How to Buy a Classic Car at A Live Automobile Auction

One of the major purchases an individual or family makes is an automobile. Here in the United States, we have had an ongoing love affair with cars that continues to grow. Cars represent freedom, and for many people, are the ultimate status symbol.The hobby of car collecting has steadily grown since the mid-80s and is now a full blown major industry. It used to be car auctions were reserved just for the wholesalers and dealers but today auctions are no longer staged on back lots they’re televised in prime time featuring celebrities and, in many cases, the cars themselves are celebrities. Perhaps you have been bitten by the bug and want to get in the game. How do I bid on a car? What are the rules and most importantly, how can I purchase the car of my dreams with savvy and not over spend? Read on!

How to Buy a Classic Car at a Live Auction

classic car in black and white with loads of shiny chrome
classic car in black and white with loads of shiny chrome | Source

History of Auctions in the United States

Until eBay, the auction block was something more of a novelty seen only at the movies - at least here in the United States. As an American I conjure up auctions in my mind with a refined British accent. Many American auction houses today continue this vocal tradition of a "British accent". Some auction houses even have commentators with a British accent which I find rather ironical when they are talking almost exclusively about American muscle.

And then there is a new Internet phenomen that has made its way to most households in America and beyon - eBay. eBay is an exciting adventure! Oh, to be the highest winning bidder - what a thrill! Yet in my dealings with eBay I have found I must control my emotions. For you see in the auction arena, there is a little thing called pride and competition in the bidding process. This is what makes the auction consignors rich and the buyers poor. So this brings me to the real fact, only experienced and astute buyers do well at auctions - eBay or otherwise.

The Universe of Auctions is Changing Here in the United States

eBay Motors started it long ago. I am a little surprised at the lack of competition until recently. There seems to be a plethora of new software houses that now offer online bidding and the first ones to take hold but, of course, are those for automobiles.

Perhaps the dramatic increase is due to the notoriety of the auction house operations being televised on the Discovery Channel. Perhaps it is simply a natural reflex after the economic downturn. Whatever the case, the online automobile bidding is exploding and I anticipate the global market to change dramatically in the next 24 months.

What eBay did for antiques and collectibles and clothing is now going to be a common place item for the automobile.History of Auctions in the United States

Until eBay, the auction block was something more of a novelty seen only at the movies - at least here in the United States. As an American I conjure up auctions in my mind with a refined British accent. Many American auction houses today continue this vocal tradition of a "British accent". Some auction houses even have commentators with a British accent which I find rather ironical when they are talking almost exclusively about American muscle.

And then there is a new Internet phenomenon that has made its way to most households in America and beyond - eBay. eBay is an exciting adventure! Oh, to be the highest winning bidder - what a thrill! Yet in my dealings with eBay I have found I must control my emotions. For you see in the auction arena, there is a little thing called pride and competition in the bidding process. This is what makes the auction consignors rich and the buyers poor. So this brings me to the real fact, only experienced and astute buyers do well at auctions - eBay or otherwise.

The Universe of Auctions is Changing Here in the United States

eBay Motors started it long ago. I am a little surprised at the lack of competition until recently. There seems to be a plethora of new software houses that now offer online bidding and the first ones to take hold but, of course, are those for automobiles.

Perhaps the dramatic increase is due to the notoriety of the auction house operations being televised on the Discovery Channel. Perhaps it is simply a natural reflex after the economic downturn. Whatever the case, the online automobile bidding is exploding and I anticipate the global market to change dramatically in the next 24 months.

What eBay did for antiques and collectibles and clothing is now going to be a common place item for the automobile.

"For you see in the auction arena, there is a little thing called pride and competition. This is what makes the auction consignors/sellers rich and the buyers poor. So this brings me to the real fact - only experienced and astute buyers do well at auctions. Do your homework and remember the cardinal rule is control your emotions."

Auction Block

Photo of an auctioneer up at the podium in front of the auction block
Photo of an auctioneer up at the podium in front of the auction block | Source

All Good - Competition is Always Good

Market competition is always a good thing. For any market to be dominated by one or two firms, the consumer always loses. If there is true competition, the consumer always wins. Competition always begets greater efficiencies, lower prices and higher quality standards.

The Start-Up May Be Rocky - Beware

Having stated that we must realize the broad acceptance of car auctions will forever change the marketplace. We have seen the downturn of the brick and mortar retailers have taken. Look for the local car lot to be also hit. If the local car lot is not participating mark my words their business will go adrift in the same manner as the horse whip. Retailers must change their point of view, understand the consumer needs and wants and make changes to their retail operations to keep pace with the ever-evolving marketplace.

Auctioneer

Auctioneer
Auctioneer | Source

Auction Terms You Must Know

Auction Block - a platform from which an auctioneer sells; "they put their paintings on the block

The term bid is derived from Old English beodan, "to offer or command."

Bid a. an offer of a specified amount, as at an auctionb.the price offered

Registered Bidder

Reserve The floor price to accept the offer of sale, the lowest possible bidding price the seller will accept


Step One Know Your Fees

At an auction there are always three fees you must be aware of:

  • Registration Fees
  • Buyer's Fees
  • Seller's Fees

Fees are always non-refundable. Deposits are refunded or applied to your purchase.

