Street Rodder Auction - The Auctions

Nothing lasts forever, and it seems that after the latest round of car auctions, maybe the street rod bubble that had many people feeling warm and fuzzy for the past few years has finally burst.

Car auctions are a lot like rolling the dice in Vegas. Sometimes you're hot, sometimes not, but you can count on the fact that you are usually the last one to know it if you're not. The past six years have seen prices inching (and sometimes leaping) higher and higher and folks in the know stand back and shake their heads as mediocre cars sell for four times what they're really worth. The high-dollar count is exciting to both participants and viewers, and that frenzied excitement is the key auction organizers count on.

The smell of money is what attracts buyers and sellers to the show, but the days of $300,000 roadsters crossing the auction block may thankfully be over. An argument could be made that it screws up the market for the rest of us when those high-dollar cars sell for that much. But a different argument could also be made since there are some well-built cars out there trading for fair money. However, when someone buys a 1-800-type roadster for $200,000 that anywhere else would bring half that amount, the only person winning in that situation would be the seller.

STREET RODDER sampled some of the car auctions that were held at the beginning of the year to get an idea of what was out there for sale, and for how much they were selling. We were a bit surprised (and relieved) the prices seem to be, on the average, a bit lower than the past few years. But we also noticed not as many high-profile cars crossed the block this time around, many of which were responsible for astronomical selling prices in the past years.

The key to buying or selling a car at an auction is to check current selling prices of like vehicles in the area in which you live. If you're selling a car, you should be willing to take your car to another part of the country where those cars seem to be selling at higher prices. You can probably buy a Model A sedan for a lot less in Indiana than in Arizona, so do some research.

Also, check to see if the auction only accepts cars on reserve. In these instances, a seller can put a reserve on his car, which is an agreed-upon price between the auction company and the seller that car much reach before it is sold. If it doesn't meet the reserve, the seller takes it home (after paying all the required fees the auction house tacks on). If it meets or exceeds the reserve, the seller says goodbye to it and drives home with an empty trailer (after paying all the required selling fees the auction house tacks on).

Sometimes, depending on the auction company and the fine print in the contract you sign when you offer your car for sale at a reserve, an auction company might take on the role of a bidder too, until the reserve is met. In this case, if you are an interested buyer in the audience, you may be bidding against the house up to the point of the reserve-a price that you won't know, as it isn't advertised. It's legal, as long as the auction house tells people it's doing it (hence the fine print). In a different case, some sellers will have friends in the audience (commonly called a shill) who will help bring the price up to where the seller thinks it should be and the seller ends up buying his own car back, but, in most cases, the practice is illegal.

If the auction company only accepts cars with no-reserve status, then the car will sell for whatever the highest bid is, period. That can be dangerous for the seller, as the high bid may be below the perceived value of the car, but that's the chance you take when you roll the dice at an auction. Also be aware there are usually lots of fees you'll need to pay at an auction. Fees to register your car for sale, fees as to where your car will be physically placed on the grounds, and maybe even what time it will go across the block (a Saturday evening placement is usually better than Wednesday afternoon).

And, if the car sells, both the seller and buyer typically pay the auction house 8 to 10 percent of the selling price as a fee to sell/buy the car. So, in a case where your car is in an auction with a reserve you set at $50,000, and the auctioneer yells "Sold!" as the hammer falls at $58,000, you have to carve the selling percentage out of the sale price to give to the auction company. An 8 percent fee on $58,000 would be $4,640, so you'd get a check from them for $53,360. But the same goes for the buyer, who pays an additional buyer's fee of 8 percent. In other words, on a $58,000 "buy," he actually pays $62,640, and the combined $9,280 from the buyer and seller goes to the auction company.

At the Barrett-Jackson auction in Scottsdale, Arizona, in 2007, $112 million was generated with the sale of 1,271 cars. That's a good business by anyone's standards, but the event was also able to raise $4,168,500 for different national charities-something you don't hear too much about when all the media focus is thrust upon an ultra-rare Shelby race car that went for $600,000.

Sometimes you don't even need to leave your home to buy a car-the Internet's eBay Motors sells them each and every day. If you'd like to see what cars are selling for without being on-site at an auction, check out some of the Web sites listed below. All in all, auctions are an interesting way to spend an afternoon if you can first learn to keep your hands in your pockets. It's hard to make money that way, but, on the other hand, no one has ever lost money at a Vegas craps table by just watching!