I’ve been watching a variety of online chats about selling strategies for online auctions. They revolve around whether it is better to list a car with a reserve (a minimum price that must be met or the car doesn’t sell) or no reserve (the highest bid takes the car, no matter how low).
Your approach to this will depend on whether you are a dealer who has a certain margin that needs to be met, or a hobbyist who is just selling a car because you are done with it. A third component is whether you are greedy or not. If you are determined to squeeze every last penny out of a car, you might be better off hand-selling it yourself, or consigning it to a dealer who will really know how to “work your car.”
Because buying and selling cars is not my business but a hobby, I don’t need to turn a profit to keep the lights on. Hence, when I sell a car, before I even list it, I have to come to peace with the range it will probably sell for. If it sells for more than I thought, I am smiling. If it sells for less, I am not suicidal.
Auctions are a one-way street for me. There is nothing worse than deciding you are going to sell a car and then have it not sell. Then, having to go out and look at it in the garage every day, wishing it were gone.
Especially with “affordable” cars, those up to $250,000, you are guaranteed to get more eyeballs on the car at an online auction than presenting it in any other way. I have faith that in all those eyeballs will be two sets, attached to two competing bidders, that will duke it out and get the car to its market value.
As an aside, after 37 years of writing about auctions, certain phrases continue to amuse me. When a car sells below expectations, pundits proclaim, “that car was worth way more than that.” Not true. On this day, at this moment, the amount paid was the exact amount the was worth. Same with a car that sells for an unexpectedly high amount: “That car wasn’t worth that much.” Not true. At this point in time, that car was worth exactly what was paid for it.
There are many reasons buyers will increase their bids, often intangible. I paid an extra $25,000 for an Alfa Sprint Speciale at Auctions America in Ft. Lauderdale because it was Bluette, my favorite color on SSs, and it was a 1300cc Giulietta, a configuration I vastly prefer to the later 1600cc. At $75,000 (for a car that was probably worth $50,000 to most collectors) for a non-running car with a frozen engine, did I pay too much? For the world at large, yes. For me, it was a fair price to have a dream car in my garage.
I always start my auctions with a reserve price, and then wait until the bidding is accelerating until I announce that I have lifted my reserve and “this car will sell to the highest bidder!” Is it effective? I don’t know, but it is fun for me, and allows me to feel like I’m having some effect on the outcome.
My only other words of advice are if you decided to play in the online auction game, don’t bring a knife to a gunfight. Don’t submit crappy photos and an incomplete description. You’ll get eaten alive by the commenting trolls. Take a look at how the successful guys do it and emulate them.
Most important, be available through the entire auction to answer questions. Buying a car online requires a leap of faith by the buyer. Your job is to create an electronic bridge of trust between the two of you.
Then, sit back and enjoy the show.
The fear that your pride and joy could sell for $1 just because nobody was there that wanted it is hard to overcome. However I note that some nasty old Dodge Box Truck in Santa Monica, that stayed at $100 for nearly the entire online auction did eventually sell for $2800 after 13 bids.
the only problem with the strategy of setting a reserve, knowing you are going to lift it is that the reserve commission is generally higher than the no-reserve commission.
That is not true with most online auctions. It is true with land auctions. In which case I would go no reserve right from the start. – KM
Fear is a part of no reserve. But if you have a decent car bidders will show up. Dealers watch these auctions for good buys and you will at least get a wholesale bid.
Some auctions will start items ( including cars) at a low price to attract attention. One theory of auction sales seems to be that a low starting bid draws people in and they will develop an attachment to the item/lot/car which will keep them interested and engaged after the low price has been surpassed.
Having just taken a small bath on a couple of non-automotive items that were sold at auction, I have to quibble with Keith’s “willing buyer-willing seller” valuation. In order for that theory to work, we have to assume the ideal publicity has reached the ideal bidders, who are presently ideally situated to bid. If the ideal bidder has just had to replace his furnace, or is at a child’s little league game, other results may occur. If the seller hasn’t taken enough pictures, or some aura of uncertainty ( or worse) has attached to the car, potential bargains might still be had. I relied on an auction house that was lazy or complacent about publicity and descriptions and it cost me.
I’d also like to invoke that great Auction Theory Economist, Yogi Berra, who reminds us that it ain’t over till it’s over.
Your take is spot on vs. my recently no-reserve BaT selling experience, Keith.