The registration fees vary greatly from type of auction and from company to company. Often for equipment auctions, the fees are low the but deposits are high. For automobile auctions, the registration fees vary by type of auction house. For instance, a collector car auction where the lowest price car is in the six digits, the registration fees are typically vary high because it is an event unto itself and in order to keep the clientele elite the fees are accordingly very high.

The perks of the registration fees of the elite car auctions often entail free alcoholic beverages.Do know what you are buying and most importantly do understand often buyers will purchase more if they have more drinks. Drink responsibly and you will buy responsibly.

Auction Rule for Winners

"Drink responsibly and buy responsibly."

Bidder Paddle

Bidder Paddles
Bidder Paddles | Source
Nascar lanyard - credential holder for pit pass
Nascar lanyard - credential holder for pit pass | Source

Days of the Bidder Paddle Now Behind Us

Credentials are still needed for the bidding arena and auction houses still use bidder numbers but the days of the bidder paddle are now reserved for the non-profit and charity events. The typical bidder credential is a lanyard that is worn about the guest neck. The bidder always has a number because that person has buying power and is financially responsible. The guest badge may have a name or not, often I have seen the simple words "guest".

In Nascar they pit passes have also gone into the realm of convenience with the lanyard serving as the entrance ticket.

Bidding Arena - Standards of Excellence

Setting the standards of excellence is key to a good auction house reputation. Reputable firms will pull credentials and black list those who violate the rules. Why is this important? Because the auction house is serving to bring a fair and equitable set of buyers and sellers to the table. If one of the parties is ................

Faux Bidder - Yanking Bidder Credentials

"A short time later, President Steve Davis stood at the podium and dangled the faux bidder’s lanyard for all to see, announcing that he had been removed from the premises, and that his bidding credentials had been yanked. "

Yanking Bidder Credentials

Bidder Credentials - The Right to Bid

Not everyone attending an auction has "bidder credentials". What are bidder credentials? Credentials showcase the individual is a bona fide buyer This is a right and can readily be revoked.

Sincere Bidder

One of the best terms I have heard that simply and succinctly describes the bidder credentials is the term "sincere bidder".

How does the auction house prove that you are a sincere bidder? There are a number of different methods and each auction house rules are a little bit different. Always be sure to understand the options and choose a clear path to expedite your registration process. It is not complicated but the details must be sorted out before you proceed.

Credentials - Definition

"cre·den·tial

noun 1. Usually, credentials. evidence of authority, status, rights, entitlement to privileges, or the like, usually in written form: Only those with the proper credentials are admitted. 2. anything that provides the basis for confidence, belief, credit, etc.. 3. to grant credentials to, especially educational and professional ones: She has been credentialed to teach math.adjective 4. providing the basis for confidence, belief, credit, etc."

Definition of BONA FIDE

1 : made in good faith without fraud or deceit <a bona fide offer to buy a farm> 2 : made with earnest intent : sincere 3 : neither specious nor counterfeit : genuine

Documents You Must Provide

The auction house will need to have proof of identification. Be prepared to provide a copy of your dealer license (if applicable) and a personal form of identification - either a driver's license or a passport.

These documents can be copied and mailed, scanned and emailed or copied and faxed.

TIP: The driver's licenses in the United States do not copy well. Do plan placing on a 30-40% zoom if you are using a copy machine. Do hand write or type your date of birth, license number and cell phone number so it is perfectly legible. This provides a quick and easy method to decipher your identification and contact you quickly if questions were to arise.

The best way to provide a copy of your identification is a simple photograph of the front of your driver's license via your the camera on your smart phone. The magic of mobile technology makes life so much easier.

Step Two Decide Your Type of Registration

The options for registering to bid include:

  • On-site registration
  • Pre-registration
  • Absentee registration (proxy bidding, telephone bidding or Internet bidding).

Payment Options for Registration

Payment options often include check, certified funds, money order or credit cards.

Payments for Purchase Often Different From Registration Fee Payment Terms

One of the items that can be confusing for first time auction goers is the different payment terms for registration fees verses purchases.

Some auction houses do take credit cards for purchases - but not all. Do plan ahead and know precisely how you would plan on paying IF you are the highest winning bidder.

Payment Time Frame for Purchases

Know your payment terms and the time frame full payment is mandated. Remember, an auction is a privilege. If you do abide by the rules, the item you won could be returned to the auction block. For instance, eBay requires payment within 4 days. Some sellers want payment within 2 days. One automobile auction asks for payment within 60 minutes. Do read the registration contract and clearly understand the financial responsibilities of the buyer.

Deposits for Absentee Bidders

Whether you are an absentee bidders at a physical automobile auction or an absentee bidder bidding on the Internet or telephone, the deposit to prove you are a sincere bidder must be submit. Do allow sufficient time to overnight the check or wire the funds.

Some auction houses have forgone the "deposit" for a simple credit card qualification. The qualification is serving as the good faith deposit of years long ago.

