I vividly remember being a bundle of nerves behind the auction block moments before my first car was to cross. . . the butterflies in my stomach were so intense that I lost my cookies in a nearby trash can.
I’ve sold millions of dollars of collector cars since. For the cars that I consign to auction, I am regularly asked why I always sell “no reserve.”
Having been in the auction industry for years, I know a few things the general public isn’t aware of.
I’ll let you in on a few industry secrets, and then perhaps you’ll understand why I am such an advocate of selling my cars at “no reserve,” and not just some batshit crazy chick.
On a “reserve” car, the auction house has the right (stated in their terms and conditions) to bid on behalf of a seller close to the reserve amount, with the hope that “live money” (a real bidder) will raise their hand during the process. Yes, that’s right - what appears to be bidding in the auction arena might not actually be real bidding; the auction team is doing what the industry calls “working up to the reserve.” And YES, this practice is perfectly legal!
Once “live money” (a real bidder) is in the arena, one of the auction team members will turn to the seller and ask if they want to drop their reserve and sell it.
Oftentimes reserve cars won’t sell because the owner has unrealistic expectations of its value, and have too lofty a reserve. Like many owners, I too have overspent and lost sight that a car is restored for the passion and love of them, and not because an owner should expect to see every dollar back when they sell it. Owners don’t always realize that just because it took years and tens of thousands of dollars to restore a car doesn’t mean the car is actually worth what they put into it.
As a result of a car crossing the auction block and not selling with a reserve, many sellers (who haven’t read the terms and conditions) will believe they “turned away $X” for their car -- when in reality there may not have been an actual bidder in the room. This practice establishes a false ceiling for the value of a marque (figuratively speaking).
When a “no reserve” car crosses the auction block, a bidder knows the car will go home with the last bidder standing. As a result, natural competition takes over, and a bidding war ensues. A great auction team will keep the momentum up, so bidders are more apt to get caught up in the excitement of the auction. Add alcohol, a TV camera, and peer pressure to the excitement level in the auction ring, and voilà! The collector car on the auction block will sell for its true market value. A quality no-reserve auction environment will typically outsell a private sale.
Having held a key role in a large auction firm, I know that this is the only real way to determine a car’s worth: the price a vehicle brings in a “no reserve” setting, where the market dictates the value. It is worth what someone is willing to pay in this scenario.
Especially if it is a passion-driven environment.
I only consign my personal collector cars to the most noteworthy of auction houses: auctions which have the most pre-qualified bidders who are ready to buy. However if a client asks me to represent their car at another auction house with a reserve, I will happily oblige – like I said: selling “no reserve” isn’t for everyone!
(And yes - I still have the butterflies in my stomach immediately before one of my cars crosses the block – but fortunately they now fly in formation!)
If you are considering consigning a collector car to auction, or have any additional questions about the auction process, feel free to reach out: muffy@muffybennett.com.
Muffy Bennett, CEO – Bennett Automotive Specialists, Inc. www.muffybennett.com
Photo: Muffy prior to setting a world-record auction price with her F-code 1957 Ford Skyliner Retractable – sold with “no-reserve” for $330,000.
