Cautionary Notes for Auction Bidders
 

I'd like to offer some cautionary notes for auction bidders, if i may. Most are lessons learned from years of experience ... both good and bad. I don't post that often, mostly because i like to fly under the radar ;) but a few well-respected members know me :)


I'll try to organize so that there's one "lesson" (so to speak) per post. I'll also offer my best, unbiased advice ... without any agenda, other than to share & maybe inform.

I've thought about this quite a bit. I've concluded that it just benefits no one, who is passionate and really cares about our hobby, if "mistakes" are made at auction.


So here goes ... please feel free to add, comment or ignore, of course!

FIRST: Do NOT trust the auction description! Not one word of it. It's not worth the paper it's printed on.


PLEASE start here. PLEASE read this:

https://cdn1.mecum.com/assets/regist...gistration.pdf


A few highlights:


"7. All Lots offered are sold “AS IS, WHERE IS.” Mecum makes no representation and extends no warranty, express or implied, respecting any Lot’s
condition, genuineness, value, and/or quality. Mecum is not responsible for any defect in any Lot. MECUM HAS NOT INDEPENDENTLY
INSPECTED OR TESTED THE LOT AND HAS NO KNOWLEDGE OF THE LOTÂ’S HISTORY OR CONDITION. Bidder has the duty, right, and opportunity
to inspect any Lot prior to bidding, and BidderÂ’s participation in the auction of any lot is exclusively premised upon the BidderÂ’s own
determinations. Winning Bidders shall accept their Lot(s) with all faults, including, but not limited to, qualitative conditions, defects or
imperfections (whether structural, mechanical, cosmetic, latent, obvious, whether mentioned or unmentioned in the Lot description).

8. Bidder releases, waives, and discharges Mecum for any and all claims arising out of, involving, or associated with a Lot description. Bidder shall
reimburse Mecum for any costs and/or expenses (including, but not limited to, reasonable attorneysÂ’ fees) that Mecum incurs in defending any
BidderÂ’s claim arising out of, involving, or associated with a Lot description."




IN SHORT: The auction house accepts ZERO responsibility for the accuracy of the lot description. NONE.


What should a bidder do?
In short, invest the time to do your own research!!!

1. Get someone you know or trust to put eyes on the car, to verify the VIN. This will likely be the starting point of the internet search.
2. If the lot description includes old magazine articles, get on ebay ... find them, buy them, and READ them! Get familiar with the car's history.
3. Research the past auction history of the car, if applicable.
4. Find the past owners and experts. TALK TO THEM. This is a GREAT forum to explore this particular point :)
5. PAY the experts for their time and knowledge! Time, and knowledge, are money :) A few hundred, or couple thousand, bucks spent now ... can save you MUCH more $$ in the future. If an expert is willing to visit the car, seriously consider following through on that small investment.


PLEASE REMEMBER: NO single person is necessarily the "final word" on any one car. Your job, as bidder, is to "assimilate" all available info ... and come to your own conclusion about a car's authenticity and condition.

SECOND: Always remember: you have NO IDEA who you are bidding against! Not EVER.


Most auction houses reserve the right to shill/house/chandelier bid up to the reserve price (you already knew that, right?). How about after the reserve is off ... surely, all the house shills are "out" by then, right? Not so fast ... how do we know the seller, or seller's proxy, is not continuing to juice the auction? If the seller (or proxy) wins, he just pays himself and you'll find the same car at another auction within a year.


What should a bidder do?
1. You've done your research on the car itself. Before the auction, your next task is to research the "market value" of equivalent cars. Auction history, internet sales, and this very forum are great places to look :)
2. Then, you must add your own "personal passion premium" to the market value. This will determine your MAXIMUM, happy-to-walk-away BID.
3. Disclose your maximum bid to NO ONE. Not your best friend, not your wife or mother, and certainly to NO ONE connected with the auction house!

THIRD: Don't exceed your maximum bid (determined above). Allow LOGIC to rule the day, rather than EMOTION.


You've already added your "personal passion premium" to the market value, to determine the number where you are, quite literally, happy to walk away.


So ... BE HAPPY.


If you lose, hold your head high in the knowledge that:
- you may have lost to a drunk bidder, who's gonna relist the car somewhere as soon as his wife finds out what he spent!
- you may have lost to the owner (or his proxy), who will also relist the car somewhere within a year or two.


