Answer: Many people who follow the classic car hobby watch the major auctions on television, and are under the misconception that if you sell your car at one of these auctions, it will bring far more money than it might through other venues. This is a misconception that can prove very costly to a seller.
The major auction houses such as Barrett-Jackson, Mecum, RM, and others do a fantastic job of bringing cars and buyers together, but there is no guarantee that your car will sell at a premium, and in most cases it will not. The cars that tend to bring premiums are cars that stand out from the others in one way or another. Perhaps the car is original, heavily documented, or restored to concours standards. Perhaps it was produced in very limited numbers, or has an interesting history. Maybe it possesses more than one of these attributes. Most cars do not.
When considering the idea of selling a collector car at one of these auctions one must consider the many risks and costs involved, and this can get very complicated, especially to the uninitiated.
The risks are not always obvious. One of the risks is selling your car with no “reserve price.” This is a minimum price below which you will not sell the car. Some of the auction houses will not accept a car with a “reserve price,” so your car will be sold to the highest bidder no matter how high, or how low that bid is. Other risks include damage to your car during transportation.
In addition to the risks, there are many costs to consider as well and these include transportation, entry fees, detailing and a “sellers commission.” And this is just for the car! Somebody will have to travel there with it.
Let’s compare a hypothetical major auction in Arizona at which your car sells at a premium, versus advertising it conventionally and selling it on the open market. We will have to make a lot of assumptions, but I think you’ll get a good idea of the process. Remember, this is make-believe so my numbers may be off a little.
The first assumption will be the value of your car, which I’m going to estimate is $50,000 if you were to sell it on the open market. Now let’s see what happens at the auction.
Enclosed transportation from your home to the auction will cost $2000, and the auction company will charge you a consignment fee of $500. Detailing your car in preparation for the sale will cost another $200. You (or an agent) will have to fly out and meet the car so let’s figure $750 for airfare and $750 for a few nights in a hotel. So far you’ve spent $4200.
As hoped, your car crosses the auction block and sells for $60,000, a full $10,000 (or 20%) more than it would have on the open market. Everybody is happy, particularly the auction house that will now charge you that “sellers commission” of 8%, or $5200. Your costs now total $9400, and when we subtract that from the sale price, you will net $50,600, or $600 more than if you had stayed home and sold it on the open market. This is a best-case scenario. In a worst-case scenario in which your car does not sell at auction, you’ll both be coming home, along with all of the attendant expenses, hard work and disappointment. Of course there are times when a car will sell for significantly more than it is worth, but this is the exception rather than the rule.
Your 1955 Cadillac convertible is a desirable car which should not be difficult to sell. I would suggest that you use more conventional means (which these days means the internet) to sell it. If you’re not sure how to do this, or which websites to list it on, ask one of the friends who suggested the auction to help you. You could also consider consigning it to a reputable classic car dealer, or hiring an agent to sell it for you.