🔍
Why There Are So Many Car Auction Sites Now - YouTube
Channel: Donut Media
[1]
- Seems like everyone in
their dear old Daddy Doug
[4]
dAdDy dOuG
[5]
has an online car auction site these days.
[7]
They've got names like Bring A Trailer,
[9]
Rad For Sale, cars & bids,
[11]
and more where you can literally bid
[13]
on your car nerd, dream
car from your phone.
[14]
But with it being so easy
to drop your hard earned
[17]
Dogecoin on a car you haven't
driven or seen in person,
[20]
are these sites the new
hunting ground for scammers?
[23]
Some people seem to think so.
[25]
How safe is it to buy
a car from these sites?
[28]
And why more of these auction
sites popping up every day?
[31]
Today, we're going to look at the advent
[32]
of these new auction sites, how they work
[34]
and what to look out for
as a buyer or seller.
[39]
- Big, thanks to Omaze for
sponsoring this episode.
[42]
- Nolan and I have had a
great time working with Omaze
[44]
at James' private Island off
the coast of Costa Rica to
[47]
bring one of you the chance
to win this Ram 1500 TRX taxes
[51]
and shipping included.
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- And you'll be taking home $20,000 cash.
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- Quick, everyone in the TRX!
[60]
Come Nolan.
[61]
Let's go, quicker!
[65]
- Go faster Nolan!
[67]
- Nobody panic, I just
forgot to tell you guys
[70]
about my T-Rex.
[72]
- Oh, how it has a reinforced frame,
[74]
specialized BILSTEIN suspension
[76]
and 35 inch tires,
[77]
that means we can roll over anything?
[79]
- No, I mean the literal dinosaur chasing
[81]
after us right now.
[82]
- What?
[83]
- Don't worry. Thanks to the TRX's
[85]
6.2 liter Hemi Hellcat V8
[87]
that pumps up 702 horsepower.
[90]
There's no way that big dumb
dino is going to catch us.
[93]
(engine revving)
[95]
I'm sorry about that you guys,
[97]
I got so excited about giving
[99]
away this truck that I totally forgot
[101]
about my extensive
menagerie of real dinosaurs.
[105]
- I get it James, it's exciting.
[106]
Especially when every donation
helps support Team Rubicon,
[110]
a nonprofit organization
that utilizes the skills
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and experience of military veterans
[115]
to help people prepare, respond,
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and recover to disasters.
[119]
- So, for your chance to
win this Ram 1500 TRX,
[122]
head on over to omaze.com/donutmedia
[124]
use code RAM150 and receive
150 additional entries,
[128]
again that is omaze.com/donutmedia.
[131]
- Uh, James?
[134]
- Oh I forgot about the flying ones.
[138]
- We should have had a
helicopter next time.
[139]
- I have a helicopter.
[141]
- Come on Nolan, there's
scientifically accurate
[143]
real looking dinosaurs out here.
[148]
- Oh, oh.
[149]
- I fell out Nolan, I fell out!
[153]
- So to understand what makes
these new sites so different,
[156]
we first got to look at how buying a car
[158]
at auction used to work.
[159]
On the low end, there were estate sales,
[161]
police auctions, and public auctions.
[163]
These are auctions where the cars were
[165]
either owned by the
entity holding the auction
[167]
or they were at least
responsible for them.
[169]
On the day of the auction
you could physically
[171]
inspect the car at the auction lot
[173]
and even start them up.
[175]
If they started, that is.
[176]
This was a place to
try to get a good deal.
[178]
Maybe you could find diamond
in the rough that no one
[180]
at the auction that particular
day was interested in,
[183]
or at the very least you'd find something
[185]
simple and reliable
that might be worth more
[187]
if you got your knucks a little greasy.
[189]
These types of auctions are
relatively safe for the buyer.
[191]
Auctions sometimes even
offer an auction guarantee:
[195]
a warranty on the drivetrain of the car.
[196]
And if something isn't
quite what was promised
[198]
they might even have
an arbitrator onsite to
[200]
reconcile any dispute
between buyer and seller.
[203]
So while there are a few systems
[205]
in place that might put your
mind at ease, the inventory
[208]
isn't exactly a bunch of rare sports cars
[210]
and you have to go all the
way down to the actual auction
[213]
and stand all day in a building
that doesn't have AC to keep
[215]
up with this many people
[217]
and you're not guaranteed
to leave with anything good.
