Why do people sell cars at auction?

Why do people sell cars at auction?

Author
Discussion

wyldstalyns

Original Poster:

35 posts

10 months

Sunday 17th February
quotequote all
Ok, I can only assume this is a stupid question, but I just don’t get it, so perhaps someone can enlighten me.

Today I was at the London Classic Car Show and was watching the COYS auction. Each car there (some lovely stuff on the face of it) had an estimate well below their market value “norm”, and then for the most part each car went for well below its estimate. For example a Ferrari 599, very few of which are listed on here for less than £100k, went for £60k. A brilliant looking low mileage Diablo also went for £100k when the cheapest here is £130k.

Why would the seller do such a thing? Assuming it doesn’t have some fatal flaw (in which case why buy), a dealer would take that off your hands for better if you were so desperate to get rid of it.

What am I missing? I’m guessing there is a simple answer...

Cheers all.

So

15,558 posts

163 months

Sunday 17th February
quotequote all
wyldstalyns said:
Ok, I can only assume this is a stupid question, but I just don’t get it, so perhaps someone can enlighten me.

Today I was at the London Classic Car Show and was watching the COYS auction. Each car there (some lovely stuff on the face of it) had an estimate well below their market value “norm”, and then for the most part each car went for well below its estimate. For example a Ferrari 599, very few of which are listed on here for less than £100k, went for £60k. A brilliant looking low mileage Diablo also went for £100k when the cheapest here is £130k.

Why would the seller do such a thing? Assuming it doesn’t have some fatal flaw (in which case why buy), a dealer would take that off your hands for better if you were so desperate to get rid of it.

What am I missing? I’m guessing there is a simple answer...

Cheers all.
Auctions tend to amplify the market in which they operate. Maybe that is what happened here.

There will be a buyer's premium to pay, which I am presuming you aren't including in your figures. It won't make up the balance, but will reduce the difference.

Auctions are a guaranteed sale on the fall of a hammer. It could be a creditor liquidating someone's portfolio and there may be recourse for any loss - so they may not care.


Drclarke

862 posts

114 months

Sunday 17th February
quotequote all
I have often wondered this.

With the extraordinary auction fees, the seller is always getting a very low price for their car, and the buyer is paying dealer prices but with no comeback.

Basically the auction houses are earning dealer margins for selling a car with no warranty or clear title!


wyldstalyns

Original Poster:

35 posts

10 months

Sunday 17th February
quotequote all
So said:
Auctions tend to amplify the market in which they operate. Maybe that is what happened here.

There will be a buyer's premium to pay, which I am presuming you aren't including in your figures. It won't make up the balance, but will reduce the difference.

Auctions are a guaranteed sale on the fall of a hammer. It could be a creditor liquidating someone's portfolio and there may be recourse for any loss - so they may not care.
Some good points there thanks.

Excluding the final one re liquidation the logic still seems odd to me, because as a buyer, not knowing the full state of the vehicle, you’re always going to bid well below market value. You’d be mad to pay “par” for such an unknown quantity, therefore the car should always get undersold *unless* it has a problem. Thus, as a seller with a sound example, you’ve a high likelihood of getting rinsed. (And consequently the buyer has to assume problems, compressing the price still further)

An exception I guess would be for one-off examples (eg Cilla Black’s Mini which was there today) - in this instances I can see the sense.

Drclarke

862 posts

114 months

Sunday 17th February
quotequote all
But a well known auction house Phoenixed after going bust owing clients money a few years ago.

From what I’ve read from auction houses terms and conditions, they don’t pay the owners of the cars until at least 14 days from sale!
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Ferruccio

830 posts

60 months

Sunday 17th February
quotequote all
Car dealer ask and get can be very different. “Facts” are hard to verify.
Auction prices have the great benefit of being real.

Drclarke

862 posts

114 months

Sunday 17th February
quotequote all
But they are not at all

The hammer price is the same as a trade price, then with fees it’s the same as a retail price.

phib

3,939 posts

200 months

Sunday 17th February
quotequote all
I have sold through one of the major auction houses a couple of times now and have another car going in one in a couple of weeks.

Just my experience

Paid within 7 days

In both cases I wanted the cars gone, on the first the dealers were offering but £10k below retail (on a 30k car) that had been serviced etc etc

I ended up with £3k below retail.

Sellers fees are not always high if you negotiate.

2nd car was a bit of a one off and had it on here for a while and it didnt get a call, two guys got into a bidding war and it went for more than I had advertisied it for on here.

Both cars had 12 months MOTs and had been recently serviced

However I have seen loads of stuff at the auctions that looks like a bargain but then "just' needs a service .... and disks and pads and tyres and and and !!

Phib




Drclarke

862 posts

114 months

Sunday 17th February
quotequote all
So why does it take them SEVEN days?!! In the electronic world of instant payments!

South tdf

694 posts

136 months

Monday 18th February
quotequote all
Drclarke said:
But a well known auction house Phoenixed after going bust owing clients money a few years ago.

