Kerrmudgeon

Personally I would never put a car up for auction. Too many variables like turn out etc. Even the weather comes into it.
I don't know what percentage Frankie paid to consign his 61 to the dealer that sold it, but at least you have control over the price albeit with their help, and get to the buyers you want.

Rdelvalle

According to the Fort Lauderdale Collectors Car Auction & Show terms you get paid within 30 days when the buyer pays them. If the buyer does not pay then it is the responsibility of the seller to go after the buyer and get paid. The auction house is not responsible. In the mean time you have already paid them their commission. It is all in favor of the Auction house.
I started this thread because I was going to sell one of my cars at that auction but when I red carefully and in depth the fine print I decided against it. The commission the entrance fee the seller fee and the fact that it is the sellers responsibility to collect made it a deal breaker.

biggd

On top of their commissions, entrance fees, occupancy food and lubricant, , I wonder how much Mecum gets from TV rights? I know it's a big production but they are making a killing!

Factoid

This is also how Bring a Trailer (BaT) works. As soon as the auction ends, BaT takes their cut from the buyers credit card and then sends both the seller and buyer instructions on how to complete the transaction. However, it is completely on the seller to complete the transaction. Frankly the best mitigating factor the seller has is how they participate in the lunacy that sometimes breaks out in the forum portion of the BaT auction. The more active and non-confrontational your involvement, the higher your odds of the best price and completed sale.

cv67

Sounds like a pita with some risk

dplotkin

I lurk on BAT now and then, twice I've jumped in to correct some misstatements and bad information regarding Corvettes proffered by fellas who are proud of their knowledge and scribing skills, and I'm not even one of you Corvette experts!

Dan

Frankie the Fink

IIRC SupremeDeluxe member on her sold his nice split window on BaT and got a nice 6 figure price for it....not a terrible way to go I'm thinking.

bb62

The OP's calculations are correct. You guys seem to be suggesting that the opportunity cost of the buyer's premium is not part of the market value equation when it certainly is. If you push aside the parking and entry fees and just concentrate on the 10% sellers fee (at reserve) and the 8% buyers fee, the key numbers involved of the car (using the OP's numbers):
- $100,000 hammer price
- $90,000 seller proceeds
- $108,000 market value (the monetary value that the buyer was willing to part with to obtain the car)

If this were a private sale, the buyer would still be willing to part with $108,000. So from the buyers perspective, he received 83.3% ($90,000/$108,000) of the market value of the car or 16.7% less than the market value. By the same token, the buyer paid 20% ($108,000/$90,000) more than the seller would have been willing to accept. The percentages would be higher when adding in the extraneous transportation and auction fees).

Now you could argue that the buyer could have negotiated the price down from the $108K that he paid, just as you can argue that the seller could have held out for more than $90K in a private transaction. Certainly classic auto sales do not have the "theoretical" perfect information that the stock market has with bid and ask premiums, but it is clear that the transactional differential between buyer and seller is (roughly) the 18% that the OP is alluding to.

Not Red Rob

Ron,
I'm located in Jonesboro, and buy from Glen Bagus in Malden, quite often, I also bought a red / white '77 Bronco for a gentleman in Bernie last summer.

I've been to a couple Smith auctions, decent money and a wide range of cars.

Rob

68hemi

You have missed the entire point of my post to the OP. He was counting the buyers premium as part of HIS cost or outlay which is not the case as HE does not pay it, the buyer does. From my post above "You also alluded later that it was costing you 18% +$575 which is NOT the case." The 18% He is referring to include the BUYER'S premium which the BUYER pays.

Beyond that you can not count the buyers fee paid added to the sale price in valuing these cars in the market. What a particular buyer that chooses to buy at an auction and has to pay for that right has NOTHING to do with the car's selling price EXCEPT to that buyer. It is the SALE PRICE not the purchase price that determines the value and has nothing to do with the cost incurred by that buyer. You can't add transportation of the car in the equation either these are only supplemental costs that SOME buyer incur depending on where they and the car are located. People that choose to buy in an auction venue are paying a premium that others that buy privately don't.

MOXIE62

I had a real nice 59 and needed some money right away. I can not give you any figures because I do not remember, but it was way low under market. I thought Proteam would interested but they said no. They must steal their cars. I can not see anybody selling to them or probably any other dealer. Anyway, If I ever sell my car and it will be listed here and on ebay and maybe Hemmings.

bb62

Virtually everything you typed is antithetical to how a business person would look at this transaction. And if you can't understand that opportunity cost (the buyers premium) is indeed a cost, then I can't explain it to you.

