ALL RESERVE, ALL THE TIME

ALL RESERVE, ALL THE TIME

The rules have changed
The integrity of “No Reserve” has been so badly compromised within our hobby that it no longer has value. Quality consignments are the result of only two scenarios; either the owner had paid a premium or has endured a costly and laborious restoration. Neither of these two will entice this caliber of automobiles to simply be “sold to the highest bidder – regardless of price”. These consignors want “top dollar” for their car; and deservedly so. The challenge we auction companies face is how to attract these types of quality consignments and consign them with appropriate reserves that will be well received by our knowledgeable bidders.
Sure, there was a time that being granted a “No Reserve” entry to some auctions was like winning a lottery ticket. The seller knew that they would probably sell the car for more than anywhere else on the planet. Or at least that was the perception. Now that the market has taken a more conservative turn, and quality inventory is selling for market relevant prices at most high caliber sales, consignors are now seeking to invest themselves in long term relationships with the auction house that best suits their particular needs and objectives.

Russo and Steele will now be offering exclusively “With Reserve” entries to all our auction sales. I believe allowing owners this measure of control over the sale of their car results in the high quality consignments we have become known for presenting. All Reserve entries however mandates that the auction house be keenly in tune with the market to appropriately counsel our clients on market relative reserves.

The downside risk of No Reserve
At every auction on the planet there stands the chance that the “right” two (and yes it takes at least two) bidders are simply not in the room at that golden moment in time when a car is on the auction block. The downside risk for the consignor then results in two alternatives. One, allow his car to be “stolen” from him and be forces to sell the car at substantially less than we all know it is worth. Or two, compromise the integrity of our hobby by having a friend bid on the car or do so himself, and essentially “buy” his own car back. Both of these options fail to build the most important part of the process, the relationship between the consignor and the auction house.

The duties we must fulfill
There are three duties we must perform when we produce an auction event. First, we have a duty to the consignor. I am acutely aware that it is not a “cheap date” to bring a car to an auction, having spent many years as a consignor myself. Costs include transportation, detailing and preparation, care and feeding on site, food and lodging for the owner and (depending on the number of entries) possibly a small staff which in places like Scottsdale, Monterey and South Florida are on the farthest planet from Motel 6! These costs and investment, in my opinion, mandate that the auction house works with the seller to achieve a suitable reserve to achieve the objective of selling the car for the most money possible. To simply grant a ridiculous Reserve, that has no market relevance, is wasting the time and money of the seller.

Second, we have a duty to our bidders. To place vehicles on the auction block that they essentially cannot buy due to an unrealistic expectation of a seller is both frustrating and infuriating. Our bidding clients are keenly aware of the market values on the specific types of cars we bring to market. Many of them know that outstanding cars sell for a premium regardless of the trends up or down. As a result, many of our bidders will indeed understand this additional value but for unrealistic reserves to waste their time “fishing” for an anomaly with every final bid is disrespectful of both their savvy and their wallet.

Third, is simply economics. The caliber of events that we produce and the related expenses associated with this level of production simply cannot be compensated by the collection of entry fees, general gate, vendors, or sponsorship. We must sell cars with corresponding sellers and bidders commissions to pay the bills. It is that simple.

To achieve a successful outcome and fulfill the duties to all three is indeed a delicate balance. It requires a staff who are closely in touch with the marketplace so that we can work with our sellers to consign great inventory, bring them to our auction sales with appropriate expectations and enable our bidders to buy them while enjoying the very best our hobby has to offer.

The investment in our hobby
The liability of No Reserve far out-weighs the benefits. Having a seller get “beat up” and selling his car for considerably less than market value or forcing him into a “buy back” at usurious commissions (either by contract or as a deterrent) fails at every level to foster and maintain long standing relationships. In turn, to “pack” a buyer into a car by selling it to him for infinitely more that it is worth simply due to his naivety or because they have a cocktail in one hand and a TV camera stuffed in their face fails to create equity in the future relationships with buyers. These are the very buyers who will hopefully become your best sellers when the time comes to trade, and will once again consign quality cars that will initiate relationships with new buyers.

Sadly, somewhere along the way No Reserve has resulted in an adversarial relationship between sellers and the auction house. In addition, now that bidders are well aware of the many mechanisms used by unscrupulous sellers (know or unknown by the auction house) the integrity of our hobby is jeopardized by No Reserve entries. The myth of “stealing” a car just because it is No Reserve has been now been exposed. Savvy bidders will immediately recognize the value of quality consignments and aggressively bid accordingly. Our equity lies in the transactions of quality cars to astute enthusiasts.

The announcement by Russo and Steele in Scottsdale this past January to now present our auctions with all Reserve entries has already been well received by our clients. The consignment of quality cars is the foundation upon which we have built our company. I believe the fulfillment of this duty is directly responsible for the fortunate success we now enjoy. I believe this perspective is clearly evident in the quality of cars we present at our auction sales. I know this commitment will result in the long term health of our hobby and maintain the integrity which our clients have come to expect from our company. We welcome your Reserve entries and invite you to bid on the finest European Sports, American Muscle cars, Hot Rods and Customs at the next Russo and Steele Collector Automobile Auction!