I and my car partner (we own 3 cars jointly) recently sold our former vintage racer 1970 Porsche 911T on BaT. The selling process started early last summer when, to sort of test the waters, I let it be known to several local Porsche guys (or anybody else who’d listen) that we were going to sell the car, even throwing out a “number”. It was a fairly well known car locally and in some vintage racing circles, and there was some interest from a few prospects, but nothing came of it. It became clear, however, that our initial number was high given market realities. And, although the car was streetable (barely), we knew it probably had somewhat limited market appeal given that was still in (mostly) modified, vintage race car trim.
Thus, when we decided to put it on BaT, we also decided to let it go at no reserve, given that It was a) difficult to peg a reserve value on a modified, ex-race car 911T (prior comps were all over the board); b) we just wanted to sell it and move on, and c) we’d owned it since 2016 so I figured we stood a good chance of getting at least what we had in it…I felt there was likely some cushion there even without a reserve.
After a quite a lot of time & effort spent getting the car ready to sell online, it sold on BaT with no reserve for a reasonable sum, with the typical fast & furious bidding at the very end of the auction. We came out ahead on the car, too. Not hugely, but enough. Can’t complain about that! The buyer was very pleased with the car and plans on putting it back on the track soon (look for a bright yellow long-hood 911″ST” on track this coming season in the northeastern region).
All in all, a positive experience.
Beware lazy auction promoters. There is no perfect way to get all the bidders at the right time.
Think of the cars you have seen listed and were interested it but you were putting in a furnace. It wasn’t the right time. There is no sure thing at an auction if you want a sure thing sell to a dealer at wholesale.
As with all collectables, cars, art or anything else, with an auction, on line or in person, is only worth what the bidders in the room or on line are willing to pay for it. With the market as it is now, depressed, cars are not selling for what they were worth 6 months ago. I have a 64 Alfa spider that I started restoring in 2008, not worth much then, finished in 2017, somewhat but not what I wanted it to be. Now I will hold it until the value will increase until what I hope it is worth. Or close to what I have in the car.??
I agree with Keith. Alfas are very soft and I do not foresee them exploding in value. Besides, It is highly unlikely that you will ever get the restoration costs back on a full Giulia Spider resto. If you want to sell, Islso recommend to sell now. Otherwise, you will have to hold on a very, very long time.
My advice is to sell it, take your loss and move on. Don’t try to time the market.
This is an interesting and very timely subject for me.
I live in Australia and am the proud owner of a rare Alfa Romeo GTA Junior Corsa, prepared as a race car by Autodelta in 1968 and supplied to an amateur Mid West racer, and raced at over 50 SCCA meetings in the 70’s.
The car has been meticulously restored to “as it was” and has won trophies at the best Australian classic car shows.
I now wish to find a new owner and expect to find more prospective buyers in the U.S.
Keith’s article addresses my issues. Should I ship it to a dealer, or an auction house, or advertise it through an on-line auction? Bearing in mind that, although I have a detailed restoration documentation and photos, and correspondence with all previous owners, the car is in Sydney, which is a long trip for a viewing. Any advice would be appreciated.
The profit vs pain potential of selling no reserve completely depends on initial buy-in. Someone trying to clear out dear-old-Dad’s original Porsche Speedster project, which he bought in 1973 for $25K, is probably going to be ecstatic whether it sells (no-reserve) for $300k or $400k. Someone who bought the same car at $400k and later sells it (no-reserve) at $300k is going to feel something, shall we say, less than ecstasy.
Keith, this article is so spot on. I am a big fan of Bring-A-Trailer due to the massive exposure there and have sold Italian cars there. If you don’t get them”right two people in the room” on BaT, chances are they will not be in any other “sales room” either.
You are completely right that the best results are achieved with well prepared cars, a great and comprehensive set of pictures, a good description, full transparency on condition and a highly engaged, knowledgeable seller with a positive attitude.
I decided on a reserve for the cars as an insurance policy. Because of the way I prepared the cars and auction and the level of engagement, all of them sold above the reserve.
Thanks Mike. Anytime you go to an auction you are rolling the dice. But you can do a few things to shade the odds in your favor. The secret sauce of BaT is their engaged community even more than their eyeballs.
And it’s free entertainment!
If I’m a seller, I’m definitely using a reserve that is pegged to at least something close to it’s value. Some research on what other units have sold in the prior 2 years for is obviously essential. You’ll probably have trouble recouping your “sweat equity” but at least you won’t be giving your vehicle away. You can always lift the reserve if bidding is active. Unless I’m desperate, I’m always willing to let the vehicle go unsold, and then try to sell at a later date.
If I’m a buyer, no reserve listings are always desirable! You might be able to land a good buy. (“well-bought” in your lingo)
Everything you say makes sense. For me when I’m done with a car I just want it to go away. Then I can move on to something else.