I enjoy auctions. Charity, art, real estate, foreclosure – you name it, I’m interested in the bidding for it. To me, auctions are refreshingly candid assessments of the value of things. Internet auction sites like eBay serve this purpose, too. But there’s something more vivid about a live auction.
Recently, the cash-strapped county in which I live announced a larger-than-usual surplus vehicle auction. Since the county had just downsized the number of sheriff’s deputies and other positions in its employ, more new, or relatively new, cars and trucks were available, and a ready source of extra cash for the government. Good for it, for acting (in this narrow context) like a rational economic entity.
Aside from my general enjoyment of these things, I had a practical reason to be at this auction: I have a son who’s get- ting close to 16 years old. I thought that a late model, decommissioned police car would be a safe rig for him to drive for his first year or two on the road. But the auction went unexpectedly.
The crowd was a strange mix. About half of it looked like a bunch of financial sharpies taking some hours out of their Friday morning to chase bargains. The other half had the look of desperate rural poverty. Ragged, stained clothes. Unshaven faces. Crooked or missing teeth. Downward gazes. Overweight. Lots of wasted, anxious movement. Quite a few of them completed a wretched stereotype by bringing their entire families – including children during class hours on a school day – to the County Facilities Garage.
The first vehicle up for auction was a mid ’90s Ford Taurus sedan. The low Kelley Blue Book value of this car was less than $1,000. (I checked later.) Bidding was spirited, moving up in increments of $25. A very tall, lean fellow standing next to me bid up to about $600, then stopped. The bidding thinned out notably at that point. Quickly, two of raggedy rural types were left alone to bid against each other. They kept pushing up until they stopped at $1,100.
That process repeated for just about every car and truck that came up for bid. The tall, lean guy next to me bid on just about everything. Turned out he was from a used car dealer- ship in the state capital, looking for inventory.
1 joined the bidding when they got to the Sheriff’s Department’s former Crown Vies. The county was offering about a dozen for sale – most from the 2002-2004 model years. There’s a divergence of opinion about the wisdom of buying former law enforcement cars. Some people think they’re bar- gains because they’re usually well maintained; others think they aren’t because they’re used hard while in service.
The low Blue Book value for these cars was between $2,750 and $3,300, depending on the year and miles in question. (This I’d checked ahead of time.) My rule of thumb about value in a used car is that, assuming decent quality, 25% below low Kelley Blue Book is a good deal. That meant my bids would top out between $2,050 and $2,450. And, given the “rode hard” factor of the former cop cars, I’d stay on the low end of that range.
It didn’t much matter. The crowd set the prices far above my limits. I managed to bark in a few early bids, but was quickly elbowed out by people willing to pay more than a “value” price for the cars. And, almost every time, the final action came down to a couple of the dentally-challenged types.
One, in particular, was buying the Crown Vics. An older man (he looked to be in his mid-60s, and ridden as hard as any of the cars), he pressed the prices up over the limits that any- one planning to resell the cars at a profit would pay. And he bought five or six vehicles.
His most frequent rival bidder was a sullen-looking younger man – late 20s, maybe younger – with his heavy- set wife and two kids in tow. He paced around nervously, bidding quickly until he suddenly stopped. He was oblivious to the normal protocol of auctions – slower bids as bids approach market prices. Still, he managed to bull his way to a couple of winning bids. When it came time to fill out the purchase paperwork, the overweight wife did the writing.
The tall guy standing next to me hissed, exasperated: “There’s no way they’re making any money on these cars. With taxes and title? No way.” We talked a little between items, and he blamed the illogical bids on late-night infomercials that tell people about fortunes to be made in government auctions. He suggested that, if I were really interested in a cop car, I could wait until some of them showed up on craigslist. After a few weeks, he predicted, they’d end sell for less than what the winning bidders were paying.
The tall guy from Olympia dashed off before bidding finished on the last vehicle. I heard him saying into his cell phone, “Nothing here.” But there was something here. A market inefficiency created by late-night infomercials and the desperate, possibly meth-fueled, desire to make some quick money.