Buying a car at auction can be full of pitfalls, but get it right and you can be in for a real treat. Here Borro Blog’s car industry expert talks you through the “do’s” as well as the “don’ts”
The fall of the gavel, signifying that you went unchallenged with your last bid. The feeling of euphoria that follows, and then the twinge of doubt about what you have just become the new custodian of. A very familiar feeling.
Changes in the Auction Industry
Auctions for high-end motor cars really have changed over the past few years. There was a time when the auction houses were just a trade-only gathering where stock was bought and sold with very little competition from the buyers who would normally have walked into the dealer’s showroom. Now, however, the rooms tend to be filled with the consumers who are looking to cut out the dealer middle man. Perhaps, it was the lure of snapping up a bargain, or that everything is sold at trade money. Whatever the reason, times have changed, and because of it, caution must be observed.
Do Your Homework
Buying a car at auction can be adrenaline-fuelled, and so it is easy to get carried away. When you have identified a car that is worthy of your time and money, it is imperative that you carry out some due diligence. The auction house is a very different beast to the dealer route, and if you don’t exercise care, it may end up costing you a lot more than if you had simply bought it from a showroom. Study the market to get an idea of value. What are these models selling for? When was the last one sold at an auction, and how does this one differ? Remember, provenance carries more weight than condition, so take that into account. A famous previous owner may push the value up, and so the car will attract not just fans of the model, but also of that individual. The fact that someone paid over $17.8m for Paul Newman’s Rolex Daytona is point in case for that. Make sure you are fully aware of the car’s history as much as you can be.
Have a Representative in Attendance
It’s not always possible to get to the auction because of other commitments, so if this is the case, my advice is always try and send someone on your behalf to be there. They’ll be able to not only look at the car for you and check its history with the file, but also give you an idea of the room’s “temperature” and if the crowd is enthusiastic in its bidding. They might also be able to indicate to you how many people are looking at the car before the bidding starts, or if the room thins out after another, feature car has gone through. This might allow you to keep your powder dry until the time has come to start bidding.
Beware Bidding Wars
Whether you are bidding in the room, or by phone, the key is to stick to your budget when you’re buying a car at auction. It is very easy to get swept up in a bidding war, and unless the car is worth every last penny you have, or you have particular reason and resource to own it, don’t go past your self-imposed limit. Also remember, the price that the hammer falls at is not what you will actually end up paying. The auction houses charge both the seller and buyer a percentage commission, and some charge a split fee on the purchase price. For instance, they might charge 10% on the first $50,000 and then an additional 8% on the remaining difference. This will always be disclosed in the catalogue or website so check this out before you start, and always be quick in your mental arithmetic!
Take Caution with Competition and Restored Cars
Competition cars should always be viewed with the utmost caution. Be very “clued-up” on the individual car before you start. Does its catalogue description match what you can research? Study the description very carefully, as a replacement chassis, engine or body may be glossed over quickly, and so has that tainted the car’s originality? If so, the estimate might be unrealistic. Also, if your plan is to keep it competing in history events, has any changes made affected this? I cannot stress enough that proper research before you even get to the venue will pay dividends in the end.
This is also the case with a restoration. Does it look period correct? Remember, today’s paintwork and trim materials are very different to those used in the past, and whilst it may look lovely in the catalogue’s photographs, does it match up to that in reality. The camera never lies is no longer true in a Photoshop world remember……
All this being said, if you enter into this with your eyes wide open, and a clear head, the thrill can be irresistible and a great way of snapping something very special up. Just remember that when you have bought it, you own it. No warranty, or comebacks apply in the auction world. You have to pay the money and take it away. Its only in very rare circumstances that there is any way to have the sale revoked due to an incorrect description or unexplained history.
So, to summarise:
- Do your homework and check the car’s provenance carefully.
- Take provenance into account more than condition when it comes to value.
- Prepare your budget including the fees.
- Don’t get carried away in a bidding war.
- Have your payment ready and logistics in place for when you win your dream car.
- Most of all? Enjoy the experience!
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