CAN YOU TRUST GUIDE PRICES?
Punters complain of inconsistency on sellers’ reserves and estimates at UK classic car auctions
A leading authority in the auction world has warned bidders that the catalogue’s lowest guide price is not the same as sale’s reserve price. The warning comes as a result of a number of CCW readers having their offers rejected, despite bidding to above the guide price.
Market analyst and collector vehicle valuations expert Richard Hudson-Evans has highlighted increasing concerns that although several best bids made have been the same or higher than lower guide prices in auction catalogues, their bids have been rejected by auctioneers on several rostrums as still being insufficient. But, as our research has discovered, there are no hard and fast rules – some houses allow reserves to be set within the estimates’ range, others set sellers’ reserves below the lowest guide price.
CCW’s auctions commentator says: ‘Custom and practice has always been that an auction reserve – the minimum amount that an owner would accept from the auction firm for a consigned motor car – is confidential. However, a punter’s bid that is the same as, or between the lower and higher pre-sale estimate figures, or above the guide price band published in the catalogue, should secure the lot. But that isn’t always the case.’
Nick Whale, managing director of Silverstone Auctions lambasts auctions that have reserve prices higher than their lower guide price. He says: ‘For our auctions, you have to be able to buy the car in the estimated price range. That means if we’ve valued a car between £10,000-12,000, and a bidder bids £10,000, they will be able to get the car. If other auction houses don’t employ that technique, they haven’t valued their car properly.’
According to reader-reports from the field, some bids have been within auctioneers’ published guide prices, but have not been accepted. ‘Not quite enough, Sir,’ the auctioneer announces both to ‘live’ witnesses in the saleroom and, increasingly to the online public in cyberspace. Often they add: ‘Come and have a word with us afterwards...’
Auctioneers do have the right to decline a bid from anyone, and there is nothing illegal about having a reserve price higher than the lower estimate, or even the higher estimate. Richard asks: ‘Why are the come-and-buy-me estimate figures, published information before every sale, not raised above the confidential reserve so that a bid within the guide price band actually buys the car?
‘The answer is that pre-sale estimate figures are all down to the increased competition between the various auction firms keen to sign up as many entries as possible for more and more sales in the national auctions calendar before their competitors get there first.
‘As a result, some vendors’ reserves are too high for the current market. They have been set attractively low by the auction firms to excite bids, but do not reflect the reserves that the cars can actually be bought for.’
Justin Lazic, managing director of Classics Central, says: ‘No reserve will exceed the final lower pre-sale estimate announced by us. But not every company plays by these rules, and it’s one of the reasons I started up the business.’
Another reason stated by some houses for refusing bids is that the vendor has increased the reserve bottom line between consigning the car and the day of the auction – frustrating for the auction company and potential buyers.
More often, though, the power is with the bidder: if potential buyers do not agree with what is usually a joint valuation arrived at by vendor and auctioneer, then the over-estimated car will be unsold, and the auction house’s sale rate diminishes as a result.