PLEASE REMEMBER: If you are passionate about these machines, you're in it for the LONG HAUL. You're not a day trader :) If you've done your homework, the chances are VERY HIGH that the car will find its way back to you within a couple years (yes, it's happened to me). Please be patient :)

Is this an open thread to allow questions from those of us never exposed to an auction? Buyer or seller? There's a ton of good offerings, knowledge, that reside in this group, and I'd like to know some specifics but usually these types of questions interrupt specific sales and get ignored.

Heck yeah! Post anything at all :)

I've got a car I'm considering selling, it's a high end chevelle. These are my observations....and please comment if they're wrong or skewed.
A car that hits the market without being well known may have a handicap with the field of buyers.
A car that doesn't have lineage needs more thorough build history, ie, pics of the build.
A car that hits a high exposure marketplace will need to lay out ALL the cards and be well prepped, or it may suffer from that sale, or a no-sale on the next go-around.
There is a stigma amongst auction buyers that if a car suffered from a no-sale or a stagnation on a on-line venue, that the gallery has spoken, and it won't achieve anything beyond that.
That last statement is something I've always felt, that there's a local frenzy of buyers that vet a new listing, and if it's still up for a few weeks, most buyers will cool off.

My thoughts:


A less-well known car may not suffer any disadvantage, if the evidence of authenticity is strong. In fact, "hidden" cars may surprise with a premium over the well-known cars!

You will need some form of documentation, or expert opinion, for authentication. This is, of course, a GREAT forum to seek out the experts!

There's lots of fraud in this hobby. There's money too, of course ... but smart bidders/buyers just want to be sure of what they are buying. Has your Chevelle ever been discussed here (or another forum)?

by the way ... what I know about Chevelles would fit in a thimble. With room left over.
(I love them, just not knowledgeable)


HOWEVER, I know for a fact that there are true EXPERTS on this forum, who know more about these awesome machines than the people who designed and built them! I think it's quite likely that these experts would have no agenda, other than to help :)

This is a '69, and that year is very familiar to me. For the purpose of my concerns, I can validate the car, and it has enough paper and codes to stand for itself. My main concern is presentation mostly. I did meet up with a pro photographer that does a lot of work for BaT ads, who offered his services. When it's time, I'll likely use him. I'm sure he's also got insight on presenting a car on that venue. I really have no intention of running the car across the blocks. I'll reserve my reasons for that.
I hate to discuss the car specifically, as it'll sidetrack this thread. Mainly looking overlooked or focal points for these types of online auctions. Many will apply to either type of auction though.

Here's a question for lycan;
How does the owner buy back his own car? Would the $$ have to change hands (go thru the auction house) and ALSO...does he have to pay the buyer/seller fee to the auction house?

Seller, or seller proxy, simply bids on the car. If he wins, it sold ... to himself :) It could be considered a "hidden reserve".


Buyer & seller fees ... probably yes, but i think those fees are more negotiable than one might imagine. I've seen live auctions, where the bidder is being encouraged to go higher (like, always) and he responds with something like "I'll go x higher, if the buyer fee is lowered by y"


Of course, if the seller and/or buyer is a big customer, or even somehow affiliated with the house ... those fees are probably even more negotiable!


PLEASE NOTE: The auction house may, or may NOT, know if the seller is bidding (if the seller is clever about using a proxy). The real point is, you never know who you're bidding against!
Don't try to chase, or outsmart a ghost ... my advice: set your maximum (based on research, as described, plus a passion factor), and stick to it.

Just a simple note to remember ..

If your max bid was $200k (for example) where the bid increment is $10k, and you lose to a winning bid of $210k ... don't beat yourself up for losing by "only $10k". You didn't lose by only $10k ... because you don't know how high the other bidder was prepared to go.


If I may recap: do your own research, including market value, figure the premium you're willing to pay, and stop at your maximum. Walk away happy if you lose ... the car may very well come back your way. Let logic & patience rule the day, instead of emotion.

I know of a case where a seller asked a friend bid on a car. He thought another person threw out real a bid and pulled the reserve. The seller had to pay both commissions and brought his car home. Pure miscommunication on the seller's part.

----I'm not even sure this is pertinent, but if a seller buys back his own car wouldn't he be responsible for whatever sales tax he owed his own state? There would be auction paperwork reflecting the sale figure....Bill S

Games and special deals have been part of the auction process forever. Buy backs do happen but were more prevelent in years past.

It is generally accepted and most states allow that the auction house can bid or advance a bid to the reserve amount, although it is generally accepted that the auction house cannot directly make a bid against a bidder once the reserve has been lifted or met.

There was an extensive federal investigation into "auction buybacks" not long ago.