From what I’ve read from auction houses terms and conditions, they don’t pay the owners of the cars until at least 14 days from sale!
Let’s just say the people who owned the cars sold Saturday will not be paid for 30 days, and then its a cheque. More often they will get paid when the money from the next auction starts coming in.

indapendentlee

284 posts

40 months

Monday 18th February
quotequote all
South tdf said:
Drclarke said:
But a well known auction house Phoenixed after going bust owing clients money a few years ago.

From what I’ve read from auction houses terms and conditions, they don’t pay the owners of the cars until at least 14 days from sale!
Let’s just say the people who owned the cars sold Saturday will not be paid for 30 days, and then its a cheque. More often they will get paid when the money from the next auction starts coming in.
Having sold several at auction including this outfit your summary there sounds about right, although some are better than others. Always had a pleasant enough experience with Silverstone/CCA as a buyer or seller, whereas I've had to make a couple of visits to Richmond in the aftermath of a sale (+40 working days) to get my money.

For me personally it was always a worst evils argument, there aren't many traders with the means or desire to buy higher end cars into stock outright at a price that isn't theft, and by the time you've negotiated the selling fees down you end up with a toss up between a traders offer of £X or the auction where you will get at least 0.95X but possibly 1.2X depending on the room.

For the most part traders want to take things on SOR which often entails "preparation" works at cost whether paid up front or at sale.

I've had my fingers burned more badly buying cars at auction, but that is for another thread!

LotusOmega375D

4,183 posts

94 months

Monday 18th February
quotequote all
I must be in a minority, but buying an expensive car at auction goes against all of my instincts. It just seems to be a ridiculous risk.

Bispal

472 posts

92 months

Tuesday 19th February
quotequote all
I sold my F355 at auction in December. I tried for 4 months to sell my low miles, FSH, LHD, Manual F355 privately. Each time a 'time waster' came to view I lost half a day in cleaning, test drives and even arranging inspections. I wasn't being greedy I only wanted £53k and the car had just had £7k spent on bringing it up to really nice condition. I was losing a lot of time & that was costing my business with 'supposed' buyers. The couple of offers I had were so cheeky it was a joke.

The auction house contacted me and said they would sell it consignment for a reduced fee. I agreed and took the car to them. 2 months later it wasn't sold so it went to auction in early December. Almost 3 months later I still don't have my money. Every day I have been leaving messages & emails. I get the same excuse every time, cheques in the post, only the MD can sign and he's out of the country, we are busy preparing the next auction, cheques in the post and round and round in circles it goes.

Selling older exotic or niche cars is exceedingly difficult and time consuming. There comes a point where the time I was spending was costing me more than the auctioneers fee and I was losing faith in the human race with the contemptible time wasting. However as I still haven't had my money its a case of out of the frying pan and into the fire. I have now heard this from numerous other people who have sold at auction, the money is almost always late!

I won't buy another classic car ever again after this experience, and what makes me sick is that the car was for sale for almost 6 months at a reasonable price and someone paid more, with the buyers premium, than I was selling it for but I still got less than I wanted by quite some margin. At least the car is sold and I will hopefully get my money soon but this has been a dreadful experience. What is strange is the amount of people who rant & rave about the F355 and how great it is and its their dream car, but no-one is buying them, even when they are a bargain!






So

15,558 posts

163 months

Tuesday 19th February
quotequote all
Bispal said:
I sold my F355 at auction in December. I tried for 4 months to sell my low miles, FSH, LHD, Manual F355 privately. Each time a 'time waster' came to view I lost half a day in cleaning, test drives and even arranging inspections. I wasn't being greedy I only wanted £53k and the car had just had £7k spent on bringing it up to really nice condition. I was losing a lot of time & that was costing my business with 'supposed' buyers. The couple of offers I had were so cheeky it was a joke.

The auction house contacted me and said they would sell it consignment for a reduced fee. I agreed and took the car to them. 2 months later it wasn't sold so it went to auction in early December. Almost 3 months later I still don't have my money. Every day I have been leaving messages & emails. I get the same excuse every time, cheques in the post, only the MD can sign and he's out of the country, we are busy preparing the next auction, cheques in the post and round and round in circles it goes.

Selling older exotic or niche cars is exceedingly difficult and time consuming. There comes a point where the time I was spending was costing me more than the auctioneers fee and I was losing faith in the human race with the contemptible time wasting. However as I still haven't had my money its a case of out of the frying pan and into the fire. I have now heard this from numerous other people who have sold at auction, the money is almost always late!

I won't buy another classic car ever again after this experience, and what makes me sick is that the car was for sale for almost 6 months at a reasonable price and someone paid more, with the buyers premium, than I was selling it for but I still got less than I wanted by quite some margin. At least the car is sold and I will hopefully get my money soon but this has been a dreadful experience. What is strange is the amount of people who rant & rave about the F355 and how great it is and its their dream car, but no-one is buying them, even when they are a bargain!
I think I would have involved our solicitors before now, unless there is a clause in the contract that allows them to pay late.

