crowd at auction
(Photo: RM Sotheby's)

Drive a bargain

What you need to know to buy classic cars at auctions
Last August at Bonhams’s classic-car auction during the Pebble Beach Concours d’ Elegance in Monterey, California, the first two autos sold uneventfully. But Lot No. 3—a 1962 Ferrari 250 GTO, one of only 39 made—was another story.
The gavel of Bonhams chairman Robert Brooks started the bidding at $10 million, a huge jump from the $1.5 million that the last 250 GTO sold for 27 years ago. And higher bids kept coming, just as fast as Brooks could point at the would-be buyers. In just 11 minutes, the sale ended with an unnamed Ferrari aficionado winning the car for $38.1 million. It became the most expensive auto ever sold at auction and it ripped my heart out because, in 1970, I had turned down an identical 250 GTO for $6,000. That very car just sold privately for $52 million.
With price increases like that, it’s easy to see why classic and vintage cars have become popular investments. Another reason is that they can be more fun to own than stocks and bonds.
But before you start bidding, remember that classic-car prices can be at least as volatile as stocks. When Wall Street nosedived in 2008, Ferraris that had sold for a million dollars a few years before were suddenly on eBay for a few hundred thousand.
“If you think you can make a killing in antique cars, you probably think you can time the stock market,” says Keith Martin, whose Sports Car Market magazine is the bible for collectors. His point is valid. You should buy vintage cars not because you think you can flip them in six months but because you enjoy them.
Barrett-Jackson Auctions—which stages auctions in Scottsdale, Arizona; Palm Beach, Florida; and Reno and Las Vegas, Nevada—has been instrumental in popularizing such events with its extensive television coverage, first on Speed Channel and, more recently, on Discovery Channel. But Barrett-Jackson is far from the only auction house; its U.S. competitors include RM Sotheby's, Bonhams, Gooding, Russo & Steele and Rick Cole, and there are others in Europe.
Most such companies have a specialty, so you’d be wise to visit their websites before deciding which auctions to attend. Barrett-Jackson, for example, has tapped into the growing enthusiasm for classic American muscle cars, while some of its competitors focus on vintage European sports cars or even “old brass,” meaning very early automobiles. The eye-popping prices quoted above notwithstanding, many of these classics are surprisingly inexpensive.
Here are four tips to help you acquire the car of your dreams:
1. Decide what you want.
Perhaps you’re seeking a model that you’ve lusted after since high school. Or maybe you’re just looking for something sporty to enjoy with the top down on Sunday afternoons. Either way, don’t start shopping until you know what you’re after. As Martin has said: “Resist bidding on a car that’s sort of what you want. Find a car you really want before you bid.”
And don’t get confused in the excitement of the auction. Barrett-Jackson CEO Craig Jackson tells the story of someone who made the winning bid for a red ’57 Chevy, then complained that someone had stolen the Continental kit off its back. Security arrived and found that it was another red ’57 Chevy that had the spare tire on the back. The man had bought the wrong car!
2. Define your budget and consider after-purchase costs.
“Buy the best you can afford, because a restoration will always be more expensive” than purchasing a car that’s already in good shape, advises auctioneer Rick Cole. Getting a seemingly good deal on a scruffy Rolls-Royce can lead to thousands spent on repainting, reupholstering and having the engine or transmission overhauled. A Rolls-Royce radio antenna alone can cost $600 to $1,000.
I once acquired a VanDenPlas Princess limousine, in which the Queen Mother of England had been chauffeured around. Bad transmission: $8,000. Odd-sized tires: $6,000. New leather upholstery: $18,000. That added up to more than I had paid for the car, so heed Cole’s advice: buy fully restored cars.
Buyers often overlook insurance and don’t realize that if you buy an unusual or expensive car, your local insurance agent most likely can’t handle it. There are insurers (such as Haggerty, Chubb, Grundy and Heacock) that specialize in classic cars, but find out what you’ll pay for agreed-value insurance before you bid.
Tony Hogg, a former editor of Road & Track, was told by his insurance company that the rate for his rare 427 Cobra would be several thousand dollars a month unless he agreed to insure it as a “work of art” that could be driven only a few miles a year. He sold the car.
Getting your vehicle home from the auction is another expense. And then there’s the cost of licensing in your home state, which may require emissions modifications to meet existing standards. Know before you bid.
3. Perform due diligence.
Before you go to an auction, learn everything you can about your chosen cars. There are collector guides for nearly every make and model, and these detail not only the history, but also what to know and what to avoid.  
As Ronald Reagan said, “Trust, but verify.” If a car owner claims the serial numbers match, meaning engine and chassis are as they came from the factory, you can call on experts and other resources to check that detail, which can add (or subtract) considerable value.
If you don’t know the car well, find a similar one and have the owner show it to you. Buying a car at auction that you’ve never driven can be disappointing. Notes Martin: “Italian sports cars were designed for men who are five-foot-eight and weigh 140.” Is that you?
One source of information is the online and printed catalog that every auction company puts out months before an event. Use it to narrow your focus, and try to check all the claims it contains. Remember that sellers provide the information in the catalog, that everything is auctioned as is and that sales are final.
As you do your research, you may discover that a car is more valuable than the owner realizes. The catalog for a recent RM auction listed a Ferrari 275 GTB/4. What the seller apparently didn’t know and the catalog didn’t mention is that the original owner was Steve McQueen. The buyer paid considerably less than he would have if the catalog had noted this provenance.
Unless you’re an expert auction-goer, don’t bid by phone. You need to check out the car in person. Is the paint really “concours quality” or are there a few cracks? Is there an oil leak? Does everything work? Is there paperwork to document maintenance?
One good way to answer such questions is to meet the owner, which you can do if you bid onsite. The owner knows about the maintenance and can tell you more than the catalog reveals. He can also start the car for you, give you a list of things that aren’t working and explain why. As talk-show host and avid car collector Jay Leno says, “Buy the owner, not the car.”
4. Bid wisely.    
Get to the auction early. More than a few buyers have missed the car they wanted by being on the wrong side of the auction site. Identify yourself to one of the ringmen (or women) who assist bidders. Tell him or her which car interests you, and stay nearby.
Want your bid to be secret? Agree with the ringman on a signal, such as putting a cigar in your mouth or folding your arms. In most cases, however, a slight nod will place your bid with the eagle-eyed ringman.
At most auctions, such as Barrett-Jackson’s, attendees vie for “featured” cars on Friday and Saturday nights, when television provides coverage, but hundreds of others are sold earlier in the week. This is when you can find some amazing bargains.
Whatever you do, don’t get into a bidding war. It’s easy to do, with an arena full of tense bidders, the auctioneer shouting, the crowd roaring and a TV cameraman zooming your face to millions of viewers. It takes powerful self-control to reach your limit and then shrug negatively to the ringman.
At his first auction, my next-door neighbor got excited about a 1968 Camaro that rang some personal bell, and he kept bidding until the car was his for nearly $125,000. Later that day, Camaros in similar condition went for half that price. I hope he’s happy.
Instead of jumping into an auction right away, let the early bidders beat themselves up. If they drop out below your limit, terrific; you can make your move and buy the auto at a price you can afford. If not, keep in mind that losing out on a collector car is like losing a watch in Switzerland: there are always more.

