The inside secrets of a car auction
Join us as we question the head of a major auction house to answer all of your burning questions.....
What’s the difference between a reserve price at a car auction and an estimate, and what protection do you have after the hammer has fallen?
Matthew Parkin, head of classic motoring at Brightwells, a major auction house, spills the beans on these important issues and more…
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Isn't it risky buying a car at auction?
A used or classic car purchase is a risky undertaking wherever you buy from but we’d say that at least an auction is transparent. There’s a description of the car that’s correct on all objective measures, and the estimate we place on its sale price, or value, and publish with this description gives buyers an indication of the car’s worth and desirability.
However, regardless of this estimate, you’ll pay what it was worth on the day – no more and no less.
Why would I sell a car at auction?
If the sale has been properly marketed to the right buyers, you’ll get the market value of your car, which will be turned into cash without any hassle.
If you’re unsure about its value, you can put a reserve on it. Finally, you get no time-wasters or silly questions at auction. People bid, pay you cash and take your car.
What sort of cars do you auction?
We hold general sales of used cars including everything from dealers’ part-exchanges to ex-government and armed services vehicles. We’ve auctioned more than 250,000 cars since the mid 1990s.
We also sell classic cars in our specialist sales. These require a totally different approach from our general car sales and we auction 1000 of these each year. We’re one of the country’s top five classic car auction houses.
What’s the difference between the estimate and the reserve?
An accurate estimate is what a reputable auction house thinks the car will sell for. It inspires interest among bidders.
However, when we give an estimate range, from low to high, this tells bidders we’re not quite sure what it’s worth! The reserve is the lowest bid the seller will accept. Bidders don't know what the reserve is (or even though they know if it has one) but they can see what the estimate is.
Why are some cars offered with no reserve?
In fact we favour this approach because in our experience a seller is more likely to get a higher price than had they put a reserve on their car. Without a reserve, bidders get very excited, imagining they can have the car at any price.
They all pile in and very soon the car is attracting high bids. We say a car with no reserve will always get every penny of its value and sometimes more. In contrast, a car with a reserve may not make its reserve price and therefore will remain unsold.
So how do you get a car with a reserve to sell?
The auctioneer is allowed to take bids from phantom bidders, or ‘off the ceiling’ as the expression goes. This wakes up the room and gets buyers focused. It’s legal to do this because the car isn't actually for sale below its reserve price.
However, it is illegal for the auctioneer to bid above the reserve. Theoretically, if they were to do that and nobody else bid, they’d have to buy the car.
What’s a provisional sale?
This is where a car has just failed to meet its reserve price. In this case, we’ll ask the seller if they want to agree a price with the highest bidder, in private.
What’s the pace of a sale like?
Some can be bafflingly quick. In our general sales, we like to keep things steady but focused so aim to sell 35 cars an hour. Anything less and buyers go to sleep!
Do you offer any redress?
In our general sales, we make sure the seller’s description of the car is truthful and sticks to the facts. People can also call us ahead of the sale and ask us about the vehicle and we’ll be honest. We usually know the seller and the cars they bring us to sell plus we’ll probably have driven them around the yard.
In any case, our general cars are sold with an insurance policy that gives a buyer 30 minutes to identify any faults and, if they are serious enough, return the car. On this point, it’s important you choose a reputable auction house who won't sell a car at any price.
In the case of our classic car sales, it can be hard to determine a vehicle’s precise condition, so as a safeguard we keep the buyer’s money for two weeks after the sale so if any serious faults or discrepancies emerge, we can return it to them.
As a buyer, how should you prepare for an auction?
Read the sales catalogue thoroughly and identify a few cars of interest. Ahead of the sale, ask the auction house about the cars and what they’re like.
They may say things like, ‘It comes from one of our regular suppliers’, or ‘we moved it and everything worked OK’. Have a fixed maximum bid in your head and accept that if you have to spend a little money on its refurbishment, you’ve saved a lot more than had you bought it from a dealer.
And as a seller?
Research the auction house, making sure it’s reputable and that it places your car in an appropriate sale that will be properly marketed to prospective buyers.
Prepare it properly (at least give it a wash and vac) and gather together all its documents including MOTs, service book and workshop receipts, and V5. If you set a reserve price, make sure it’s realistic.