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Arizona Auction Results

Discussion in 'Vintage Ferrari Market' started by billnoon, Jan 18, 2013.

  1. merstheman

    merstheman F1 Rookie

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    #201 merstheman, Jan 21, 2013
    Last edited: Jan 21, 2013

    This makes no sense. It doesn't matter what your maximum is, what matters is that in the auction environment only 2 people matter, the winner and the next highest bid. If the next highest bid was the auction house, there is an illusion that there was a competitor, when really the auction house was biding for it's own profit. My original question regarding chandelier bidding was alluding to the fact that in the art market, it remains a grey area, and for that reason is an unethical practice in my eyes. And many times it explains the insanely high prices achieved at art auctions. Legally the auction houses do not have to disclose their agreements with the sellers, which already puts them at a great advantage. The manipulation of the proceeding itself aggravates that fact. It seems when dealing with cars that they are more revealing - particularly because of the ease in which they can negotiate a deal with the bidder post auction, if it's a no sale. And I may be mistaken here, but the deal reached post auction may even become a matter of public record...but this I do not know for sure..someone here surely will.

    In Art, things are different. Artworks are closer to being so called Giffen goods, in that they do not obey classic laws of supply and demand. As works by an artist become more expensive, they become more in demand, and the price rises again. Once that price begins to fall, however, interest also declines - usually rapidly (see: Sandro Chia) That is why you see so many dealers bidding on the work of artists they represent, protecting their artists' market. It is a lot worse for dealers/collectors-looking-to-sell if a Gerhard Richter painting publically sells below estimate, because it can have an immediate effect of the artist's future sales, both primary and secondary. This is only one of the reasons you cannot compare the sales of these cars with the sales of artwork at auction.

    Basically what I'm saying is yes, you could say "My maximum is 1MM", but would you prefer to pay 1MM or the 700K reserve the car would be sitting at if the chandeliers couldn't bid?

    Even the ultra rich prefer a deal.
     
  2. Edeb

    Edeb Rookie

    Dec 3, 2012
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    330 GT went for 275,000 including commission...bidding frenzy, i was there and had the pleasure to see it!
     
  3. Cris Bertschi

    Cris Bertschi Formula Junior

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    I did. A very interesting car, not art.
     
  4. Napolis

    Napolis Three Time F1 World Champ
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    The house can not bid above the reserve and they don't.
     
  5. merstheman

    merstheman F1 Rookie

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    #205 merstheman, Jan 21, 2013
    Last edited: Jan 21, 2013
    Agreed, but the fact they bid up to it means they are basically guaranteeing the car will sell for reserve, or be a NS at close to that arbitrarily decided price, meaning market prices for said cars are largely influenced by auction houses & sellers, whether there is a sale or not.

    (In Art it is more murky, and most people in the industry believe the chandeliers do occasionally bid past reserve, particularly when there is a guarantee...the point is that it is extremely hard to prove if they do)
     
  6. John B

    John B Formula 3
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    I dont think the house possibly bidding up to reserve had anything to do with the eye popping prices we saw on some of these cars, they traded well above reserves and usually well over the high estimates. I think the whole "Chandeleir Bid" discussion is missing the real point of what occurred in Scottsdale last weekend.
     
  7. merstheman

    merstheman F1 Rookie

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    You're right. I apologize, my intention was simply to try and point out the possible differences between the sale of cars and art at auction.

    I do think the results were quite spectacular, for very demand-driven reasons....
     
  8. Napolis

    Napolis Three Time F1 World Champ
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    No it means that some sellers won't sell a car for less than a set amount which is usually the low estimate and if buyers won't pay that they won't buy it.

    No one forces buyers to pay more than they want to. I've been the high bidder and the buyer wouldn't sell. Life goes on.
     
  9. Napolis

    Napolis Three Time F1 World Champ
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    Exacto.
     
  10. Timmmmmmmmmmy

    Timmmmmmmmmmy Formula 3
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    Prices are all over the place, and the best of the best is selling high and mighty. Especially the Cal spider at Goodings but also a lot of Goodings stock sold really strong. Maybe that is the effective marketing that Goodings can and provide. RM can also be very pleased with their sales and even Bonhams did very well. Barrett - Jackson was capable as always, and with their "style" appropriate to a particular audience sold some cars very well, especially the 1947 Talbot Lago at US$2 million.

