Playing the car-auction game

With the recent surge of interest in collector cars, there has been a proliferation of collector-car auctions. Buyers and sellers are becoming increasingly concerned about the level of service within the industry and the standards and practices that they should expect from a collector-car auction company.

Auctions are a great way to buy or sell collectible vehicles, but they are only as good as the company that runs them.

The Barrett-Jackson Auction, one of the largest in the United States, has developed a list of guidelines aimed at educating consumers about possible pitfalls they may encounter while buying or selling a collectible car.

A few years back the late Thomas W. Barrett III, an internationally recognized collector-car expert, told me that the growth of the collector-car market had paradoxically posed new problems for the unwary shopper.

“Every other used-car lot on the block thinks it’s a collector-car auction showplace,” he said. “We don’t want to see anybody get taken. It hurts the whole industry. Car collecting is a wonderful activity, but an unscrupulous, fly-by-night auction company can easily ruin that enjoyment for life.”

Here are some tips from Barrett-Jackson for buyers and sellers to bear in mind whenever they’re dealing with an unfamiliar collector-car firm or auction house. If the management doesn’t seem to demand these standards of its buyers and sellers alike, you’d probably be better off taking your business elsewhere.

If You’re Selling

An auction company should screen its bidders to the highest degree possible, including requiring bidders to present letters of guaranty from their banks prior to check-in time, on bank letterhead, notarized by a bank officer and stating each bidder’s account number and credit limit.

This will protect the seller — and the auction house — from the possibility of a sale falling through due to the buyer’s lack of funding. It’s not a good feeling to think that you’ve sold a car, only to find out that the buyer doesn’t have the funds to cover his or her bid.

A seller should expect to know for certain whether his car actually sold. Even without an acceptable bid, some auctioneers have been known to shout “Sold!” to make the auction look more successful than it actually is, later telling the seller that the car failed to sell.

A seller should expect to have her car on the block long enough to give it the best opportunity to sell at the highest price. About three minutes per vehicle is a good average time. Less than that may reflect “churning,” cranking vehicles through to assure a maximal number of sales for the auctioneer, even if the sellers aren’t getting as much for their cars as they might.

It’s better to receive payment on a sold vehicle through the auction company itself, rather than from the buyer, a person whom in most cases the seller has never met. This avoids possible post-auction financial complications.

A seller should expect the auction to be reasonably advertised and promoted. Consignment fees normally pay for this advertising.

The auction company owes it to the seller to limit the number of cars of the exact make and model of the seller’s in the auction. The vehicle should be presented in its best light, not as one in a crowd. Remember, supply and demand function within an auction the same way they do in the outside market.

All auction rules, regulations and fees should be presented up front, so that there are no misunderstandings or surprises later.

If You’re Buying

A buyer should expect the vehicle she purchases to have a good, negotiable title — no salvage titles. Each car should be inspected by the auction firm to verify that the title and serial numbers match.

The vehicle should perform mechanically as described on the consignment form and on the car’s window card. If, in the auction company’s opinion, the vehicle’s mechanical condition has been misrepresented, the buyer does not legally have to complete the transaction.

Buyers should expect to purchase the actual vehicle that they have bid on, in the condition that it has been represented to be. Cancellation of the sale, or at least renegotiation, should occur if any of the following four problems are undisclosed prior to the fall of the gavel: 1) an incorrect engine made to appear correct. 2) car rebodied to a different style and not stated. 3) low mileage stated and found to be incorrect. 4) claims of documentation of previous ownership by a famous personality found to be false.

All advertised cars should be at the auction and available for buyers’ inspection. Knowing misrepresentation of available vehicles is the same as a “bait and switch,” but some companies nevertheless run pictures in their brochures of cars that they know will not be in the sale as a means of enticing prospective buyers to attend.

Car collecting and the appreciation of fine automobiles shouldn’t be a chore or a cold, calculated business transaction. Fun is the name of the game.

If you are only now dipping your first toe into the car-collecting waters, following these guidelines should help you avoid pitfalls that can prove annoying, disappointing and costly.