[219]
Unlike my dad who scored a
Cherry 93 Dodge Spirit back
[222]
in 2000, we hit a lot of baseball
practices in that bad boy.
[225]
Kinda ugly though.
[226]
On the whole other side
of auctions, though,
[228]
there are the classic car auctions
[230]
and you've probably seen these
[231]
on TV before.
[232]
I'm talking Barrett-Jackson,
[233]
Mecum, Bonham's, Gooding & Company,
[235]
anything during Monterey car week.
[237]
These auctions are high end events where
[239]
every car is likely to
sell for six, seven,
[241]
or even eight figure prices.
[242]
These auctions rarely
have something as trivial
[245]
as a drivetrain warranty,
[246]
but you know what they
do have? An appraiser.
[248]
someone whose job it
is to inspect the car,
[250]
verify its authenticity,
and set its valuation.
[253]
These companies put their reputation
[255]
on the line to sell a car.
[256]
So they make sure
[257]
that anything that crosses
their auction block
[260]
is exactly what it says it is.
[261]
Or at least as close as they can verify.
[264]
But that's what buying a car
in auction was for a long time.
[268]
Either super high-end collector cars
[270]
or bottom of the barrel.
[271]
For most people buying a
car without test driving it
[273]
or being able to talk to the
seller is a bit unnerving.
[276]
But if you knew how to play the game
[278]
and were smart with your money
[279]
and confident in your
ability to assess a car
[281]
an auction was a good
place to find a deal.
[283]
But there was a gap in the auction world.
[286]
A space somewhere between
the six-figure classics
[288]
and high mileage clunkers
that needed to be filled.
[291]
This is where our new
auction sites come in.
[294]
And the biggest by far is Bring A Trailer.
[297]
When Bring A Trailer started in 2007,
[300]
it wasn't even an auction site.
[301]
It was just a blog that
sent out a weekly email
[304]
noting interesting listings on eBay.
[306]
But as more and more
people started subscribing,
[308]
sellers realize that having their car
[310]
in the Bring A Trailer
email was great exposure
[313]
and wanting to start paying
for placement in the blog.
[316]
Now there's over 400,000 users
[319]
and only half of them
are lurkers like myself
[321]
scrolling during Zoom meetings.
[323]
- Well, if we take a look
at views for last month
[326]
we can see from the trend
line that it's headed
[328]
towards negative infinity.
[330]
I think it probably has something to do
[332]
with Nolan's haircut.
[334]
- Scrolling Bring A Trailer is like
[335]
scrolling through Instagram.
[336]
It's a curated assembly of
cars that are interesting,
[339]
unique, and have a story.
[341]
With each listing you get a
pretty detailed description
[343]
of the car along with dozens
of professionally taken photos.
[346]
And it really draws you in,
especially when you compare it
[349]
to scrolling used car listings
[350]
with a price listed as $1234.
[353]
And if that's not enough for you
[355]
they have a public comment section where
[357]
interested buyers ask questions
about the cars and specs
[360]
and the seller will
usually posts extra links
[362]
like a walk-around video or idling
[364]
and shifting all the stuff you might check
[366]
if you went to see the car in person.
[367]
But they're not the only site.
[369]
In 2020 alone, the 80's
and 90's era car show
[372]
Radwood started their own
auction site Rad For Sale
[375]
and YouTube legend Doug DeMuro
[377]
launched cars and bids.
[379]
Real quick, let's talk
about how these sites
[381]
actually make money because
they're not just websites.
[383]
They are businesses.
[384]
Auction sites generally keep
the doors open one of two ways.
[388]
Charging the seller a small listing fee
[390]
a tactic even Craigslist employs.
[392]
And the more lucrative method
of taking a small percent
[395]
of the final sale.
[396]
Bring A Trailer does cap
this amount at $5,000.
[399]
But as a rule, the more car
sells for all the better
[402]
for the site, which has
some worrying implications
[405]
I'll talk about later.
[406]
Now you might think that a
website full of desirable cars
[409]
that are being honestly
represented is too good to be true.
[412]
And you wouldn't be alone.
[413]
Plenty of people can see the potential
[414]
for buyers to get scammed
[416]
when you look at how these websites work.
[417]
As I mentioned, Bring A
Trailer didn't start out
[420]
as an auction site.
[421]
It was just a curated list
[422]
of cool things you can buy on eBay.
[424]
Kind of like thisiswhyimbroke.com.
[426]
It was in no way
affiliated with the seller
[428]
and couldn't vouch for
the legitimacy of the car.
