Every year, thousands of classic vehicles are sold at high-profile auctions, and countless others end up on the auction block at smaller public and government auctions.
The competition is fierce at car auctions, and there’s no guarantee that you’ll end up with the classic car of your dreams at a price you’re willing to pay. There are things that you have to know to bid successfully, so that you don’t end up with a bad quality vehicle.
Just as an example, you need to know that a lot of classic cars that are sold at auction are “miles exempt” – that means that you can’t count on the odometer reading. You also need to know that vehicles can be sold with hidden damage, or even flood contamination. The exterior might look great, but that doesn’t tell you much about the running condition of the car.
So, you could get a great deal on a classic car at auction, but on the other hand, you might not. There are things you’ll need to think about before you decide to pursue your dream of owning a classic car by buying one at auction.
No Test Drive
It is unlikely that you will be able to do a test drive in the car you’re thinking of buying. At best, if you’re actually attending an auction as opposed to bidding online, you might be able to start it up and sit in it. You won’t be able to do a thorough inspection.
At some auctions, especially the smaller ones, you might not even be able to verify the vehicle’s history. What this means is that you want to minimize your risk. Set a reasonable amount for your bid – only be prepared to pay what you’re willing to lose – and don’t deviate from it. Resist the temptation to get caught up in a bidding war.
Remember that you won’t be able to drive the car away in most instances. The car is likely to be a fixer-upper, and if your bid is successful, you’ll have to arrange to transport the car to your place of residence.
Unless you’re using a proxy bidder, which is a company that uses its dealer license to bid and buy on your behalf, this means that you’re going to be responsible for finding someone to transport the vehicle. Proxy bidders will arrange transportation, usually included in the cost of using their service or for a small additional fee.
Understand the Reserve Price
The reserve price is the absolute minimum at which the seller will let the vehicle go. If the bids don’t reach the reserve price, the seller is under no obligation to sell the vehicle, and the high bidder will not be able to buy it.
Usually, you don’t know the reserve price in advance – you only know if it has been met. Once the reserve price is met, both the seller and the buyer are legally obligated to complete the bid. Sometimes, cars are sold without a reserve price. This means that the high bidder wins the car regardless of the amount of the bid.
You can get an incredibly good deal at a “no reserve” auction, but the downside is that no reserve can trigger a bidding war that actually boosts the sale price a lot higher than the actual value of the vehicle. So again, set a limit and stick to it.
If a car hasn’t yet met its reserve price, an auctioneer may call out what is known as a “chandelier bid”. No one has actually called out the bid, but the auctioneer pretends that a bid has been made in order to drive the price up and keep the bidding going.
This is actually legal, because unless the reserve price has been met, there is no contract – only bids above and beyond the reserve result in a contract for sale. If the auctioneer calls a chandelier bid, keep your next bid low.
The Final Word
Know the value of the car you’re bidding on. Set a limit. Watch for chandelier bids. If you play the game right, you could very well walk away with the classic car you’ve been wishing for.