While many are still mandating the bank letter of guarantee when writing a check, be sure to check the individual rules of the specific auction house you will be attending. When the rule, when in Rome, do as the Romans do. This rule applies with the specific auction houses. Know the rules.

Auctioneer's Gavel

auctioneers gavel
auctioneers gavel | Source

Registration Fees Different From Deposit

Perhaps one of the most confusing items is the registration fee is completely separate from the deposit. One is a fee to participate - it is simply a non-refundable entrance fee that allows you in the auction arena.

Remember, you can attend many automobile auctions without any registration fee and simply observe. The experience is completely different. Some elite auction houses do not offer this option - they simply want buyers not spectators. Do consider this fact when you are at step one of your decision tree.

How Credit Card Authorizations Payments Work Diagram

Credit Card Authorizations Diagram
Credit Card Authorizations Diagram | Source

Step Three - Prove Your Financial Qualifications

You are now a registered bidder and yet you still must offer to the auction house some form of qualification to show that you are financial able and willing to participate in an auction.

Cash Deposit

This is common place for many equipment auctions. This is still an acceptable method to qualify at many automobile auctions. It is clear cut and easy to understand but it is cumbersome for the bidder because IF they do not purchase anything they must wait for the return of their funds. For some auction houses, this may entail up to 30 days and beyond.

Credit Card Authorization Becoming Popular

A deposit may be in the form of simply a credit card authorization. This means the auction house will authorize or reserve a certain dollar amount with your credit card company. It is not a payment, it is simply a reservation. This method in the United States is the most common method because it is simple and secure.

Bank Letter of Guarantee

The bank letter of guarantee was once the preferred and only way of bidding at an auction. This is still done here in the United States. It has lost its luster as the world of banking has transgressed from local banking to regional banking. Check with the auction company before you go to your bank and know the precise rules regarding the letter before you even begin the conversation with your banker.

Sample Bank Letter of Guarantee

Source

Step Four - Due Diligence

Just as bidding out on eBay, the buyer must be wary! Know the flaws, ask for documentation, start the engine, ask for more photos. Ask for the vin number and run the CarFax report.

Car Inspection - What to Look For

One of the difficulties of any auction, from eBay to the many car auctions is the item is sold as is. It is the seller's responsibility to detail the many flaws and the buyer must delve into the details and make their judgement call about the flaws and how they might affect the value of the item. For an automobile, the engine is key. While most car auctions allow you up close and personal, the one item that sets a car auction apart is the time given to the buyer to start the engine, inspect the documents and do their due diligence. If you have limited funds, starting the engine, looking for any possible leaks, inspecting the documents is critical. If you are car collector seeking a classic car for an investment and the maintenance fees might be less of a concern for you. Classic car collectors have a different standard of excellence, they are looking for the high demand cars with low production numbers.

Bottom line is if you are attending an auction to buy, do go the distance, sprint to the finish line with taking the time and making the effort to start the engine and see it run. All too often people look at the shell of an item at the auction - this is great for fine art but not recommended for mechanical items such as an automobile.

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Buying A Car at Auction - Purchasing A Classic Collector Car or Buying a Daily Driver

The automobile auction is a great way to purchase whether you are buying to start or add to a classic car collection or purchasing a daily driver. The auctions offer a free and open market system that this country was built upon for open commerce. The rules, at first, are a little daunting because they all are intangible, however, once you know the ropes and have the process explained, it is crystal clear and very simple.

The auction of automobiles historically has been reserved for the wholesale dealer and "to the trade only", this is changing very rapidly. Auction houses are now serving not just dealers, not just classic car collectors but the common daily driver too. And while eBay started the online auction motors, do look for increased competition in the next couple of years.

As a registered bidder either on-site or absentee, it is your responsibility to learn the rules of not just registration but also for bidding. Do look for an auction house that educates and trains you on the details. Being the highest winning bidder is only fun when you have purchased well. Don't be fooled by your emotions and the shiny piece of steel in front of you. Set your limits, know your strategy and the auction process will serve you well.

Auction - How to Buy At An Auction Step by Step

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Know the Rules of Your Specific Auction House

The most important rule is to do your research so that you know what you are buying and eliminate any surprises. Remember you are in the ring with savvy wholesale dealers and “wild” amateurs. Resist the urge to follow the pack. Know your values and know your strategy.

As a registered bidder either on-site, via telephone or internet, it is your responsibility to know that auction house’s rules. Prior to making your first purchase seek out an auction house that educates and trains you on the details of their registration and payment terms.

Being the winning bidder is only fun when you have purchased well. Make sure your dream car isn’t a nightmare when you wake up the next morning. Set your limits, know your strategy and the auction process will serve you well.

The automobile auction is a great way to purchase whether you are buying to start or add to a classic car collection. Who knows you might even purchase a suitable daily driver. The auctions offer a free and open market system of free enterprise that this country was built on. At first, you may be intimidated by the crowds, the television lights or new surroundings. Remember to focus on the basics. Once you know the ropes and have the process down it’s simple and fun.

Best of luck bidding. Please drop us a line about your auction experiences. We can all learn from each other.

© 2013 American_Choices

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