How To Check Out and Buy a Classic Car at Auction

According to the folklore surrounding automotive auctions, you’re best not to wave at a friend or scratch your nose during proceedings, or you might just buy a car. Today, it’s a different world where everyone plays by a new set of rules and it’s hard to do anything by accident. You can still get mugged, though, so danger signs need to be recognised and rules observed. Retro Rides’ Market Analyst and long-term auction participant Cliff Chambers explains.

The sound and fury of a wholesale vehicle auction is not a place for the uninitiated. However, there are bargains to be found by those who are cautious and disciplined.

When the auctioneer’s friendly patter stops and that hammer thumps down for the final time, you just might have bought a car and any problems that come with it. However, there are processes to help ensure you don’t arrive there by accident.

Validations, disclosures and opportunities for inspection ensure that auction buyers are better informed than ever they were, with protections against buying something with a shady past. 

Buyers still need to understand their rights and also their responsibilities when entering the auction arena.

Visiting the auction venue a few days prior to the sale – and the crowds piling in – and introducing yourself as a new and likely bidder will normally initiate a guided tour of suitable vehicles with a member of auction staff (Image: Barrett-Jackson)

Pre-Registration

Your first time at an onsite auction should be a process of introduction and education.

Visiting the auction venue a few days prior to the sale and introducing yourself as a new and likely bidder will normally initiate a guided tour of suitable vehicles with a member of auction staff.

Once you’ve decided there are items (called ‘lots’) in the sale that are worth a bid, the next step is to register your interest. 

Bidder Registration usually means filling out a basic form and producing some photo ID. The auction staff will then issue you with a bidder card or paddle with a number and a printed copy of the auction Terms and Conditions. 

If you buy something, you will need to show the number to auction house staff so an invoice can be prepared.

Auctions in Australia don’t normally apply a bidder registration fee – some overseas sales do – but they may charge for a printed catalogue.

Inside the catalogue and also on large signs adjacent to the auctioneer’s rostrum will be the terms of the sale and detail any Buyer Premiums that apply.

These are extra charges that a successful bidder is required to pay in addition to the ‘hammer price.’ A car that sells for $100,000 with a 9 percent Buyer’s Premium will be invoiced at $109,000 plus GTS, any charges for storage or transport and other fees agreed to by the buyer.

Auction houses are required to provide clear title to vehicles and represent them correctly. If you find that something you buy is a different year or model or is registered as security for an unpaid debt, you can nullify the purchase and may also have grounds for compensation. 

A major online auction participant recently agreed to a $10 million combined settlement with buyers who had been able to prove that the business made false claims or omitted information from descriptions of vehicles being sold.

Driving vehicles being offered for auction is usually not possible, but starting them and organising professional inspection usually is (Image: Ryan Hurley/Unsplash)

Inspection

Lots being auctioned need to be available for inspection, although some may not be at the auction location. 

Where an item is offsite and possibly in some quite remote location, it is the bidder’s responsibility to find someone who can physically inspect and assess its condition.

The auction house may, at its discretion, offer a Condition Report to assist bidders. It may also place a Guiding Range on lots being offered, showing the auction’s estimate of the item’s value.

Some items will have a Reserve Price which is the minimum amount the vendor is likely to accept. At least, the minimum until bids are received and there is a basis for negotiation.

Notes made during your inspection of faults and flaws can help when justifying a bid below the reserve price, especially if the auction house description hasn’t mentioned something significant.

Using a phone to record your inspection of different vehicles will document any faults you find and eliminate confusion between lots.

Driving vehicles being offered for auction is usually not possible but starting them and organising professional inspection usually is. Bear in mind that a static check will not reveal every potential problem, so make allowances for the possible cost of repairs when bidding.

While most auctions used to be conducted onsite, with potential buyers seated in a room or marquee, but the most common position for a bidder today will be at home or work, watching it livestreamed on the internet (Image: Hagerty/Broad Arrow Auctions)

Auction Day

Almost all auctions would once be conducted onsite, with potential buyers seated in a room or marquee, or maybe standing in the open alongside lots being offered. 

Close by would be auction staff with phones in hand, relaying offers from across the country and sometimes other parts of the world, to the auctioneer.

Today, the most common position for a bidder will be at home or work, watching the event being livestreamed and perhaps tapping the Enter key as the screen’s ‘Current Bid’ figure increases.

During the Covid-19 lockdowns, onsite auctions became impractical or even illegal, and the concept of the Timed Auction came to the fore.

