“12-6. $12,600! Habada-gibada-monay! Monay! MONAAAYYYY!!!!”
That not so subtle mention of ‘monay’ was my cue. It was auction-speak for, “Go ahead and find a bunch of car dealers that are close together on the block. Look at me, and pretend like one of them wants to offer more money’.”
“Then act slightly impatient. I’ll take care of the rest.”
A lot of folks believe that when an auctioneer and his ringman are trying to negotiate a higher final bid, they’re trying to be heroes and make a buck.
The truth is almost always the exact opposite.
See, every car we sell at an auction has a floor. In the case of the above example, the car happened to be a one year old Mercury Milan.
Like most of the Mercurys from the late 2000’s, this one wasn’t much to look at. Beige, bland, a waterfall car. For all we cared the damned car could have been a pallet of potatoes and we would still find ourselves in the same predicament.
The manufacturer wanted thirteen grand for the car. No ifs. No buts. No compromises, and no $12,900 as a counter. The lady in charge of selling this car from Ford had about 600 vehicles to sell that day, and we couldn’t waste much time on a car that was as important to Ford as a pallet of potatoes.
“Hold on Steve! I’ve got the high bidder here at 12-5 and he gets first shot!”
The auctioneer would catch me as I would be walking towards him with a fist near my chest, and my other hand pointed towards a bunch of dealers (never a specific one). I would exchange a once earnest face with a mildly sad dejected one as I would stop right in the tracks. The auctioneer would then motion the high bidder to come to the auction block.
“Look Fred, Dee has about $13,200 on her sheet. The absolute best I can do is sell it for $200 off the floor which is right at 13 grand.”
Fred was a familiar face, as was nearly everyone else. This was a closed factory sale, which meant that nobody other than a franchised car dealer of that specific car brand could bid on the vehicles. Everyone else, from Carmax to Joe Blow Auto Sales was not welcome. In a span of a few seconds, Fred had to figure out if he was willing to spend a strong thirteen-k on a Milan.
Sometimes Fred would bite. Other times he’d walk away and say no. Every once in a while, he would counter at $12,800 at which point the auctioneer could either hold that bid as an ‘if’ deal so that Dee could go after the sale, call a higher-up and see if she could sell it for that price. Other times, the floor would be a commandment from the high heavens of a computerized valuation system and the seller would simply need to get 13 grand in order to get the deal done.
This is how daily life is at the auctions. You are constantly trying to get deals in the sellable range. Hundreds of vehicles every day. Five to seven auctions a week if you are good at it.
The trick that I just mentioned to you is done a hundred different ways at the auctions. You would think that a talent like this would be unique in this world. Nope, we all have done this, and everyone from attorneys to parents of teenagers know how this negotiation works. Although I would like to say that you get experienced when you deal in this type of environment, the truth is we all deal in situations at some point in our lives where there is only one ‘bidder’ and the guy doing the talking likes to ‘pretend that he’s got money’. When the only thing he really has is a little bit of time, and a whole lot of nerve.
Feel free to share your experiences. We all have tricks of the trade.
(Note: Part Two will be released at three o’clock later today.)
One of the reasons I have bought a lot of cars that are not all that popular is because of the leverage I have as a buyer. There is no more maddening kind of negotiation than when one party stakes out a position right at the outskirts of reasonable. It is an amount of money that the other party cannot dismiss out of hand, yet it is not attractive either.
As you can imagine, this is a very useful approach when you want to buy a hard-to-sell car.
More than once I have walked away when a seller would not meet my number, only to get a call later that they have reconsidered. Like when my son bought his 89 Grand Marquis. It was a very nice car. Cheap nasty ones of that age are easy to sell, nice ones are not, if you want some money for them. We hung out at several hundred dollars lower than the seller got stuck at. We were polite, said we understood, that it was a nice car that would make someone very happy, and we left. He called back inside of two hours, probably after he talked to his wife. We paid more than we wanted to, but we were in the strongest market for used cars in years. So, everyone compromised and a sale got made.
I wouldn’t have the guts to buy a car at an auction, though my neighbor does, and he does pretty well.
Main reason I try to buy new, even if I do lose either way is: paying too much for someone’s junk, so I suffer the consequences of 20% devaluation right off the lot.
Oh well, I merrily motor on…
My son used to stock his used car lot like this. Went with him sometimes for entertainment value. He picked up a couple nice ones for me.
If the Coke machine or other phantom can bid the car up to a price where a deal can happen, what are the auction ethics of having a buddy bid on your car in hopes of maximizing the sale price?
Dealers will stop bidding up the vehicle once it hits a sellable range.
Buddies bid up vehicles all the time. But they don’t want to get the vehicle off the money and most dealers that bring vehicles to auction are doing so to get rid of the vehicle. Not to shop around. Of course, there are plenty of exceptions to this rule that I know of in this business.
But long story short, you should be able to have at least one buyer who believes the price is fair. Two buyers are often times unavailable and without having the vehicle get to a sellable range, there is no point in getting the vehicle on the block.
Thanks for the reply, Steve. When I was a kid and into my early 20s, I went to dealer auctions all the time with my grandfather, who was a Mopar dealer. I was sometimes enlisted by his friends to push the bid on their cars, and I always felt a little funny about it.
BTW, your posts (including the video clips) bring back some great memories for me. I was enchanted by auto auctions the first time my granddaddy took me to one when I was 8 or so (I know auctions aren’t a safe place for kids, but this was the 1980s and my granddaddy was under the false impression that I was actually 40). I went to every auto auction I could during summers, and mom would even let me play hooky to go during school sometimes. The easiest way for me to get my fix now is going to classic car auctions.
Steve, I don’t know much about the auction process, so I’m especially confused by this one: Why is Ford selling a used car???
My bet is that Ford Credit is selling an off-lease vehicle or it was a company car or a fleet car that Ford financed / leased.
Steve, I know auctioneers work on their chant to make it distinctive, but shouldn’t they also want to make the bids understandable? I really like the TV displays at the big auctions that are used to show the current bid, because with so many auctioneers even the prices sound like gibberish.
Clarity is important, but the level of clarity depends a lot on your audience.
Professionals in this business (as well as livestock, antique, etc.) have a far better ear for the chant since they listen to it on a far more frequent basis.
You also get used to the way certain auctioneers perform their bid calling. What may sound like a gibberish to one man can easily be as clear as a bell to another.
Hope this helps…
Sounds a bit like the closed auctions in OZ where all the govt fleet gets sold nobody without a 2nd hand traders licence can get in