Some auction companies expressly forbid buybacks via their consignment contract.

Certainly you can have someone protect and purchase your car, but seller and buyer fees are due and that is generally 20% of the hammer price, Title will generally transfer and sales tax is due at some point.

my advice; DONT BUY AT AUCTIONS...

Very good information, Stefano.

Good question, however, would he still not have the title still in his own name in his own state and would he be obligated to show any auction paperwork at all? I would figure all that person is out is paying both buyers and sellers commissions. :hmmm:

... which are often quite negotiable.


Also remember:
- some buyers never title cars in their name, even after decades of ownership
- some owners choose tax-friendly states to title ownership
- some cars (typically race-only, in my experience, not street legal) are transferred on biil-of-sale only, no titles known to exist

I believe you would have to show ownership AND also sign it over to the auction house??

Every state has different titling and tax laws. What happens in Florida is not exactly the same as Indiana which is not the same as Arizona... etc.

Today most auctions will not accept a consignment contract from two seperate parties, wherein a title is in one name and the contract is in another unless there is a Power of Attorney and / or a dealer licence or both. Things are much different today than they were in the past.

In Connecticut we have no titles on cars over 20 year old. In state reg is used or a bill of sale with a Ct address from the seller.

I should have said title and or registration, whatever document a state uses to provide proof of ownership as many states do not have titles for vintage vehicles. Canada uses registrations as well. Alabama is a Bill of sale state etc.

Interesting thread. Some great insight.

Great thread and lots of good advice.

Keep in mind that all of the advice is also pertinent to private party and dealer purchases/sales. I have been involved with numerous good and bad experiences. The more complicated and expensive lessons have been learned when buying outside of an auction. While the auction fee’s are not pleasant, when a deal goes wrong or is misrepresented, the major auction houses have been helpful in correcting it.

In one of my more recent experiences with a collector car dealership has resulted in $75K in legal fees, the dealer being charged and pleading guilty to Federal Charges and I am still holding a car that has no title and no way to recoup costs. This would have never been an issue via an auction house since they have to have proof of title/ownership prior to running the vehicle through the auction.

This ^^^^ is a VERY good point. Thank you!

Couple random thoughts ...

I never really minded paying the buyers premium. I know there's a cost involved with the venue (plus all associated expenses), advertising, insurance, etc. And there is certainly a value-add to bringing lots of cars together with lots of buyers (by the way, if 10~12% buyers premium sounds excessive ... try buying a COIN at Heritage Auctions, where the buyers premium is now 22%)
Where I have a problem, is not knowing if you're bidding against real buyers with honest bids. Are you buying in a competitive, or manipulated, market?

Anyway, as far as i'm concerned, this thread is un-hijackable. Please feel free to add as many stories you like about deals gone wrong! My only request: offer a take-away, or lesson-learned, that might be useful to others in the future :)

I've bought from Mecum, but at the Bid Goes On venue. You make an offer and they take it or counteroffer. It's a much more relaxed atmosphere.

Seller would have to pay the buyer and seller premium to the auction. If title is not transferred the sale has technically not been made. If a sale is not made... sales tax would not be collected.

Would the seller not have to give the proof of ownership to the auction house to hold?
The house WANTS to be GUARANTEED it receives payment, BOTH sides buyer/seller.

I have never been in that situation personally.

The seller hands the title over to the auction prior to the auction. If the seller "buys" the car back. The seller would have to give the auction both buyer and seller fees in order for the auction to release title and vehicle. It can get very expensive. If they have a friend buy the car back. The sale would go through the normal process as title would technically transfer.

So IF I say a reserve at 1.3 million. I would hand over ownership prior to the auction.

On sale day, I have "someone" bid the car up and it stops with MY bidder at 1 million. MY bidder would have to fork over, 1 mill for the car, and $100,000 buyers fee, I would have to caught up $120,000. I would then get the million from the auction house, but I would have to pay MY bidders $100,000 and I'm still out the $120,000 sellers fee.

So in essence, to "try and see" what the car brings would possible cost the OWNER of the car 22U% of the hammer price? So in this case of high-bid at $1 million, it would cost the owner $220,000 for him to keep his car!

Is that correct? I know fee go down as prices rise, I was just using the base prices.

The car would not have sold. You had the reserve at 1.3, your bidder stopped at 1 mill.

If your bidder bids over the reserve price. Then yes... they/you are liable for the buyer/seller fees as that would be considered a sale.

That's what I thought, YES I had a brain fart with the whole 1.3 reserve and only getting to a 1 million.