Auctions v dealers part 2
In the second installment of our two-part investigation, Total 911 delves into the world of auction houses and specialist dealers to find out who’s best when it comes to selling your Porsche
Total 911 investigates: which is the best avenue to go down when selling a Neunelfer?
Like all retail therapy, buying a used Porsche 911 should get the blood pumping. It’s a good kind of stress – excitement and perhaps a little nervous anxiety all rolled into one. However, it’s unlikely the same can be said when the time comes to sell it again. The tyre-kickers, the no-shows, the joy-riders and the inevitable ridiculous offers can make selling your car a grim and frustrating experience. It’s probably not surprising that so many of us enlist the help of others to do the job.
Specialist dealers and auction houses are two of the most commonly used methods. Having examined in the previous issue the pros and cons of buying
911s via each of these routes, today we’re turning the spotlight on the sellers. We wanted to look at what you can gain, and what you can lose, by the choice you make. Silverstone Auctions are again making the case for the auction houses, with the specialist dealers represented by Paragon Porsche in East Sussex, and Suffolk’s Paul Stephens.
Visiting Silverstone’s Race Retro auction for the day, we asked operations manager Harry Whale precisely what happens when someone contacts Silverstone with a 911 they might be interested in selling at auction: “We ask for photographs and full details, which are examined by our in-house valuation committee, and if we are confident at this point that we would be happy to sell the car we go back to the vendor to discuss a reserve,” he says.
“If they are happy with this we go to see the car to examine it and review its provenance. If we are still happy, we will hopefully sign an agreement with the vendor. Then we do the photography, and write a script based on the research and the provenance, which is agreed with the vendor. Then the car goes on the website, which gets over a million hits per year. Four or five days before the auction the cars arrive on site and the auction hall is prepared.
“The reserve is made in consultation with the vendor. Guide prices and reserves need to be realistic and accurate, because people will not travel to see a car if the guide price is too high. If a car is valued at £100K on the specialist retail market, then our guide price might be £80k to £90K. After the explosion in prices of the last couple of years sellers’ expectations are sky high, which is fair enough, but you have to start at a realistic level.” Whale explains: “A perfect example was our 2015 Porsche Sale. We had the first Uk-delivered Flatnose. It was estimated at £150K to £170K, which was too high, and it didn’t sell. The
owner put it up on the retail market for a year at £180K and it still didn’t sell, so he brought it back to our Classic NEC Motor Show sale with an estimate of £100K to £120K, and it sold for £212K. That lower estimate was a ‘come and get me’ estimate, which attracted four or five serious collectors, and between them they decided it was worth over £200K.”
So the question remains, why should an enthusiast looking to sell their 911 come to an auction house rather than a specialist dealer? Whale again offers us an explanation: “Selling at auction is a call to action. If you put your car with a dealer you have no idea how long it might take, but with an auction you know it is going to happen on a fixed date. You will be exposing your car to a worldwide audience – we sell a lot of cars to Europe, to the USA, to Australia – and we only charge a 5 per cent fee to the seller. We have built up relationships and a level of trust with sellers, who might sell their whole collections with us. We understand that the procedure might seem a bit daunting if you haven’t done it before. We’ve got a car in this auction that has had one owner since 1995, and he has got really emotional about selling it, but we have tried to hold his hand through the whole process.”
Of course, the vendor’s perspective is only one dimension of the story. In the auction hall, owner Peter Penfold explained his reasons for choosing to sell his immaculate 1986 Carrera Supersport Targa in the day’s auction. Giving the bodywork a final polish, he explained that having recently expanded his collection he had simply run out of space.
Needing to make room quickly, the auction offered him the certainty of an outcome today. The car had a guide price of £47K to £52K, but the hammer went down later at a surprisingly low £41,800 – above the reserve, but below the £50K Peter was hoping for. With the 15 per cent buyer’s premium the buyer paid £48,070, and Peter received £39,710. Taken together, Peter’s situation and the Flatnose mentioned by Harry seem to neatly sum up the pros and cons for the seller at auction: the time and place of the outcome can be virtually guaranteed, but the financial outcome cannot. It can be a disappointment, as in Peter’s case, or a very pleasant surprise, as the Flatnose owner found out.