[430]
Today, the site works in
a kind of similar way.
[433]
Yes, they vet the car a bit and provide
[435]
as much info as possible, but
there's no auction guarantee.
[438]
All sales are as is.
[440]
There's no official arbitrator
[441]
or appraiser to talk to
you just see other users.
[444]
And as far as the actual
transaction is concerned,
[446]
you're on your own.
[447]
Sites like Bring A Trailer,
Rad For Sale, and cars and bids
[450]
are in no way responsible for the security
[453]
of the actual transaction
[454]
or its legitimacy.
[456]
So you'd go from scrolling
a Pinterest board
[458]
of nice cars to all of a
sudden having to wire money
[460]
to a dude in Michigan, just like you would
[462]
if you had bought the car in Craigslist.
[464]
Now I want to be clear here.
[465]
I don't think these sites have
responsibility to do any more
[468]
than they're currently doing.
[469]
I do think it's a
buyer's responsibility to
[472]
treat a purchase seriously and not assume
[474]
that things will be taken
care of for you, just
[476]
because the site has a better
UI than Facebook Marketplace.
[479]
But I get that people
start to feel uneasy when
[482]
the pretty, well presented site turns
[484]
out to be very similar to
the normal buying process
[487]
once you've actually won an auction.
[489]
It feels a bit like a
bait and switch, I guess.
[491]
So much so that they think there's
[492]
some kind of scam going on.
[494]
Like the '55 Desoto they just paid for is
[496]
actually going to be a Geo Metro.
[498]
But to that I say, it's
time for a reality check.
[502]
Thing about reality,
it always gets checked.
[506]
Life's not fair!
[509]
(futuristic music playing)
[514]
Look, to get a car listed
on any of these sites,
[517]
the seller has to go
through the listing process.
[520]
Extensive photos are required,
[522]
as well as the records of the car.
[523]
And it's not just a
checkbox list of questions.
[526]
These sites are run by
enthusiasts like you and me
[528]
and a scam happening on
their site would be as big
[531]
of an issue for them as
it would be for the buyer.
[534]
So if a seller is uncommunicative
or just a little shady
[538]
they're not likely to get
their listing approved.
[541]
You've just been checked!
[544]
The truth is that these
auction sites benefit
[546]
from the engagement of bidders.
[548]
Because people ask questions
about the listed cars publicly.
[551]
If a user asks something, not
disclosed, let's say a recall
[555]
the seller's answer is then
visible to anyone else bidding.
[559]
It may not have been a
question you thought to ask.
[561]
And now you know the answer.
[562]
And at the end of the
day the winning bid is
[565]
just a promise to buy the car.
[566]
If you show up, and the car
isn't what was advertised.
[569]
You're not legally obligated to buy it.
[571]
There is no bank lien on your house
[573]
if you backed out.
[574]
Sure, the seller might be mad.
[576]
And if you backed out without good reason
[577]
you would probably get
banned from the site
[579]
but it's not like the feds
are coming to your door.
[582]
So don't worry, there's no scam.
[584]
At least not the kind you're thinking of.
[586]
In July of 2020 an E30 M3
sold on Bring A Trailer
[590]
for a quarter of a million dollars.
[592]
Even though this particular
one only had 8,000 miles on it,
[595]
many people agreed that that was an
[597]
insane price for this car.
[599]
After the auction had
closed a few users wanted to
[602]
know more about this Richie Rich buyer.
[604]
And decided to run the VIN of the car
[606]
through services like Carfax
[607]
until they saw it change hands.
[609]
Six months later, the car still showed
[612]
the same number of owners.
[613]
Why would someone buy a car
[614]
for 250k and then never
take ownership of it?
[617]
Well to answer that, we
need to make a journey
[620]
to the speculation zone.
[621]
That's right, two bits this episode.
[623]
(mysterious music playing)
[627]
What if our BMW seller never intended to
[630]
sell their ultra low mileage M3?
[633]
But they had a second M3
[635]
he wanted to get rid of.
[636]
They listed the 8,000 mile one
[638]
and either created a second account or
[640]
had a friend bid to make sure they won it
[642]
at a stupidly high price.
[644]
Then riding the artificial hype created
[646]
by this high priced
auction, sold their other M3
[650]
for 20 to 40k more than what
they would have gotten before.
[655]
Before the 250k M3 sold,
only one E30 M3 had ever sold
[660]
for over a hundred thousand dollars
[662]
in the history of Bring A
Trailer in the nine months
[664]
since that sale, four more
have sold for over a 100k.
