Auctions

The concept of collector car auctions has always baffled me.   I like them because they are a good snap shot on what the market is on a given item, sort of.   Buying hay or cattle or antiques at an auction, in person, is one thing, but buying something like a vehicle at an auction, site unseen no less, is just crazy.  It is a fad that has thankfully cooled for the prudent car collector. Note the term prudent I used there. Auctions are marketing events and while I love to see the wheels of commerce turn, as a buyer my preference is to spin my wheels a bit slower.

SpecificallyI  like auctions because they are pseudo public transactions where the data can be used as “comparables” to like-kind items. While they are in fact skewed with buying and selling fees, and hype, they can be used as a guide, a loose guide.  I don’t know if the buyer was there in person. Nor do I know how much they inspected the car, or if they even drove the car.   I rarely use online auction results, i.e. eGouge, in valuing a collector car because I believe buyers are holding back a bit on their offer as a means risk mitigation because they are in fact buying something site unseen,  at least I hope they are.

Every car has a story and that story is a huge factor when I buy or sell a car. The story must be shared and understood.   I have to ask when buying or selling a car at an auction, or even worse at an online auction, how much of that story is able to be told and conveyed from seller to buyer? The auction house acts as a facilitator between buyers and sellers. There is immediately an insulator inserted between the buyer and seller. This is going to restrict the conveyance of the story. That is a problem for me.

Auctions are a game you need to understand before you play.  I have bought and sold cars at auctions and because of my experiences, and the reasons shared above, I avoid them. Good entertainment and eye candy yes. Auctions are also also a great place for socializing and networking. However, I have seen first hand cars “short-saled” or “quick-hammered” to an auction house’s good buying customer. Often times the bids being announced are fishing bids by the auctioneer.  There is not any real money behind the bids even though the bids appear to advanced in steps. This is just one example of the smoke and mirrors that take place.  Know your auctioneer and watch the room. Again much too fast and loose of a game for me to play in. No thank you.

Collector car appraisers use auction results in valuing a car. Insurance companies use auction results in determining a car’s value for loss purposes.   This is really the only sales data out there. I use a combination and try not to use auction results. If I do, I create a separate “auction value”.  If you ever see a seller using “Appraised Value”, know that the only hard core data available to the appraiser was auction results. Again, auction sales are very different than NON-auction sales. Moreover, online auctions and very different than in-person auctions.   I will be glad when the auction hype is over.

Word of mouth transactions can often be like the big fish stories, a bit embellished. Good sources I will trust. Use your gut.   -Jake