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Car Auctions, Buyer Beware
By slmarket | September 21, 2007
Source: SL Market Letter #311
Author: John Olson
I still remember my early auction experience 25 years ago, trying to buy a 300SL at a well publicized annual extravaganza then held in Oklahoma City.The car had a magnificent paint job, but was buttoned up tight with only a number on its windshield announcing its auction sequence. For hours I tried to locate the owner.
While waiting for anyone with facts about the car another beautiful Mercedes, a 280SE 3.5 Convertible came up to the auction block. I recognized one of the bidders and walked over to him. He stopped bidding considerably below what I thought was a reasonable price and the car did sell for less than I felt it should. I did not bid because I still had my mind on the Gull Wing but when I asked my friend why he didn't buy the car his reply sobered me. "Too many unknowns. Couldn't talk to the owner or drive it. Wish there was a compression test posted on the windshield instead of just a number." I walked back to the GW which was now moving in a line with a driver aboard. He opened the hood and trunk, but was indeed just a driver, knowing little beyond how the get it running. I couldn't see any glaring problems. Not ready for a concours but it was hard not to like that paint or the thought of owning the car. All the valuable parts were present and accounted for. Minutes later I heard myself opening the bidding.
Two auction assistants landed on me like glue. In the begining there seemed to be four or five bidders which narrowed down to two, myself and a Dr. Phillips in the back of the room. I couldn't actually see him but the main auctioneer, high up at the podium could see him clearly and seemed to know him. The assistants kept my attention with them. At some point when the good doctor had the high bid I hesitated in order to get in line-of-sight with Dr. Phillips. The auctioneer asked me with visible impatience if I was still in the bidding… to which I replied under pressure "I can't see Dr. Phillips. Where is Dr. Phillips?"
Immediately the auctioneer declared a new bidder at one side of the room, taking attention off me. Assistants kept after me to re-enter the bidding but my trust had broken in what was happening. My friend's words flashed back through my mind – "Too many unknowns. Couldn't talk to the owner…" Yup, the spell of the moment was gone. I froze up and stopped bidding. The scene played out with another minute of fanfare and the car left the stage with the auctioneer announcing the car had not reached reserve. I inquired but was never able to speak to the well known Dr. Phillips.
Upon returning home I drew a few books on the history of auctions from the library. Every book made it clear early on that a centuries-honored skill of good auctioneers was throwing in an extra bid now and then, from here or there. It was never a question of properness but one of skill. In the USA each state has its own auction regulations. Some declare "shills" (a decoy bidder for either the seller or the auctioneer) illegal, others states do not. Phantom bids from non-existent sources are less often addressed by state laws.
Today's more prominent auction houses provide details on each car at their websites well before the sale. Shoppers can usually request a phone conversation with the seller weeks before the sale. This can lead to an advance showing of the car before it is even brought to the auction, for inspection of records and discussion with the car's mechanic… the same thing you would hope for in a private sale. You can be sure your contact will be discussed between the seller and auctioneers if they are on their toes. It could be a wise strategy to stay away from the car on auction day until the moment of bidding to throw off any planning for your presence. A good auctioneer only needs one bidder (regardless what it seems like to you) to conduct a successful sale.
A Better (?) Type of Auction was invented when Ohio State School of Engineering was given a Gullwing by a grateful alumnus. The school needed money more than an exhibit of German engineering excellence but was concerned that it's sale be completely open and free of mystery. I was selected to oversee this sale, to facilitate inspections and guarantee that all bids were real. That car sold for $249,000. Subsequently I have conducted more single car bid sales under the banner of John R. Olson, Inc., providing the same guarantees.
To discourage uncompetitive bidding only the top few bidders are invited to a concluding conference phone call. Finalists are introduced (no phantom bidders) and highest bid announced. Before the phone call, all bidders are urged to inspect the car or send their expert to evaluate and drive it. The seller is also available for interviews. The exact time of the final phone call is not set until inspections are complete.
A minimum price is not declared up front though the seller is allowed the right to withdraw the car up until the conference call. By this time the seller and I have talked to each bidder and studied other recent sales enough to accept the outcome of the bidding or retreat. These discussions work to bring buyer and seller together on more common ground. Once a time for this phone call is announced the car will definitely be sold to the highest bidder during that call. In a sense this becomes an auction in slow motion where bidders become comfortable that they know the car, everyone has time evaluate the market, alternatives, and all bidding is guaranteed to be real.
Finally, for busy people the sale comes to the bidders; they can participate from anywhere. To learn more about our telephone bid sales visit this page here.
Topics: Mercedes-Benz Articles, Mercedes-Benz Auctions |
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