AUCTIONS: THE BEGINNER’S GUIDE

911&PW’S resident auction observer, David Sutherland, talks you through the ins and outs of the auction world

Auction “virgins” wandering around the September RM Sotheby’s sale at London’s Olympia and spotting Bernie Ecclestone sitting close to the rostrum might have wondered if they were way out of their depth. If one of the world’s greatest wheeler-dealers frequents car auctions, surely they’re for the big boys only? No, because car auctions, classic or modern, all work on the same basis and are easy enough to engage with. You just have to know the ground rules. You’re probably aware of the ethos of auctions: you buy what you see, and market forces ensure you don’t pay more than the true value (unless you are stupid enough to get swept into a bidding war). For sellers it’s a great way to get your car in front of a potentially large number of buyers, and you don’t have a string of tyre kickers turning up at your house. But the devil is in the detail. The most important aspect to be aware of is the addon costs at auction, as these are often misunderstood. For example Surrey-based Historics Auctioneers, which for the want of a better description we’ll call a “local” auction, charges a “buyer’s commission” on top of the actual hammer bid of 10 per cent, to which 20 per cent VAT is added. So that Porsche 968 you might have thought you got for £10,000 will actually cost £11,200. Buyers’ commissions vary between auction houses, Silverstone Auctions in Warwickshire charging buyers 12.5 per cent (plus one per cent extra for online bids), while Anglia Car Auctions in Norwich charges six per cent on classics. The international auction house, RM Sotheby’s, which stages many auctions in the US and Europe, charges a 15 per cent buyer’s commission (plus a £150 “bidder’s fee”) on the first £200,000 of the hammer and 12.5 per cent on the rest, so your winning bid of £500,000 on, say, a Porsche 959, becomes over £581,000 by the time you load it onto the trailer. Presumably to attract “consigners”, selling commission is often, but not always, lower than for buying. Silverstone Auctions charges five per cent, Anglia Car Auctions six per cent. And there is likely to be an entry cost on top, Historics asking £230 plus VAT fee for the catalogue entry, including professional photography. RM Sotheby’s charges a (negotiable) eight per cent on sales, so the seller of our imaginary £500,000 959 is going to take home approximately £450,000, while RM Sotheby’s banks a tidy £107,500 or so from both ends of the deal. The seller of a £10,000 car sold at Historics would net around £8500. Commission rates apart, the more you know about how the auction works, the more likely you are to get a good result, buying or selling, and one of Historics’ most experienced auctioneers, Fabian Hine, is always happy to advise the nervous and inexperienced. ‘Sit down with a cup of coffee and read through the catalogue, there’s nothing horrible in there,’ he promises. Fabian is often asked by sellers if they should set a “reserve” (a pre-determined amount, below which the car will not be sold), and there are differing viewpoints. Acknowledging that Historics does not allow reserves on cars expected to sell for under £10,000, Fabian says, ‘If a car has no reserve, this will cause a flurry of bidding because people think they will steal the car for £10 – but that never happens!’ He also feels that a car higher up the price range needs a reserve: ‘The lack of a reserve on an expensive car can create a bad impression.’ At international auctions the threshold is higher, RM Sotheby’s not usually allowing reserves on estimates under £100,000. The reserve should not be confused with the pre-sale estimate, the upper and lower amounts an auctioneer expects a car to sell within. Although frequently cars either don’t reach the lower figure, or crash through the upper one. The auctioneer won’t reveal the reserve, and no seller with any sense will either, but it’s safe to assume that it’s somewhere in between the lower and upper estimate figures. The pre-sale estimate can be quite a contentious aspect, because sellers sometimes choose the auction house they’ll use based on which one offers the highest estimate. If you’re scared about buying at auction, Fabian suggests a no-purchase visit to a sale to get the feel of it – which proceeds at breakneck speed, most ‘lots’ dealt with in under two minutes. ‘Just don’t wave to anyone, it could be very expensive,’ he jests. In fact Historics even lays on free seminars for auction novices to explain how things work, and what they need to do. Furthermore, Historics also offers an on-site, independent inspection service, costing £200 to £400 depending on the car. Auctions tend to be intense affairs, but there can be humour, too. Fabian recalls the couple that attended one sale, each intending to buy the other a particular car as a present, both ignorant of their partner’s intention. ‘They arrived together but were on the opposite sides of the room and bid the car up an extra £3000!’ he laughs. On realising what had happened, Fabian cancelled the sale, and re-presented the car later in the day. ‘It then made a higher price, but neither of the couple bought it!’ he says. Auctions don’t suit everyone, but in recent years they have become much more welcoming to those outside the motor trade. Once any old scrap could be disposed of at auction – it still can, but it has to be described honestly and accurately. And classic sales in particular are increasingly offering preview days that are almost as much for entertainment as they are for checking out cars; Historics for example holds most of its sales on the Brooklands Museum site, so a visit there can be part of the day. Some even sell nice coffee rather than vending machine liquid sawdust. Decide on the car you want to bid on, research its typical price beforehand, set yourself a budget and don’t exceed it, or at least not by very much, and you could end up with a good car at a nice price, probably the equivalent of the “trade” price as opposed to the “retail”, or forecourt price. If selling, consider spending a few quid on a valet, as simple cleanliness can really can make a difference to the price achieved, and will definitely make it sell more easily. Don’t be tempted not to declare faults, as most bidders will spot the problem anyway, and the auction house, which has a duty to describe the car truthfully, will not be amused. Get an auction venture right, and you’ll like it and might become an auction regular – just like Bernie!