Some Cardinal Rules for Buying at Auction
A conversation a number of years ago at Barrett-Jackson’s kickoff party in Scottsdale yielded a problem that newcomers (and even some experienced collectors) can have. Two gentlemen were then beneficiaries of Canada’s oil boom, and they were literally buying cars by the dozens with whatever struck their fancy. As pure and joyful as that approach is, almost guaranteed one day they will wake up and see no rhyme or reason to the collection—both in terms of what they owned and quality. Which can become very problematic as they move forward.That’s in complete contrast to this collector who, while not nearly in the same league as those two gentlemen, knew exactly what he wanted—Boss Mustangs. Every car was in outstanding condition, and an absolute blast to drive. Whenever he needs to sell, or change up the collection, it will be so much easier to accomplish than having some random grouping of cars with nothing to tie them together.
“Guess what country we are from?”
Two gentlemen were enjoying their drinks at the marvelous Barrett-Jackson auction kick off party a few years when they asked me that question, and not hearing a real discernable accent, how do you answer?
My response has long been forgotten but where the conversation went has not, for it highlights the joys and dangers of wading into the collector car auction arena as rookies. At the time petroleum was well over $100 a barrel, Canada’s oil sands industry was booming, and these friendly, cheerful gentlemen were two of its beneficiaries. They went on to say at Barrett-Jackson’s October auction in Las Vegas, they had bought 50 cars, and were in Scottsdale to acquire some more.
Not once did the “I’ word (investment) enter into their lexicon, and it was wonderful to see someone buying for the best reason of all—passion. But it was also clear they were purchasing with no rhyme or reason, other than they wanted something. After listening to them gleefully recount their Las Vegas trip, and go through a list of cars with not much more in common with each other than they were now under the same roof, I had to say something.
What’s the best reason for buying cars at auctions, or anywhere else? To enjoy driving it! In this day and age where cars are viewed as an asset class and have the unfortunately accompanying “it’s an investment” attitude that comes with it, that mentality blinds people to the fact that what made the great cars truly great was how they drove. Getting behind the wheel remains something that should be done today for these are machines after all, and the death of any machine (especially a car) is to let it sit.
The Right Way to Buy
“Gentlemen,” I replied, “here’s advice very few people will tell you. You need a professional buyer otherwise you will wake up one morning, look at all your cars, and wonder what you did. And here’s the hardest part of all—finding one who is looking out for your best interests, and not their own.”
Experience speaking there, for while buying and selling cars at auctions isn’t what I normally do, I’ve quietly done my share. Not only does a good professional buyer know how the auction game is played, they also know where to turn for expert advice—such as the time a friend/client was seriously interested in an F40LM. After researching the car’s provenance and confirming it was one of the two raced under the Ferrari factory banner in America’s IMSA series, in the days before the auction I listened closely to what my grapevine was saying, and had a friend who was involved in the F40 racing program give it the once over. It passed with flying colors (all red?, and we ended up buying it under the client’s budget.
This fabulous F40LM was a case where all the elements came together to make a good buy at auction. Researching the car’s provenance confirmed it was indeed one of the two that raced under the Ferrari factory banner in America’s IMSA series, and I had a friend who was involved in the F40 competition program examine the car to make sure it was proper. It was, and a bidding strategy allowed us to buy it well within the client’s budget.
Which brings up another point: Have a game plan prior to entering the auction tent, and stick to it. This includes setting your maximum price, for many years prior that same gentleman was new to the collector car arena, and wanted me to bid on a Saleen S7. We set our maximum value, and because he wasn’t at the auction I gave him the bidding play-by-play over the phone. When the car went past his high number, we said our goodbyes and hung up.
Trust the Experts
Thirty seconds later the phone rang, and he was telling me he wanted to go higher. I wouldn’t budge off our high number so as we were arguing over the phone, the car sold. I then told him it was now a moot point because the hammer had dropped, and he later thanked me multiple times for holding him to his budget. He had come to realize how easy it is to get caught up in the excitement of the moment and overpay, so a game plan and discipline are key.
It’s just about that time of year when auction fever hits Arizona, and the Phoenix valley. Scottsdale is where most of the action is, and the general atmosphere is much more festive and low key than at events like Monterey. Hotel rooms are plentiful and prices are reasonable, traffic is nonexistent compared to the Monterey peninsula, and there are parties and great restaurants everywhere.With so much money flooding the area, looking to be spent, that buoyant and playful state of mind also means you have to be careful at auction and not to get carried away in the heat of the moment, and chase a car beyond its real value. The key is to have a game plan in place prior to bidding, and the discipline to stick to it.
Ace restorer Paul Russell’s sales guru Alex Finigan noted another good tenet in a recent Robb Report article I authored on the current status of the market. Alex delightfully calls himself “a used car dealer” even though he has been selling collector cars since 1974; today those cars frequently have two commas in the price. “Too many collectors go blind,” he notes, “for they accept as gospel what the auction catalog or a seller says. Just because you can afford to spend $30 million doesn’t mean you know what you are looking at.”
Alex says to ask experts for advice, and not to be shy on paying for it when necessary, as it’s the cheapest insurance policy you can have at the time of purchase. In that same article, two themes were prevalent with the six market insiders I spoke with: Buy the best you can afford, and purchase because you like it, not because you think it will go up in value.
Words of Advice
Both are particularly good advice with auctions, and I would add a third, one that ultimately wraps back to consulting with experts: On certain cars, the pecking order can really impact value. A good number of years ago a friend/client was interested in a Ferrari 250 Spyder California being sold in Scottsdale. He wanted me to bid on the car, so in the days before the auction I went through all the Cal Spyder variations, starting with alloy-body covered headlight short wheelbase (most valuable) and ending with open headlight, steel body long wheelbase (least costly). Based on that conversation, he ended up passing altogether because he only wanted the best of the breed in his collection, and what was being offered wasn’t that.
These two silver C2 Corvettes may look similar, but one is worth twice the other. While the 1966 327/350 hp is the better car, the 1963 Split Window is much more desirable because of that iconic single-year styling touch. Such knowledge is essential when entering the auction arena, for the novice buyer can easily get caught up in a bidding war that drives the price far beyond what the car’s current value is. So for those heading to Arizona in the next few days to participate in auction week, be sure to go in with your eyes wide open when examining, and bidding.
Such pecking orders aren’t limited to Ferraris. For instance, a 1963 Split Window Corvette is more valuable than most other years of C2 (1963-67) Vettes; a Maserati Ghibli 4.9 will be more desired than a 4.7; a Boss 429 Mustang is worth more than a Boss 302 and 351 together; the list goes on and on.
So if you are heading down to Arizona to buy a car, enter the arena with your eyes wide open. Know what you want, buy it because you like it, predetermine how much you want to spend (don’t forget to add transportation costs, etc.), and stick to your budget—even if this means handing your bidder’s paddle to a trusted, knowledgeable friend who won’t get carried away.
Undoubtedly I will be at most of the auctions, so should you see me come on up, say hello and let me know you follow my work as your interest and enthusiasm is much appreciated.
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