Auction Glossary

by John Linhardt

The fastest way to buy or sell a collector car is by auction. One source is “internet” going to the highest bidder, but large auction companies are major car auctions. Terms are:

1. Regular auction to the highest bidder but NOT compelled to accept.

2. “No-reserve” auctions, basically the same but a ball park price is established. Again, the final price does not have to be accepted seller.

3. “Reserve” auction which seller sets a minimum price as agreed with the auction company and usually has to be sold if the reserve is met.

4. “Absolute” auction means the car is sold no matter what the final price reaches.

The “absolute way is a desperate attempt of a seller, but can be a big advantage to a buyer. Auction companies are guarenteed their commissions.

The large auction companies are too numerous to mention. Lets take the largest one, Barrett-Jackson, who sells all its consigned cars on a “no-reserve” basis, meaning that the buyer does not set a minimum price that he will accept. Barrett-Jackson charges buyers 10% and sellers 8%, but other companies like R/M, Gooding and Russo and Steele, charge both buyer and seller 10% sales commission. Sellers of the most desirable and rare cars especially do not like a “no-reserve” policy.

Barrett-Jackson is now 38 years old, formed by Tom Barrett and Craig Jackson in Arizona. Their leader The Jan. Arizona auctions, generated 63 million for 2009 but that was 28% below 2008’s 88 million and more than 40% under 2007’s 112 million. Those 3 years sold over 1,100 cars. Now they are evaluating the decline in the “economy” or could it be their “no-reserve” policy, or both. The attendance was there (over 200,000 all week long), plus a cable T.V. channel carried 40 hours of live coverage to millions of viewers. The highest price sale of Jan. ’09 auction was 1.21 million for a 1929 Ford Tri-motor airplane. 30% of the total bidders were 1st time buyers accounting for 70% of total sales. Mostly ’50’s – ’60’s shiny chrome cars sold, purchased mostly by 50 year old plus men. The top car was the 1st 1955 Ford T-Bird made selling at $660,000. Even a 1959 Chevy Convertible sold at $220,000. Buyers want these 1950’s and 1960’s cars and will pay premium for the rarer ones.

Posted in Auctions.

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