Buying a classic car at auction is a fast-paced and competitive experience. The key to success is establishing a budget ahead of time and sticking with it while staying aware of what other bidders are doing.
While intrinsic value plays a role, some personality traits affect auction strategies and bidding wars.
Buying a Car at an Auction
Auctions can be exciting and exhilarating, but staying levelheaded and focused is important. It’s all too easy to get caught up in the bidding and end up overpaying for a classic car at a classic car auction.
Hundreds of auctions occur each year, some live and some online. Each one has its own rules and procedures, but some general principles apply. For example, it’s important to arrive early so you can sign in and provide evidence of your ability to purchase a vehicle. You’ll also need to familiarize yourself with the seller’s terms and conditions, which may include a buyer’s premium or other fees.
Once the auction begins, you’ll be issued a paddle with your number on it. The commentator will announce the car up for bid and give a brief description. If you’re interested in the car, raise your paddle to show the auctioneer you want to make a bid. The auctioneer will call out the starting price, and any interested parties will raise their paddles. Auction house representatives will politely hover around interested bidders to gently encourage more bidding. Once there are no more new bids, the auctioneer will drop the hammer (or gavel), and the sale is complete.
Many people choose to use a variety of strategies when bidding. Some prefer to be aggressive and start off strong, while others wait until the end to try to steal a deal. Regardless of your strategy, be aware of the psychological tricks that other bidders may play, such as dropping out of bidding only to reemerge at the last second.
It’s also important to remember that you’re likely going to be bidding against car dealer pros who buy and sell vehicles at auction as their full-time jobs. These people have the advantage of buying cars at auctions and immediately turning them around for a profit. On the other hand, you are not a car dealer, so you’ll have to work a little harder to beat them at the auctions. To do that, you should extensively research the cars you’re interested in before attending the auction. Photos and condition descriptions can often be misleading, so it’s always a good idea to visit an auction in person and take the time to inspect the vehicle personally.
Getting Ready for an Auction
Regardless of whether you’re interested in buying or simply attending, it’s best to have a game plan. This involves familiarizing yourself with the vehicles that will be available and determining your personal maximum price ahead of time. You should also check out price guides and consult experts to get a sense of what your ideal car should cost. This will help you avoid the urge to over-bid, which can be caused by a combination of factors, including competition and pseudo-endowment (the feeling that the item you’re bidding on has been infused with more value for the brief moment that it’s in the lead).
If this is your first auction event, Terrance Lobzun of Collector Car Productions recommends leaving your checkbook at home and simply going as an observer. This will allow you to get a feel for the atmosphere and make better sense of all the nuances that can come into play during a frenzied buying environment. You’ll also have a chance to see how the auctioneer conducts business and learn how to spot flaws in a vehicle that may not be readily apparent in photographs or descriptions.
It’s also important to remember that the selling price is just the beginning. There are often buyers’ fees, registration costs, and taxes to pay, not to mention any repairs or transportation fees that might be necessary to bring your new classic car home. It’s a good idea to have a budget in mind and leave yourself room for unexpected expenses.
In the days leading up to an auction, the sales site staff will be cleaning, grouping, and organizing items for the big day. In addition, many classic cars will be taken apart to fix minor issues, and the interiors will usually be stripped down for complete detailing. Getting up early and arriving at the sale site well-caffeinated can also be a good way to scope out the crowds, find a prime spot to stand, and shake off the nerves.
You should also prepare by reviewing all the documents and terms and conditions laid out on the auction website. Registering to bid in advance is also a good idea so you don’t have to wait in line to fill out paperwork on the auction day.
Bidding at an Auction
The auction process is fast-paced and can be intense. A good auctioneer can generate a lot of excitement with his/her fast-paced chant. This helps drive up the price of items and leads to bidding wars. It is important for bidders to stay focused and not get caught up in the frenzy of it all. A simple way to avoid this is by using a unique bid number that makes it easy to identify your bid.
The first offer made at an auction is often a key factor in setting the final purchase price of an item. This is called the anchoring effect and can greatly impact your bidding behavior. The higher the initial offer, the more it will influence subsequent bids. This is why auctioneers tend to list items low to attract more potential buyers.
However, the initial price set is just the tip of the iceberg when it comes to the psychology behind an auction. Several other factors can play a role in how much you’re willing to pay for an item, including perceived value and your level of intrigue with the object.
For example, if an item is offered at $50 and you think it’s too expensive, you may not be inclined to bid on it. But if the same item is offered at $30, you’ll likely be interested in submitting a bid. This is because you’re now viewing the item as a bargain.
Nostalgia can also play a role in the price you’re willing to pay for an item. If an item was popular at one time, it may trigger a sense of pseudo-endowment, leading to people paying more than what the object is worth.
Another reason why auction prices go up is because of the social facilitation effect, which is a tendency for individuals to work more quickly and efficiently when watching or competing against others working on the same task. This is why athletes often post better times when they compete directly against other competitors rather than a computer.
Buying a Car at an Online Auction
Buying a car at an auction can be a highly emotional and exciting experience. Buyers must be prepared and well-informed to ensure they get a good deal on a classic car. There are a number of different bidding strategies that buyers can use to increase their chances of success at an auction. Some buyers prefer to place the first bid, while others prefer to wait until near the end of the auction when the bidding has slowed down. In either case, it is important for buyers to be aware of their limits and stick to them.
Auction houses often provide a lot of detailed information about the cars they sell, but it is always a good idea for buyers to verify crucial details before placing a bid. This can include ownership history, service records, and mileage. It is also a good idea for buyers to bring a mechanic along to inspect the vehicle before placing a bid. It is possible that a seasoned mechanic could spot problems with the car that are not immediately apparent from its photos or condition description.
Some buyers may choose to attend an auction in person, while others prefer to participate in online auctions. Online auctions allow buyers to conduct thorough research on the vehicles they are interested in, and they can even view video footage of the car’s interior and exterior before attending the auction. Online auctions also make it easy for buyers to compare multiple vehicles and determine which one offers the best value.
Although many factors influence a bidder’s willingness to pay for an item, some of the most important ones are intrinsic value and their personal connection with the object. For example, if you are particularly fond of a particular car model, then it is likely that you will be willing to pay more for it than someone who is not as emotionally connected to the car.
It is not uncommon for some bidders to spend more than they intended to at an auction. This is partly due to the psychological phenomenon of pseudo-endowment, which causes individuals to feel an attachment or sense of ownership to a certain object for the brief period that they have it in their possession.