[668]
Sounds a little like
someone's gaming the system.
[670]
Now, admittedly, this sounds
less like the speculation zone
[674]
and more like the conspiracy
corner on my part.
[676]
And what's more likely is that
the registration got delayed
[678]
because of COVID or the
site wasn't up to date.
[681]
But it does illustrate a phenomenon
[683]
that many buyers are frustrated with.
[684]
In the normal world, this is
known as the rising tide effect
[688]
but in the car world, it's now known
[690]
as the Bring A Trailer effect.
[691]
In ultra rare supercars,
[693]
the rising tide effect was easy to see.
[695]
One selling an auction changed
[696]
the valuation of all the others.
[698]
If a Ferrari 250 GTO sells
an auction for 8.6 million
[702]
and you've got one of
the other 36 in the world
[705]
you now know yours is
worth about 8.6 million.
[707]
As they sell for more and more,
[709]
the others increase in value as well.
[711]
And today that same 250
GTO is expected to fetch
[714]
over $50 million in auction.
[716]
But now because the popularity
of these auction sites
[719]
people are seeing more
entry-level collector cars sell
[721]
for $10,000 and $20,000.
[723]
The same cars that were
listed on Craigslist
[725]
for 4k, four years ago.
[727]
Does the car similar to yours
[729]
selling an auction for a high
price affect your car's value?
[732]
Some people think it does.
[733]
In fact, some people are
using auction results to
[736]
show their insurance companies
that their car is worth more
[739]
and should therefore payout
more if it got totaled.
[741]
But I don't think that
collector's auctions
[743]
and used car sales are
really in the same market.
[745]
Many people will try
[746]
and compare some used
listing to an auction
[748]
they saw completely
ignore spec, condition,
[751]
or maintenance records.
[753]
All things that would be checked
[754]
in the approval process by those sites.
[756]
Now you might not care about those things.
[758]
Things like mileage or maintenance
records and that's fair
[761]
but there's a difference
between it mattering to you,
[763]
the individual buyer, and it
affecting the value of the car.
[766]
Like I said, these auction
sites are run by enthusiasts
[769]
and it's a place for unique
cars to be appreciated.
[771]
So naturally, that means
people are more invested
[775]
in investing.
[776]
But I will admit that high
prices on auction sites have led
[779]
to a few optimistic used
car posts on social media.
[783]
No
[784]
low ballers,
[786]
I know
[787]
what I got.
[791]
Ha!
[792]
(fart sound effect)
[793]
I think the fear of the rising
tide effect is legitimate.
[795]
But it can't be blamed
[796]
on auction sites because it's happened
[798]
with every generation of
car that has come before.
[801]
As someone who is super into muscle cars,
[802]
it was heartbreaking as a
teenager to see the rising prices
[805]
of Kudos and GTOs and Chevelles,
because it felt like even
[809]
if I one day made more money by then
[811]
they would have gotten even more expensive
[813]
and I could never catch up.
[814]
And that's still true,
[817]
it's still true to this day.
[818]
Why does a rusty charger
have to be 30 grand?
[821]
You're out of your mind
[822]
they drive like boats.
[823]
I want to drive the rusty boat, okay?
[824]
All cars appreciate and depreciate
[826]
at a different rate and scale.
[828]
But for the most part, they
follow a similar parabola.
[831]
From the day they leave the lot
[832]
and go from new card used car.
[834]
They go down in value,
the miles and years stack
[837]
on until eventually they
begin to plateau out.
[839]
But then as there are less
and less of them on the road,
[842]
the value begins to go up.
[843]
Sometimes it's because of nostalgia,
[845]
sometimes it's because the
car becomes ironically cool.
[848]
And sometimes it's because the
things that made the car good
[850]
in the first place are
now desirable again.
[853]
But whatever it is, the car
is only going to get rarer
[856]
because it's not going to get made again.
[857]
We saw this with the 60's muscle cars,
[859]
we saw it again with the 70's Porsches.
[861]
And now we're seeing it
with 80's and 90's cars.
[864]
We just happened to be seeing it
[865]
through the sites like these.
[867]
What I really wanted to see was one
[868]
of these sites from the
seller's point of view.
[870]
So I called up my friends
at Rad For Sale to see
[873]
if they'd run us through the
auction approval process.
[876]
Now, since none of my cars are
[877]
from the Rad era, we used Max's BMW.
