ORANGE COUNTY AUTO BROKERS

  Specializing in Corvettes and Classics

Articles - Week ending May 6th, 2011

Ok, so where is the Shill Bidder?


 

With the classic car auction season getting into full swing it’s time to take a look at shill bidding and how you can spot it, and more importantly not fall victim to it. What is shill bidding? Shill bidding happens when anyone bids on an item in order to artificially increase its price or desirability, including classic cars. Shill bidding also happens when someone a seller knows bids on the seller's item, with no real intention of buying the item, just the intention of driving up the price. Shills can be family members, friends (including online friends or friends phoning in), roommates, employees, whomever.

 

This can be a bit more complicated than it seems, and can work on many levels involving many players, but rest assured it happens all the time.

 

For example: Matt and Joe have known each other for a while, they travel in some of the same classic car circles, and they run into each other at the same car auction. Matt has a sweet 1963 Corvette Split Window Coupe he needs to sell at the auction and he’s into the car just over $55,000 and he really needs to get the bidding up to $65,000 to cover his investment in the car, the auction company fee, some travel expenses and of course his profit. Matt has the reserve set on the car at $70,000 but in the end $65,000 would make him very happy.

 

Joe agrees to bid on the car, but no higher than $62,000 and Matt agrees not to pull the reserve until the car is north of Joe’s maximum bid, that way if Joe is the high bidder he won’t get stuck with the car, because the Reserve will still be in place.

 

In some cases there is a third party that’s also a plant in the crowd bidding against Joe, garnering false interest in the car and with the hope some knucklehead will jump in at one point and be left writing the check.

 

Anyone telling you there are not Shills in a reserve auction is kidding themselves. There may be some even in a No Reserve auction but it’s a bit rarer because of the risk; after all, one of the Shills could win the car and even if the Seller covers the cost someone has to pony up the percentage for the auction company.

  

This past November at the McCormick auction in Palm Springs there were a few cars that fit this profile, so let’s focus on Lot 144 from the November sale, a 1963 Corvette Convertible.



 

The car was claimed as a “body off” restoration and received a high bid of $66,000 (Which comes to $69,300 with the buyer’s premium). Now for a pristine, frame off restored 1963 Corvette Convertible (300 horse) this would be good money, but for this car it was robbery, and about half what this car was worth. With even a casual look at the car several things were obvious:

 

·       The seat covers were reproductions from either a 1966 or 1967 model.

·       The gauges were old, tired, some were broken and the clock was missing both hands.

·       The interior had some components that were beyond “well worn”, including a terribly dinged and faded center console.

·       If this car was body off restored it was a long time ago, because the paint was presentable, but had several touch ups.

·       The engine bat was totally incorrect, sporting valve covers from a 340 horse car with an air cleaner from a 300 horse car.

 

The list goes on, and I’m sure if I’d crawled underneath I could have found a lot more, but why look further after all that?



It was obvious this was a very incorrect, not recently restored, decent looking driver. The ballpark price on a car like this would be anywhere from $35,000 to $42,000 retail. Any more than that would be silly for a patient buyer. To top it all off the high bid didn’t meet the reserve! What the heck was it? Seventy grand? I could get a 300 horse Split Window for that, a really, really nice one.




I’m calling shill, probably two shills since the reached price was so ridiculous. I sent the following e-mail to Keith Martin’s Sports Car Market magazine:

 

Dear SCM,

 

Maybe you can help me understand a few things that have always vexed me when it comes to classic car auctions. Why would auction companies take a car with a completely unreal reserve that the car has absolutely no hope of hitting? Why wouldn’t auction companies be on the lookout for obvious Shill bidders (I mean way over the top) or at least sellers who are obviously using them?

 

Allow me to give Carl Bomstead a head start on his column for the McCormick auction in Palm Springs this past November:

 

#144 – 1963 Chevrolet Corvette convertible. Riverside Red/red/black vinyl. Odo: Broken. 327-ci. Could be a 250, 300, or 340 horse car but I never checked because the high bid was a completely ridiculous number, as in “Now’s a good time to invest in clones” ridiculous number. The high bid was so over the top it exceeded any value except that of a comparable car with factory fuel injection or a solid gold engine. 4-bbl, 4-sp. Acceptable factory gaps, above average paintwork with a few small touch-ups. Engine bay not detailed, but tidy and confused as a Gay teenager, sporting 340 horse valve covers with a 250 or 300 horse air cleaner. Interior equally confused with reproduction seat covers from a 1966 or ’67. Broken clock missing two hands and well worn interior components, hard top included. Reproduction knock off wheels fitted. Overall a very incorrect driver that still manages to maintain solid curb appeal despite the inconsistencies. Cond: 3. NOT SOLD AT $69,300. Hold up, did I just type $69,300 (including buyer’s premium)? Really? That should potentially buy two of these cars. Is the Seller completely insane? How could a high bid of $66,000 plus the premium not get this car a new owner, and subsequently the new owner a much needed cat scan? Was Keith or Jason McCormick laughing with hysteria when the bidding passed $50,000 or too busy simply fuming and wanting to beat the living hell out of this seller that obviously wasted their time? Who were the two knuckleheads pushing this price up? Are they still flipping houses in Riverside or just Shill bidders putting on a show hoping some sucker would jump in? Did I miss when they announced this car was owned by Elvis Presley? Good Lord what was the actual reserve? Extremely, super-duper (almost) Sold.

 

Seriously, I don’t get it. I understand wanting to fill all of the lots, I even understand taking on a car with a slightly unreasonable reserve in the hopes the owner would let go when the car reached more than reasonable money, but the reserve on this car had to be near (or over) $70,000. The McCormick’s have been at this a long time, they run a phenomenal operation and have always treated me more than fantastically, but even at my small time brokerage/dealership if this owner came to me and said, “I need at least $67,000 for this Corvette” I’d have told him find another dealer or re-set his expectations.

 

Doug

OCAutoBrokers.com

 

If someone brought that car to my dealership with that sort of price expectation, I’d tell them, “no thanks”. Why take the time to work a car that has no chance at selling?



 

The bottom line is if there is a car you really want, do your homework, find out what a comparable car would cost you outside the auction, and then set your price before you raise your hand and stick to it. If the auction exceeds your maximum, well then C'est la vie.

 

You’ll sleep better.

 

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