions. Either way, stick around for a couple hours after the sale. You may be summoned to answer a question from the buyer or auction company, or there may be a glitch somewhere along the line. It’s better to get everything settled while you are still there.
If your car doesn’t sell, what you don’t want to do is try to negotiate a deal privately with someone. You are still on the auction companies’ grounds and all the potential buyers were brought there by the auction company. Besides being a little slimy, it also violates your consignment agreement, which clearly states that these types of sales (within a certain time period) are also subject to all fees. Technically, even if you close a sale a week later in your driveway you should notify the auction company.
None of this guarantees that your vehicle will sell at the price you want. However, it does ensure that you are maximizing the sales potential of your vehicle and greatly increases the chance that you walk away happy with the collector car auction process.