    The issue of chandelier bidding isnt new and is perhaps better understood nowadays but certainly is only a problem imo when it is attached to other illegality. For example no reserve when there is chandelier bidding is wrong. Bidding up to 95% of a stated reserve and seeing what happens not so much. The buyer can choose to buy the car at the price offered/ reserve as per a private purchase at a price in a dealer. And if the buyer doesnt want to pay the amount asked they can leave it and hope the seller wants to do a post block sale at a lower amount. All pretty fair and above board.

    Back in the late 80's early 90s when one of the Bugatti Royales was coming up for sale Classic & Sportscar magazine had a strange little article regarding the sale and said that when Kruse (?) failed to sell the car they were surprised that they didnt guarantee a sale amount for the seller and/or organise to ensure it was bidded to a set amount. All kind of artificial but if they can arrange a bidder with say $5 million to bid on a car and can then offer the seller the guarantee their car will sell for not less than $5 million. Add in the factor that both buyer and seller are happy. I wouldnt personally have a problem.

    What I find much more topical is the question of where the market is going. Anyone have any opinions on whether 2013 will continue onwards and upwards or if we will see a dip or a flattening or even a complete dive ?.
     
  11. mdw3

    mdw3 Karting

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    #211 mdw3, Jan 21, 2013
    Last edited: Jan 21, 2013
    For the avoidance of doubt:

    From the Bonham's catalogue for its last GOODWOOD sale of September 2012 (as Paul alleged that he could find no mention of the practice in question), contained in Section 4 of the Notice to Bidders:

    "Where a Reserve has been applied to a Lot, the Auctioneer may, in his absolute discretion, place bids (up to an amount not equalling or exceeding such Reserve) on behalf of the Seller."

    AND

    From the Gooding and Co. catalogue for last weekend's sale, contained in the Important Notices:

    "Gooding may act to protect the reserve by bidding through the auctioneer, who may open bidding below the reserve by placing a bid on behalf of the seller, place bids on behalf of the seller up to the reserve amount, place bids in response to other bidders, or if the opening bid is below the reserve can elect to withdraw the Vehicle from bidding."

    I can assure you that contained in the terms and conditions for every other major auctioneer, whether in the USA, Europe, Asia or the Middle East, is an analogous provision. The practice is widespread and widely known, and has been so for ages, and will always be. Auctioneers will not, as a matter of practice and law, bid to or beyond the reserve, but they are always free to bid just shy of that amount.

    Michael
     
  12. xs10shl

    xs10shl Formula 3

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    I think of the seller as the "high bidder" until the reserve is met, after which point your statement applies. After all, if reserve is never met, then no transaction happens, regardless of any shilling.

    Case in point, the Clark Gable gullwing at BJ was bid to 1.85 million (or thereabouts) and then shilled to 1.9 million, which was below the sellers reserve, so the car did not sell on the block. It was announced later that the car had sold for less than 1.9 million, because the seller agreed to lower his reserve to the high bidder's maximum bid. In the end, the two people who made the market were the buyer and seller, and not the buyer and under bidder. Had the last real under bidder only bid to 1.2 million, the buyer and seller would have been so far apart that a deal might not have been negotiated.

    Worth noting that in this real example, the seller (and auction company) extracted more money from the buyer than may otherwise have happened, but that is the nature of the beast. The guy who owns, decides; the guy who wants, pays.
     
  13. miurasv

    miurasv F1 Veteran

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    #213 miurasv, Jan 22, 2013
    Last edited: Jan 22, 2013


    If I'm understanding it correctly, the above in bold is a big problem I have with house bidding. If the house does not have to indicate when it is making its bids during an individual auction then how do the genuine bidders know when they are bidding against genuine bidders or the house? They don't. So the genuine bidders may be falsely induced to bid. Effectively the house tell you in writing in the catalogue, in their terms of bidding and once only at the start of multiple auctions that they are going to rob you by making you bid up against their false/house bids, but the fact that they have disclosed it makes it legal, but it's not right. It goes totally against the spirit of an auction. Because you don't know which are the house bids it's much the same as the illegal Ebay sellers who get their friends to bid up the auctions or use different accounts to bid them up. You could argue that if the reserve is set low or reasonably there is no harm done, but what if the reserve is high or at the point of new price levels being set? If a switched on bidder was secure in the knowledge that the competing bids are genuine they would be more likely to bid up. If however this genuine bidder suspects that they may be bidding against the house, even if they are not, upward bids are less likely, and therefore the presence of house bids at auctions are ultimately counter productive in that instance because of the suspicion they create due to the absence of transparency in the actual bidding, imo.
     