You Won! Now What?
Within seconds of your winning bid, a member of the auction team will appear at your side with a clipboard full of paperwork to sign. You’re expected to present yourself at the accounting office that day to pay for your car in whatever way you selected—cashier’s check, cash or wire transfer.
At that point, you get the keys. You usually have three days to remove your prize from the premises. Unless you live a few blocks away, don’t try to drive an unknown and expensive car home. Shipping companies will have booths at the auction: ask there for bids on getting the car into your garage.—C.C.

Confirming Your Finances
Every auction company requires you to prove your financial condition beforehand, and there are several ways to handle this.
A “bid limit deposit” is usually 10 percent of the amount you plan to bid, such as $10,000 if you expect to spend $100,000. Don’t forget to include the buyer’s commission (usually 10 percent) because this can’t be paid by credit card or check. Your $10,000 bid limit deposit would allow you to bid about $90,000 plus the commission.
You can provide a bank letter of guarantee, saying that the institution will wire transfer or guarantee your personal check up to a set amount, and it must state that there can be no stop payments. Most auction companies also work with a finance company, but you must get your loan approval before the auction.—C.C.

Recent Sales at Auction
1931 Chevy 5-Window Coupe, $30,800
1948 Lincoln Continental, $19,800
1956 MGA, $27,500
1956 Thunderbird, $29,700
1957 Chevy Bel Air, $27,500
1961 Chevy Impala, $28,600
1965 Corvette Convertible, $38,500
1965 Mustang Convertible, $18,700
1969 Pontiac GTO, $42,900
1975 Rolls Royce Corniche Convertible, $33,000
1983 Porsche Carrera, $37,950
1991 Bentley Turbo R, $19,800
Note: Prices include commissions and are from Barrett-Jackson’s 2014 auction in Scottsdale, Arizona.

Chris Caswell, who has cohosted TV coverage of the Pebble Beach Concours d’Elegance collector-car show, is a former editor of Yachting magazine. He has owned many classic cars, ranging from a 1965 Shelby GT-350 to a Jensen Interceptor.