Cautionary Notes for Auction Bidders

[LT1vette]

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?

[lycan]

Originally Posted by LT1vette

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.

[lycan]

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.

[TimG]

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.

[olredalert]

----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

[Stefano]

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.

[66cayne]

my advice; DONT BUY AT AUCTIONS...

[TimG]

Very good information, Stefano.

[Z282NV]

Originally Posted by olredalert

----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

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.

[lycan]

Originally Posted by Z282NV

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.

... 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