(Bloomberg) — With used car prices skyrocketing, new-car inventories delayed for months, and the lingering stay-closer-to-home trend of Covid-19, car lovers are increasingly shopping online.
Last year, online auction sales beat live auction sales for the first time, with 20,000 cars sold online vs. 16,000 sold live across North America, according to research by the classic car insurer and data firm Hagerty. All told, online car sales rose 107%, moving from $492.5 million sold in 2020 to $1.02 billion sold in 2021, according to Kevin Fisher, a Hagerty analyst.
The hazards of buying a car sight unseen are myriad. They can range from the mundane (that shade of blue on the 1975 Ferrari 308 you bought looks different in real life than in photos) to the expensive (you overpaid for that 1969 Corvette C3, and now it needs a new transmission). And that’s before you get to the dangerous (the worn tires and old brakes on the cute little 1980 Mercedes-Benz SL make driving it feel like skating on ice).
There is no way to completely erase the risk of buying a collectible car online vs. doing it in real life. But there are ways to mitigate the risk—and maximize the fun. Here are a few.
Determine the market value of the vehicle you want.
Hagerty price guides published online contain charts that show the rise or fall in values of nearly every collectible make and model on today’s market. They allow you to determine where the market is going for vehicles in perfect condition, vehicles in good drivable condition, and vehicles that need some work. You should also check the Hammer Price app for market rates; it publishes auction results from dozens of public sales each year for hundreds of vehicles. And a deep perusal of EBay Motors, Hemmings, and local lots, including Craigslist, to price-check and comparison shop will give you a good sense of what a fair price should be for the vehicle you wish to buy online.
You might be surprised. Classics from such luxury brands as Rolls-Royce cost far less than their newly made counterparts. Here are some general rules of thumb: “Numbers matching” means a car contains the original engine and is worth more than one that doesn’t; manual transmissions are often worth more than automatic transmissions; and lower mileage generally means a car is more desirable and will cost more money.
Find an example you like.
You’ve got plenty of options. Bonhams’s Market, EBay, Collecting Cars, Fantasy Junction, and special online auctions from the big auction houses such as Gooding & Co. and RM Auctions all offer collectable cars for sale online. The granddaddy of them all is Bring a Trailer, which last year sold $828.7 million worth of cars, a 108% gain over the $398 million worth it sold in 2020—and a full quarter-billion dollars ahead of its closest live-auction competitor.
Most of the auctions work in a similar way: You can search for the make, model, and year of a vehicle you want and then follow online as people place bids. To place one of your own, which you can do at any time, you’ll register with the given site and hand over credit card information. (Most sites place a hold on the card or require an immediate down payment on the car, should you win the auction.)
Research the car in question.
Talk to the seller about the vehicle. On Bring a Trailer, you can message the seller directly to ask a question. On other websites, you can even call the seller by phone. Having a one-on-one conversation about any vehicle will help you quickly suss out if the car is worth consideration.
On a more general level, you can read long threads about model-specific reliability problems and build standards on such enthusiast forums as Pelican Parts and Ferrari Talk. It can help to peruse online auction catalogs and read the descriptions of models previously sold that are similar to one you’re considering. Even though they don’t necessarily pertain to the car you’re contemplating, they’ll give you a sense of potential problems and what to inquire about.
“The problem [online] is there is not a great standard platform for appropriate photos and inspection of these cars,” says Dorian Valenzuela, the founder and owner of DV-Mechanics, an Alfa Romeo and Porsche restoration and performance enhancement shop in Los Angeles. “A lot of poorly restored cars look super nice in photos to the untrained eye.”
If you’re really serious about the vehicle, consider traveling to view the car personally.
“I’ve flown to Birmingham, England, for a [pre-purchase inspection] because I didn’t trust photos,” Valenzuela says.
For many expensive classic vehicles, the price of a plane ticket is negligible compared to what you’ll be paying to buy. You wouldn’t purchase an expensive couch without sitting on it, or a luxury bed without laying on it, right? It pays to go see a car and drive it. Either you’ll find that you don’t like it and save yourself the money, or you’ll gain confidence that it’s indeed a vehicle you want to own.
Monitor the sale.
Some cars are listed at “No Reserve,” meaning the highest bid at the close of the sale will win the car. Other cars have a reserve, which means that if bidders don’t meet a minimum set by the seller, the car will remain with the owner. Be aware if a reserve has been placed on the car you want—and determine for yourself how much you can afford to pay; don’t get caught up in the emotion.