  14. PAUL BABER

    PAUL BABER Formula 3

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    Michael.......Apologies....I stand corrected......I have now found it but I have to say it was tucked away in the smallest of print........ in the catalogue I viewed it was the third paragraph of section 9.
     
  15. GTE

    GTE F1 Veteran

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    The shouldn't be bidding at all if they have no intention of buying. Perhaps it is legal, but it is nonetheless ridiculous and an unethical method to determine a price for a car that would otherwise not sell or sell at a lower price.
     
  16. f308jack

    f308jack F1 Rookie

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    +1.
     
  17. PAUL BABER

    PAUL BABER Formula 3

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    Best comment of the entire thread......Totally agree.
     
  18. Napolis

    Napolis Three Time F1 World Champ
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    Nope. The seller in their SOLE discretion determines what the car MAY sell at if they set a reserve. This is fully disclosed. The car can NOT sell at lower price unless the seller decides to lower the reserve. Everyone in the room clearly knows that the reserve HAS NOT BEEN MET until the House announces that the car is "NOW" selling. If a buyer doesn't want to pay more than a set amount he simply stops bidding. Buyers wank all the time to impress the Babes they cart along to the sales. Bidding "THREE MILLION DOLLARS" when the reserve is clearly a LOT higher is known as a "Knicker Dropper" in the trade.
     
  19. PAUL BABER

    PAUL BABER Formula 3

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    How True !
     
  20. merstheman

    merstheman F1 Rookie

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    I agree, even if the price is determined previously, as the reserve is set, the auctions are practically manipulating the public record of prices for cars with the sellers. Perhaps the THREE MILLION DOLLARS was the highest bid for the car, but if the reserve was set at 6 it doesn't matter. Bubbles keep from bursting this way... Or at least it helps....

    The good thing is at least most people who go to auctions to seriously try and purchase a car are well aware of these practices, and are continuing to pay top $$$ for the cars anyway.
     
  21. GTE

    GTE F1 Veteran

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    That is indeed my point.

    It doesn't really matter that someone is willing to pay 3.1 million for a car with a 3 million reserve. If bidding stalls at a little over a million, this potential buyer could realise that perhaps 3,1 million isn't a realisic prize for this particular car. It might change his mind about his willingness to pay such an amount. It is all about perspective no? When the auctionhouse fills up the reserve, this particular bidder probably buys the car for 3,1 million dollars, under the false impression that this is in the current marketconditions the correct price.

    And therefor the auctionhouse is directly responsible for not only sustaining the bubble, but for actively creating it by encouraging sellers to set high reserves, perhaps higher then marketconditions justify. True, you only need one buyer, but even this buyer, no matter how much he is willing to pay, has a right to act within a market that isn't polluted by competing bids that are merely done to jack up the price, not to reach a buying agreement.
     
  22. Napolis

    Napolis Three Time F1 World Champ
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    Your idea that this somehow contributes to "The Bubble" is silly. CNBC, The NYT, Bloomberg all reported the TOP 10 SALES to show that the market is VERY strong.
    None mentioned "No Sales". No one cares about No Sales as they mean nothing except that sellers wanted more than buyers were willing to pay in those particular cases. So What?
     
  23. JazzyO

    JazzyO F1 World Champ

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    I should try that sometime! :)


    Onno
     
  24. BIRA

    BIRA Formula Junior

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    The reports by CNBC, NYT, Bloomberg and others is exactly what is supporting the sales and possibly fuelling the bubble as readers that have not been in the market read this and believe they are missing possibly a good run....I am more concerned about the market moving outside the collectors area to alternative investors than auctioneers manipulating the sales.
     
  25. merstheman

    merstheman F1 Rookie

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    It seems to me these things often go hand in hand.
     

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