It looks like a good year for bidders at collector-car auctions. The recession means that previously overvalued cars will be relative bargains. However, even a recession cannot reduce the value of limited-edition classic cars that are always sought by well-heeled car collectors. As Andy Cohen of Beverly Hills Classic Cars says, “I think the right collector cars are much safer than stocks.”
Collector-car auctions are exciting events to attend and intimidating events for an inexperienced bidder. There’s the opportunity to get an authentic, thoroughly researched car for a fair price. However, many successful bidders will end up paying more than a car is actually worth when the costs, fees and ancillary expenses are added up. To make sure you are in the former category, do your homework before you attend so you’ll be as knowledgeable as possible when the bidding starts.
The auction companies get the facts on the cars they will offer and so should you. Your first task is to select the car you want. Research the auctions and find that car. Keep in mind that the costs of attending an auction can add up. There’s an admission fee just to watch. Bidders usually must purchase a registration package consisting of a bidder’s number and credential, admission for two, parking pass, access to special bidders’ areas and/or events and a catalogue of the cars to be presented. Be advised that a successful bidder pays a 10 percent bidder’s premium over the “hammer price” for the car. Unless you are going to drive the car home, you’ll be paying for transportation, too.
Now that you have your shopping list and auction selected, it’s “due diligence” time. The well-prepared bidder always knows what the car is worth. Your research should include confirming the prices paid for comparable cars in recent auctions. A model-specific reference book will help you know which models came with what equipment. You should know the value range for the car, prices for original, restored, “matching numbers” and modified versions of your car. Once you have the data and the numbers, the bottom-line question is: Can you afford the car of your dreams?
Early birds get auction advantages! You can view the car and check it out thoroughly and possibly talk to the owner. Some bidders hire qualified experts to check out the car and verify the auction description and value of the car. Some auction houses will even arrange a test drive! Do everything you can to know what you will be bidding on.
Before you enter the bidding area, consider everything you know about the car and come up with a “not-to-exceed” top bid for the car. Upon entering the bidders’ area, identify the “ring man” (or woman) stationed strategically by the auction company. Tell the ring man which car you will be bidding on. When your car goes on the block, move next to the ring person so you will be clear about bids and can get clarification if needed.
Bidding is an art and a psychological battle of wits. There’s an advantage in declaring yourself a serious bidder with your opening bid. If you think it’s a $50,000 car, open with a $40,000 bid – you’ll eliminate the posers and identify the serious bidders. Even in a “down” market, diddling around with low bids will not produce a “steal,” but offering a serious bid at an “educated” level may well get you a “deal.” As a serious bidder for the car, you will have the full attention of the ring man. The best situation will be a “no reserve” designation for your desired car. That means the auction house is confident the car will sell for a price that will exceed estimated values or at least come close. It means the car is going to sell, even if it fails to reach the estimated selling price. You can do very well when a car is “no reserve.” Bid until you reach your “not-to-exceed” price and then walk away, no matter how emotionally charged up you are.
Many cars will go on the block with a reserve price. If the bidding does not exceed the reserve price, the car is withdrawn and not sold. If you decide you want that car, tell the ring man immediately and arrange a quick negotiation with the owner or representative. Auction experts advise that this is the best time to purchase the car because the owner may well be regretting he or she did not lower the reserve price. If you can negotiate a fair compromise, you can own that car.
There’s one thing on which experienced auctioneers agree. Successful bidders know what they want and what they want to pay. The car goes on the block and the successful bidder calls out a realistic price. If you are sending a message that you are going to own that car, most likely you will!