JeremyBearimy

117 posts

169 months

Tuesday 19th February
quotequote all
Just out of interest did you see what the little fiat went for? I’ve been looking for the results but couldn’t find them. That was generating a lot of interest over the few days I was there - although guess that was the more affordable £3000-£5000 estimate.

I’m surprised the cars were going under estimate, I go to historics auctions quite often and most (obviously not all) seem to go bang on or over with the odd shock. I’ve bought from them but not sold (that was an expensive day out!). I think it’s the fact the deal is done there and then, no dicking around and no worry about having to deal with ensuring the money is legitimate. They advertise it and deal with the enquiries. It’s relativel hassle free - although not if your having to chase 30 days for your money!
That all said, I think the markets cooled for investors (I always felt they pushed the prices up at auctions like these) so maybe estimates are taking a while to catch up.

Welshbeef

36,309 posts

139 months

Tuesday 19th February
quotequote all
LotusOmega375D said:
I must be in a minority, but buying an expensive car at auction goes against all of my instincts. It just seems to be a ridiculous risk.
And how is that different than buying same car form a private seller? You don’t know them from Adam (just as is the risk in selling a big pricy car privately).

LotusOmega375D

4,183 posts

94 months

Tuesday 19th February
quotequote all
When buying a high value car at auction, do you get to give it a thorough test drive? Do you get to give it a proper inspection? Do you get to know the vendor and how the car has been looked after? Do you get to see where they live?

As for trade sales, you usually get some form of warranty, should the car break-down shortly after you drive off the forecourt. They usually have finance, if that's what you need. Specialist dealers can provide technical back-up and often know the car from earlier days. There's also none of the awkwardness of money transfer, that handing over large sums of money to a random member of the public involves.

Of these three high value car buying options, buying at auction would be a distant third for me.

indapendentlee

284 posts

40 months

Tuesday 19th February
quotequote all
Bispal said:
I sold my F355 at auction in December. I tried for 4 months to sell my low miles, FSH, LHD, Manual F355 privately. Each time a 'time waster' came to view I lost half a day in cleaning, test drives and even arranging inspections. I wasn't being greedy I only wanted £53k and the car had just had £7k spent on bringing it up to really nice condition. I was losing a lot of time & that was costing my business with 'supposed' buyers. The couple of offers I had were so cheeky it was a joke.

The auction house contacted me and said they would sell it consignment for a reduced fee. I agreed and took the car to them. 2 months later it wasn't sold so it went to auction in early December. Almost 3 months later I still don't have my money. Every day I have been leaving messages & emails. I get the same excuse every time, cheques in the post, only the MD can sign and he's out of the country, we are busy preparing the next auction, cheques in the post and round and round in circles it goes.

Selling older exotic or niche cars is exceedingly difficult and time consuming. There comes a point where the time I was spending was costing me more than the auctioneers fee and I was losing faith in the human race with the contemptible time wasting. However as I still haven't had my money its a case of out of the frying pan and into the fire. I have now heard this from numerous other people who have sold at auction, the money is almost always late!

I won't buy another classic car ever again after this experience, and what makes me sick is that the car was for sale for almost 6 months at a reasonable price and someone paid more, with the buyers premium, than I was selling it for but I still got less than I wanted by quite some margin. At least the car is sold and I will hopefully get my money soon but this has been a dreadful experience. What is strange is the amount of people who rant & rave about the F355 and how great it is and its their dream car, but no-one is buying them, even when they are a bargain!
This sounds very familiar to me, there are a couple that have been mentioned here and one in particular are like this - PM me if you want to know how I got the cash in the end.

f1ten

1,807 posts

94 months

Tuesday 19th February
quotequote all
Looks to me there was very few cars sold at the cost auction ?

GG33

948 posts

142 months

Wednesday 20th February
quotequote all
wyldstalyns said:
Ok, I can only assume this is a stupid question, but I just don’t get it, so perhaps someone can enlighten me.

Today I was at the London Classic Car Show and was watching the COYS auction. Each car there (some lovely stuff on the face of it) had an estimate well below their market value “norm”, and then for the most part each car went for well below its estimate. For example a Ferrari 599, very few of which are listed on here for less than £100k, went for £60k. A brilliant looking low mileage Diablo also went for £100k when the cheapest here is £130k.

Why would the seller do such a thing? Assuming it doesn’t have some fatal flaw (in which case why buy), a dealer would take that off your hands for better if you were so desperate to get rid of it.

What am I missing? I’m guessing there is a simple answer...

Cheers all.
The 599 was left hand drive with a 'not so great' interior colour. Similar cars on here have been listed at around the 80k mark over the last year, and importantly, have not been selling. Neither have many much better RHD examples at just over the 100k mark.
I think the acheievd figure is about right.

GG