68hemi

I didn’t say it was not a cost, just that the cost is not added to the value of the car it is an expense.

Rdelvalle

bb62 you grasped my point right on the money, posting #48. I could have not said it better. Even the numbers you used are better than mine to illustrate the point as they make it easier to understand. No mater how you look at it if the car was sold for $108k and you received $90k someone pocketed $18k or 18%. The way I see it you paid the auction house $18K to sell the car.

If you would have advertised the car privately for $108k and someone offered you $90K would you have sold it? Meaning you would have given the seller a discount of $18K ,18%? I doubt it very much. The buyer would be called all kinds of nasty names, Tire Kicker, low baller, thief to name a few not to mention the ones that are not allowed to be named in the forum.

bb62 I hope you do not mind that I plagiarized you numbers.

biggd

Some people just don't want to be bothered selling a car or truck privately. Personally I enjoy selling and buying privately rather than through a dealer or auction house.

68hemi

I don’t know what is so difficult to understand here it is black and white. By your example YOU paid the auction company 10% and the buyer paid 8%. If you sold it to the same buyer at a 10% discount you net the same and the buyer saves another 8% as opposed to if he bought your car at auction. You are hung up on the fact that the auction house is collecting 18% regardless of who is paying what portion of it.

I was in the car business for most of my life. We would buy cars from the auction weekly. We paid a commission and transport fees on each car and these were EXPENSES that were subtracted from the profit when they sold. We could not ADD these expenses to the price of the car because the cars already had a book value that no one was going to pay or be able to finance over that book value.

bb62

No worries on the plagiarism!

You still don't understand that there is no difference between the fees.

Consider 2 alternatives:

1. The car hammers at $90K. The seller gets the entire $90K and the Buyer pays the $18K fee as a percentage fee.
2. The car hammers at $108K but the seller pays the entire $18K based on a required percentage.

You would look at these two transactions and somehow infer that they were significantly different when in fact THEY ARE THE EXACT SAME TRANSACTION. They are the same transaction from a finance perspective. They would be recorded as the same transaction from a GAAP accounting perspective. In each case, the buyer limits his expense to $108K while the seller predetermines his receipt of $90K. The actual sharing of the buyer and selling fee is irrelevant and is just a modification of examples 1 and 2 above.

MOXIE62

Why is it so hard for some folks to not understand the numbers. We are up to 50+ replies and still scratching heads.

tuxnharley

Figures don’t lie - but (auction houses) can figure.....

68hemi

I obviously understand it better than you.

There is only one way to look at it and that is how much money the seller puts in his pocket at sale time and how much money the buyer takes out of his pocket at the time of the purchase. If you can't figure out who is actually paying the auction company what You will never understand what I am saying.

Here is the OPs 1st post in this thread.

"I was recently considering selling one of my two collection cars. There is an auction coming up February in Fort Lauderdale Fl. After carefully reading the contractual terms of the auction it seems to me that it was not a good idea to sell via auction. Here are the terms:

Seller Commission: No reserve 8% Reserve 10%
Buyers Premium: 8%
Marketing fees: NR $300 R $450 per day
Tent: $125 for three days

So if I wanted to sell my car with reserve, which is the only way I would do it, I am 18% +$575 handicapped, that is a heavy price to pay for selling your car. After subtracting the auction's cost from the car's market value it seems to me that you are going to lose money.

My question is, is there something I am overlooking or is it a bad idea to sell your car at auction. What make it attractive that I read in the forum of many members selling in auctions. What am I missing? It looks as if the auction house makes all the profits. The bank (the auction house) always wins.

What are the most successful ways members have sold their cars? Successful defined as maximizing selling price, minimizing selling costs and shortest selling time."

Yes he is 18% handicapped compared to selling the same car to a buyer privately IF you consider that the buyer is absorbing the sellers 10% and paying the buyers premium. In fact that is not the case. In order for the buyer to net the same and the buyer has no EXTRA cost the seller has to discount his price 10% in order to net the same as if selling at auction. So, you have to look at it this way, in real estate when comparing using an agent verse for sale buy owner, the seller says he wants to "save the commission" and the buyer says he wants to buy direct from the owner so he can "save the commission." Both parties CAN NOT save the same commission.