Russo and Steele auction

[Charley Lillard]

Drew had also sent me text but it came in a form I couldn't open till now. Here is his text.


Wow, this is starting to be a full time job… As I have said before, I have been at this a LONG time. Following 5 years as the GM at Barrett-Jackson and now 8 years at the helm of Russo and Steele, there is simply a complaint, story, dispute, or crying or whining, pissing and moaning I have not heard.



My track record and reputation in this hobby and the passion and integrity with which Russo and Steele operates is evidenced by the many strong relationships we maintain with our clients and the success we have enjoyed. In all the years I have been doing this, having consummated thousands of transactions, I have only ever had ONE go to court. Actually, this was back with B-J and we prevailed.



As quick-bowtie, Mr. Distad has posted. We have been able to reach an amicable agreement and keep the most valuable thing there is in this hobby, a relationship. Cars don’t talk, have feelings, or care. Enthusiasts do. And as one, so do I.



If I may be so bold, let me state that first and foremost, I am an enthusiast. At the risk of sounding pretentious, I was very fortunate to have “paid my bills” long ago. I do Russo and Steele because we truly love the hobby. Very few, if any of my contemporaries can say the same… Yes, it is wonderful to have a company that can sustain its self and pay the bills “playing with old cars” but let me be abundantly clear; I do this because I love the cars, but more importantly, I enjoy the relationships I have with many fellow enthusiasts. I love my collection of cars. I vintage race in club events, exhibit my cars when I can to share with others, and hell, I even parked my Boss 429 in the living room! (yes, Josephine is pretty cool) Suffice it to say, I am an enthusiast and collector as well.



BOTH of these ‘new issues’ 1) Jeff Yergovich of R+A Motorsports and 2) Chris Burns from Santa Barbra Car Company are as a result of consignors failing to read, understand and fulfill THEIR obligations when selling THEIR car at auction. Both are “cut and dried”. Both are subject to the contract that ALL auction company’s have and is basically “boiler plate” language.



The 1970 Blue Boss 429, of Mr. Burns simply did NOT meet the Reserve price. By law (and some other auction companies practices of No Reserve were the reason for these laws) the auction house has to divulge to its sellers the following:



Advancement of Bidding: RS retains the right to advance the bidding up to, but not in excess of, the Reserve, as agent for the Seller. RS further reserves the right, at its sole discretion, to Sell the Vehicle at a high bid price less than that price identified as the “Reserve Price,” provided that RS nets the Seller the specified reserve amount less all-applicable sales commissions and fees.



This clause is clearly stated in Russo and Steele’s Consignment Agreement under section 8, d.



Simply put, the Boss did not sell, as the Reserve was $300,000.



Nothing is worse than “working to get the reserve for a seller” only to have him “pull your shorts down” as he lifts his reserve on the block at $245,000 – for $65K less! This occurred in this instance when the above contract clause was being utilized on BEHALF of the seller in an attempt to get the seller what he said he wanted. If indeed he was wiling to take a substantial amount less, than there is only two reasons why he “shot high” on the reserve; 1) to “make us work harder” to sell the car. Anyone who has been to my auction knows this is impossible to do, since my gang works the hardest of any on the planet. 2) to have a high reserve to allow the seller to “grind” a negotiation on the block for less than the stated 10% reserve. In all my years of doing this, these are the ONLY two reasons, all others are delusions.



As for the 1968 Shelby GT500KR Fastback of Mr. Yergovich, this one is even simpler. He consigned the car with a $100,000 Reserve. It is these contracts that my staff has on the auction block. We sold the car for (coincidentally) 100 grand, met his reserve and paid him the net. If Mr. Yergovich made a mistake on his paperwork, this is not my fault. To go jumping around on my auction block saying you want more in the brief time the car is on an auction block, with the “bullets flying” and thinking you are going to then verbally raise your reserve at this chaotic moment is simply ludicrous.



I have sent a PDF of both Consignment Agreements along with this text. If they can be posted, that would be nice, since there leaves no questions.



Lets move on guys. When there are hundreds of thousands of dollars in motion, my most sincere suggestion to all fellow enthusiasts is to know your responsibilities and obligations.



Similar to when a Cop pulls you over for doing 105 mph on the freeway, the excuse of “I did not know” will not get you out of the ticket.



As I have run out of cheese and crackers, this will be my last post, I just do not have any left or the “whine”.



Drew Alcazar

[southernfriedcj]

I had no idea that an auction company could legally shill bid!
Are bidders aware that they are bidding against the house?