[883]
We had Max give us all the info he would
[885]
as if he was actually selling the car.
[887]
He submitted over 40 Max quality photos,
[890]
a lot of sites like Rad For Sale,
[892]
actually have a list of angles
[893]
they want you to get.
[894]
So, you know, the
postings gonna be uniform
[897]
and the customer gets a
complete view of the car.
[899]
After submitting our listing,
[901]
a rep from Rad For Sale responded
[903]
in just a few hours saying that
the listing was really good
[906]
but they actually wanted some
pictures of the undercarriage
[909]
of the car, just so they can make sure it
[910]
wasn't rusting away from
beneath the driver's seat.
[914]
That's kind of important.
[914]
They also came back with
some recommendations
[916]
on what the reserve price
should be, info on what parts
[920]
of the car were going
to be the most desired,
[921]
and how to best market the car overall.
[924]
You know, these are real people looking
[926]
at these listings and making both sellers
[929]
and buyers have a positive experience.
[930]
And that goes across the board
[932]
with all these sites that
we've talked about today
[934]
So I think I figured out
why there are so many
[936]
of these auction sites popping up now.
[937]
People wanted a better private
seller-buyer experience
[940]
than Craigslist or Facebook.
[942]
A place where people who are actually
[944]
into cars could sell cars.
[945]
And a place where people
respected the fact
[948]
that we like to ask
questions, know our specs
[951]
kick tires, and know a lot
about what we're getting
[953]
before we get it.
[954]
While Bring A Trailer
might be the big dog.
[956]
I like that we have smaller
and more niche sites
[958]
like Rad For Sale and cars and
bids and Hemmings auctions.
[961]
Because as a buyer
[962]
that means there's less people
watching a single auction
[965]
and more chance you might get a good deal.
[967]
Seriously, check out those smaller ones.
[968]
Don't sleep on them.
[969]
That actually brings me back
to the point I made earlier.
[971]
Remember that conspiracy theory I had
[973]
about the M3 prices rising?
[974]
Well, what also makes those
prices rise is the user base.
[978]
Regardless of how a car
appreciates or depreciates,
[981]
the more people you have
bidding on an auction
[983]
the more likely it is
[984]
that someone will be willing
to spend a lot more money.
[987]
But an auction only
sells for slightly higher
[990]
than the second highest
bidder is willing to pay.
[993]
So even with one high
roller in the auction,
[995]
the price might not
actually get that high.
[997]
With an even larger user base, though,
[1000]
it's more likely that two or more people
[1002]
with money to burn will
get into a bidding war.
[1004]
When those four E30 M3
sold, the user count
[1007]
on Bring A Trailer was
about half a million.
[1009]
When that first one sold in early 2018,
[1012]
the user count was way, way lower.
[1015]
So is that an elaborate conspiracy
[1017]
or just the growth of an audience?
[1021]
If you've ever bought or
sold a car at an auction,
[1023]
let me know in the comments,
was it a good experience?
[1025]
Would you do it again?
[1027]
If you liked this video,
hit that like button
[1029]
and it actually really does help us out.
[1031]
You know, you know how the algorithm is.
[1033]
Just it's magic.
[1034]
If you want to see more of
Max's car, check him out
[1036]
on Instagram at @35mm_cars
[1040]
Also follow Donut on
Instagram and all social media
[1043]
@donutmedia
[1044]
Follow me @nolanjsykes
[1046]
I'm posting a lot more
of my photography lately.
[1049]
Be kind and take care of each other,
[1050]
I'll see you next time.
[1068]
♪ Saddle up, set your spurs on down ♪
[1071]
♪ Donut's made the sickest hat in town ♪
[1074]
♪ Licensed realtree camo on your head ♪
[1078]
- Yeah, that's what I said. Sing it!
[1081]
♪ C-A-M-O H-A-T ♪
[1084]
♪ Finest hat that you can't see ♪
[1087]
♪ C-A-M-O H-A-T ♪
[1090]
♪ Made for you and me ♪
[1093]
♪ Woo! ♪
[1094]
- Now you can represent
your favorite automotive
[1096]
brand when you're on
the road, on the lake,
[1099]
or up in that blonde.
[1101]
Only available at donutmedia.com.
[1104]
Get you one.
[1107]
♪ Whether you're fixing
cars or in the woods ♪
[1110]
♪ Donut's got you lookin' good ♪
[1113]
♪ In your C-A-M-O H-A-T ♪
[1117]
♪ Blend in and stand
out in Donut Country ♪
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