Under this system, only online bidding was permitted, with the auction house nominating a closing time for each lot. Providing the final bid reached the reserve price, that bid would take the item, except that auction houses forgot about the time honoured auction tactic of online ‘sniping.’ 

This occurs when a bidder times their final offer to appear a few seconds before a lot ends, ensuring no one else can respond with a higher bid. 

To give everyone a fair chance, auctions would hold the lot open if a bid was received within a few seconds of its scheduled close. They would then keep bidding open for a further 1-2 minutes so the underbidders could respond. If there was no counter bid, the lot would be closed off.

When bidding in person at the auction venue, get in early with your opening bid to gain the attention of the auction ‘spotters’ who will ensure your later offers are recognised by the auctioneer before the lot is sold (Image: Gooding & Company)

This process of bid and counterbid was prone to drag on, however, and could still be going after other lots with later closing times had been finalised.

Online bidding remains the only system available via some auction sites, while some have reinstated physical participation by bidders on sale day.

When bidding in person at the auction venue, get in early with your opening bid. You will then have the attention of the auction ‘spotters’ who will ensure your later offers are recognised by the auctioneer before the lot is sold.

Once a lot reaches its reserve price, the auctioneer will announce it as being `on the market’ and being sold to the highest bidder. Lots with No Reserve should have their status announced before bidding starts.

At the point where a lot reaches reserve, some potential buyers will bid to their maximum and challenge the room to beat them. Others may engage in bidding duels which can see items sold for considerably more than they are worth. 

If you are the highest bidder but the lot doesn’t reach its reserve price, you have the right to negotiate directly with the vendor. In this instance, either stick with your bid or make a higher, written offer for presentation by auction staff.  

If the owner won’t budge on their reserve and you are at your maximum, let the lot go. Another one will come along in the not-too-distant future.

Auction houses usually allow only two business days for settlement and require a 25 percent deposit in cash (Image: Felix/Unsplash)

Finalising The Sale

Make sure you have enough money immediately available to cover your bid. Auction houses usually allow only two business days for settlement and require a 25 percent deposit in cash, as a bank transfer or credit card payment (plus transaction fees) on the fall of the hammer.

Auction vehicles will usually be unregistered, and while dealers can drive them on ‘trade plates’, private buyers will need to organise transport with a towing contractor or trailer. 

Large auctions may have on-site registration facilities for lots that have a roadworthy certificate. To register a vehicle onsite the buyer needs to immediately pay a transfer fee, Stamp Duty based on the vehicle’s sale price and the registration/CTP fee. 

Having an insurance provider online or on speed dial is essential as well. At the fall of the hammer, anything bought becomes your responsibility and will no longer be covered under the auction house’s insurance policy.

To avoid shocks when arranging insurance, it is worthwhile storing details of any vehicles in an auction that are of interest, estimating the amount you might pay including any Buyer Premium and getting insurance quotes in advance of the sale.

Online sales sites provide opportunities to buy a huge range of items, but while they are quick and convenient there is significant risk involved (Image: Collecting Cars)

Internet Sales

Online sales sites provide opportunities to buy a huge range of items, located anywhere in the world and including motor vehicles. These sites are quick and convenient but with significant risk involved.

Anything bought in this way should be cheaper than the same item at a conventional auction where onsite inspection is available. There are no viable guarantees or indemnities available for online items and while some people have acquired excellent cars via an online auction, others have been disappointed or even lost their money altogether.

As with any auction, set a maximum bid price and don’t exceed it. Some listings carry ‘Buy It Now’ prices, which are invariably well above the actual value.

Seeing photos that show every aspect of a car that is for sale are essential. If a section of the body or interior isn’t shown, contact the vendor and ask to see a photo of the hidden portion. If they refuse, leave that lot for someone else.

If a car is located close to your home, contact the vendor to see if you can inspect and drive it. Some will be happy to do this and cancel the online auction if they get an acceptable offer. 

Vehicles bought online from overseas need to come with an independent Condition Report and legal declaration from the vendor confirming Clear Title. 

If you can’t arrange to have someone collect the vehicle and pay cash, use a secure method of cash-transfer that provides ‘Buyer Protection’ with a refund policy. While these aren’t much use if the vendor disappears before you receive the vehicle and discover a problem, they help discourage misrepresentation.

Some online auctions ‘rate’ sellers by showing previous buyer’s experience of their honesty and the quality of items they’ve sold. 

When the item is a vehicle though, the vendors themselves might be very new to the auction world and won’t have any established feedback to help with decision. Buyers need very much to beware.