[olredalert]

-------Jim,,,Company bidding happens only up to the reserve, if necessary. Since the reserve is presumably what the owner wants, the car will not be sold for less, unless negotiated. I dont think a bidder is bidding against the house if the car cant get sold until the car reaches the reserve......Bill S

[Les Quam]

Wow! This is fascinating stuff. IF I read Drew's post correctly as posted by Charley? The auction house in writing advises the seller it has the right to "advance the bidding up to the reserve". I am not going to speculate how the bidding is "advanced" but I wonder if the bidders agreement states that the auction house can "advance" the bidding to a cars non disclosed reserve?

I have signed up to bid at a few auctions RS not being one of them and never noticed language to that effect advising me that as a bidder I won't be aware of the actual reserve prior to bidding and that the auction house can "advance" the bidding to the reserve???

This is all news to me and I have been licensed to practice law since 1983? I recall not long ago a couple of high end art auction house's running into some problems. Looks like I need to do a little research and learn a little more about the laws auction houses are subject too. Charley if Drew knows of a case sanctioning this contractual language could you ask him for the name? The whole thing just fascinates the heck out of me? Or am I misinterpreting his comments? Seems like the language implies artificial means are used by the auction house to get the price to the reserve? Why not just state the reserve is X amount of dollars and start there? Is advancing the bidding creating an illusion of some sort? Very possible I am just not reading Drew's comments the way they were intended. Because I can't see how employee's of an auction house or other auction house designee's who are unable to purchase the car bidding on a car up to it's reserve is anything other than an illusion that actual bidders exist and appear willing to pay up to a cars reserve? However nothing forces a prospective bidder to pay over reserve but I wonder if the bidder is led to believe the car is worth X amount of dollars by the bidding being advanced???

Please note no disrespect to Drew and his company is intended by this query. He is great for taking the time to chat with us and solve Quick Bow tie's issues. Really a first class neat thing to do. I am just baffled or misreading the post I guess. I am easily confused so no disrespect intended.

Charley you are the experienced expert here with this stuff what am I not understanding?

[AutoInsane]

"Advancement of Bidding: RS retains the right to advance the bidding up to, but not in excess of, the Reserve, as agent for the Seller."

I guess you really need to know the value of what you are buying and stick to that number.

I do not think the auction houses should be able to go up against against buyers with purely fictitous bidders. It is sad that they go to these lenghs to sell a car.

[427king]

[ QUOTE ]
Why not just state the reserve is X amount of dollars and start there?

[/ QUOTE ] To get more bidder excitement. People dont like to get outbid,so it gets/keeps more players in the game that pay more than they intended to. Plus if you see a ZL1 there for a 100K starting bid you may think you have a chance at 300/400K, but if it has a 700K reserve,youd stay home.People always want things more when others also want them. You know the word "shill" originated many years ago when the circuses had indoor events. 45 to 50 people would wait in a false "line" acting excited to get into the event and people coming "out" of the show acting the same way . They were all employees of the circus. After getting inaide people that Paid to get in wondered why so many people were in line trying to get in,and large lines leaving when there were only a handful of people inside.

[rubbinisracing]

Les you have it right!

The law requires the auction house to disclose to the consignor that they have the right to advance the bid up to the reserve amount, but there is no requirement that they make this unethical (IMO) practice part of their business practice....they choose to do it! The bidders agreement makes no mention of the practice nor does the Speed Channel or ESPN when they televise the auction. It sure would add another dimension to watching it on TV and trying to figure who's the shill bidder and who's real. All we would need then is Kitty Carlyle and Soupy Sales asking some questions.

Makes me wonder if Andy hadn't yelled so quickly and so loud if the result would have been different. I think the characterization of these complaints as "whine" is very telling about R&S's attitude towards customer service after the sale. I believe I could discern the real story while listening to Clemens and McNamee and the same goes here.

[427king]

[ QUOTE ]
The law requires the auction house to disclose to the consignor that they have the right to advance the bid up to the reserve amount,

[/ QUOTE ] Will someone here bid up my COPO motor on ebay , Since im aware you are doing it we wont have to tell the bidders

[StriperSS]

My feeling on this is that shill bidding does not reflect the actual market value of a particular car at a particular time. If the seller sets the reserve of his car at $300,000, and real people in the audience only bid it up to $225,000, this would then indicate that the market has spoken. The seller can take his car back home and wait for more advantageous times, or decide that his car is not as valuable as he thought.
A real person bidding against the house will pay an artificial market value for that car.
Maybe that's an over-simplification, but the more I learn about these auction houses, the more I'm soured on the whole process.
My $.02 anyway.
John

[redbaron]

All of the auction houses are nothing more than smoke and mirrors or better known as a horse and pony show as is the circus.