For instance, a car that you determined from your research has a market value of $75,000 would be a great deal if no reserve is listed and you can buy it for $65,000. Conversely, if you find that the car’s market value is $75,000, and the reserve set on the car is $80,000, it is overpriced. Move on.
Don’t get too upset if bidding doesn’t go your way the first time you bid. Don’t let your heart get the best of you and force you to place a higher bid than a car is worth—or more than you can afford.
Read the room.
Take note of who is bidding on a car when the sale opens. Is it a random assortment of anonymous handles somewhat arbitrarily bidding, or are two bidders going strongly back and forth with alternating bids? People who are already in a fight to win the car may be willing to pay far more than it is worth.
Beware of bidders who jump in early and bid fervently. Often they are there to make a name for themselves or to build hype for their own car businesses, says high-end automotive broker Peter Brotman. Or a friend of the seller might be trying to boost the bidding.
“If you list a seven-figure car on BAT, and it’s not selling for the price you want, you can pretty much have your friends bid for it, and you can wind up having your car bought back,” Brotman says about a practice that’s downright common among the higher echelons of the blue-chip art and car worlds. “And it’s the best advertising you can get for your car. So it’s definitely a controlled environment that the everyday buyer should be aware of.”
Bid at the right time.
But not right away. There’s no sense in jumping into the bidding early. It’s better to wait and monitor any activity first. Keep reading the comments as they accumulate. Then bid an appropriate price incrementally above the previous bid and hope you win. And remember the bid limit you set for yourself; there’s no sense in going broke over one special car.
“I personally like to show absolutely no interest in [a car] and then bid in the last minutes,” Valenzuela says.
Be patient. Remind yourself that even if you’re bidding on a $4.7 million-and-counting Ferrari La Ferrari Aperta, there will always be another example of what you want coming out there—or in the La Ferrari Aperta’s case, 209 of them! Trust that the right car will find you; when it does, the timing and finances will fall into place.
Don’t be distracted by the peanut gallery.
Half the fun of buying a car online is to read the comments.
“Remarkably, on BAT the community has become fraught with information and backstories,” Brotman says. “Some of it is b.s., and some of it is actually quite good. You have some very smart professional people giving opinions that are very valuable, that you would never get without it.”
When it comes to old cars, it seems everyone has a hot take—and likes to share it, whether or not it was requested. Most sales at Bring a Trailer bear dozens of comments about the vehicle; they offer a deep dive into the car’s most minute particulars from period-correct paint colors and seat upholstery to wheels and door handles. These are very helpful in gauging the authenticity of a given vehicle.
Still, the shrieks from the cheap seats can also serve to distract.
“Anyone with an account can comment and ruin good auctions,” says Valenzuela. “I see a lot of awful cars get way too much money.”
Don’t be distracted following a rabbit trail conversation online about things that are inconsequential to a car’s actual worth and merit; a conversation about the fact that the car has an old set of tires, for instance, simply diverts from a vehicle that may be worth serious interest. If you buy the car, put new tires on it.
Expect to pay, even after your winning bid.
Did you win the car you wanted? Great! Now be prepared to spend more money. Unlike most live auctions, where the buyer must pay the auction house a percentage premium for the purchase, most online auctions require no such payment for the buyer. You are nonetheless likely to have to spend more money once you have it.
One of the great things about online sales is that they expand your net in terms of the cars you can see and buy. This also increases the likelihood that the car you end up buying is not in your town. Transport to get the vehicle to you will cost. An open-air truck-ride to move your new baby from, say, Nashville to LA costs roughly $1,800 and can take the better part of a week. To transport the car via truck with an enclosed trailer costs even more. Registering a vehicle, getting it emissions-tested when necessary, and paying additional fees (such as for insurance) will all come into play.
Hope for the best; expect the worst.
No amount of photos—or even videos—can properly vet a car. You will probably have to pay for at least some minor maintenance or repairs when you get your new prize. Such things as fixing electronics in the dashboard or repairing windows or seat belts are minor but essential to making the vehicle ideal for use. If you’re lucky, the car you buy online will be closely approximate what you anticipated.
That’s part of the fun of owning a collectible car. There’s always something to improve.
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