Meanwhile, there are two distinct routes to selling through a specialist dealer. The first appears to remove all uncertainty, involving a straight sale to the dealer who then ensures the car is up to their required standard before putting it into their showroom. It may take some time before a buyer is found, but that’s the dealer’s problem, as the seller gets their money as soon as a price is agreed. This approach, represented for our purposes by Paragon Porsche, seems very attractive for sellers. But dealers are in business to make money. They will know how much they hope they can sell a car for, so will only offer a figure that allows them to build in a suitable margin. The more they anticipate having to spend on getting a car up to sale standard, the lower the purchase price they can offer.
Readers of last issue’s findings may remember that after examining pictures and details of Peter Penfold’s Supersport, Paragon felt they would probably retail it at around £75,000. So how much would they have offered Peter for the car? With huge caveats about having to physically see the car, Mark Sumpter, owner of Paragon, suggests a figure of around £60,000. This is over £20,000 more than
“Some people prefer a straight cash purchase, while others don’t mind waiting and getting a larger return when their car sells”
Peter received from the auction, and I’m almost hoping he never reads this article. While it would be unrealistic to expect a similar scenario with every car bought by Paragon, Mark comments that owners are often surprised by how much Paragon are prepared to offer for really good cars. But Jason Shepherd, part of Paragon’s sales team, tells me that they have to reject a significant percentage of cars offered to them because of the cost of renovating or restoring them. “Everybody always underestimates the cost of doing this properly,” he laments.
I ask Jason why he feels a seller should come to Paragon first. “We are nice people, we understand the market for their type of car and we will be the best trade buyer of the best air-cooled 911s. We are straightforward and we like to do business in a transparent way. We will show them where we will spend money on their car and precisely how we get to our expert opinion of their car’s value. Once agreed, all monies will be put straight into their account while they are here, and we will deal with all the ancillary admin for them.”
The second route to selling through a dealer is known as a consignment sale, and involves arranging for a dealer to sell your car on your behalf. This removes the private sale frustrations mentioned earlier, but involves the dealer charging you a fee or a percentage for a successful sale. Realistically, the confidence inspired by buying from a dealer with a good reputation, and of course the warranty included, means that a higher price is likely to be achieved, which should lessen the pain of the dealer’s percentage. Paul Stephens Porsche offers this service, though it is also happy to purchase your car for cash. I asked Paul which he and his clients prefer. “It depends on individual circumstances. Some people prefer a straight cash purchase as they get their money straight away, while others don’t mind waiting – and probably getting a larger return when their car sells.”
Paul charges £5,000 or 10 per cent of the sales price, whichever is higher. He points out that out of that he has to provide the same marketing and comprehensive warranty as he provides for cars he buys in. Paul is also willing to offer a combination of the two approaches, with some money paid to the seller up-front, and a further amount dependent on when the car sells and at what price. Paul stresses that he will always try to explore with a potential seller which approach will work best for them.
So which sale route should you choose? An auction can guarantee the date you will sell, but not the amount received. A consignment sale possibly gets you a larger return, but no guarantees of when. And a straight sale to a dealer guarantees the amount and the date, but with probably smaller returns. If I were in the fortunate position of having a 993 to sell, which would I choose? My heart would love the romance and unpredictability of an auction, but I know how I’d feel if I ended up bidding farewell to a much-loved, much-polished Porsche for significantly below my idea of a fair price.
Based on the conversations I’ve had here, a straight dealer sale would have the greatest appeal, for me at least, for its fast and secure outcome. If a dealer couldn’t offer as much as I had been hoping for, I would try a consignment sale, with the Plan B that if it didn’t sell in three months I could always go back to a straight sale. In effect, I’d be looking to maximise the chance of the highest return while minimising uncertainty.
But that’s just me. Take the time to talk with the people mentioned here. All are straightforward and approachable, all will be keen to help you decide the best route for you and all will ensure you avoid the dreaded tyre-kickers!
Above With an auction, the date of sale is guaranteed, but the financial outcome is not