The Secret World of Reserve Prices at Car Auctions
Once you make the decision to part with your much loved air-cooled Porsche at one of the car auctions, the big question is always: what is the lowest price you will accept for the car? The auction house then sets this price as the Reserve Price on your air-cooled Porsche. This means that your Porsche will not sell at auction unless the bidding reaches this price. The other option is to enter your Porsche at “No Reserve” that means it will sell at whatever price is the highest.
The Auction House and the seller do not divulge the Reserve Price during the Auction. The hope is that the bid will surpass the Reserve Price and net the seller a higher selling price and the Auction House a higher commission. By setting a Reserve Price it protects the seller so their car is not sold for a below-market price that is acceptable to them.
You may ask why would someone not set a reserve price and sell their vehicle at “No Reserve.” The main reason is that a No Reserve auction sale usually attracts more interest and therefore more active bidding since the buyers know that a sale will occur on the vehicle. A sale is not guaranteed when a reserve is set on a car. The bidders have to hope that reasonable reserve has been set on the car so that a sale occurs when the bidding reaches market value for the vehicle.
When you list your vehicle for sale on one of the auction sites or with one of the auction houses, they will work with you to set a reasonable reserve price that will benefit both you in a sale and the auction house in receiving their commission based on a sale occurring. Both major online auction sites for Porsches, Bring-a-Trailer and PCarMarket charge the buyer a 5% commission on the purchase price so this is where they make their money.
A seller is only charged $99 to list their car with these sites. It is important to note that these auction sites do not accept every car. The car must be of a certain quality and uniqueness and the owner must be open to setting a reasonable reserve price that will help to insure a sale. The reserve price is normally set at the low end of what the market value is on the vehicle.
It is important to note that the big live collector car auction houses, such as RM Sotheby’s, Gooding & Company and Bonham’s will have higher selling fees and buying commissions.
The Reserve Price is not necessarily what the minimum sale price of the car could be as evidenced by this recent sale of a 1978 Porsche 911SC with the unique Lobster interior by Air Brigade member Carl on PCarMarket.
Carl first listed this car on the PCA Mart selling site. One call he received on the car was from Adam of PCarMarket. I had just sold a 914 on Bring-a-Trailer and bought a ’68 911HR (Hot Rod) on PCarMarket so Carl had been exposed to online auctions as an option for selling his car and when he learned that his investment in the car could be protected with the Reserve Price he decided to give PCarMarket a try. Carl and Adam worked together to set the reserve price at $36,500, the bottom price that he would accept for his Porsche.
Not much happened the first five days, but then bids started to come in. With one day to go, the bidding was at $19,911, $16,589 away from the reserve price set. Carl had resigned himself to a no-sale but had not counted on the bidding frenzy that occurs in the final hour of an online auction.
During that final hour, new bidders appeared starting with an initial jump up to $25,000 and then it was “off to the races.” As Carl described: “The last 15 minutes were frantic.” The bidding rose and stopped at $34,441.00, just $2,059 short of a sale.
This is when the Auction House gets involved to see if they can close the gap on a no-sale so it becomes a sale. Discussion started between PCarMarket and the seller and bidder to see if one would come down and one would go up. The negotiations came together and a sale was consummated at $36,000. The car was sold to a buyer in Mexico showing the value of the increased exposure that auctions provide to the seller.
As far as I can tell both buyer and seller are happy. Carl was ready to sell the car and he tells me that he has various SC parts including a whale tail that will be sold separately to help increase his return on the sale of the vehicle. And, the new owner acquired a unique Porsche 911SC with the lobster Interior that he may not have been exposed to otherwise with the option to purchase.
All’s well that ends well.
Auction Listing on PCarMarket with bidding history: https://www.pcarmarket.com/auction/dealtank-1978-porsche-911-sc-2/
Tags: Auction Reserve Pricing, Online Auction Reserve Pricing, Reserve Pricing Secrets