Hammer Time: Not Thrilled By The Shill
Steve Lang might not be “thrilled by the shill”, but here at TTAC, we’re delighted to see him return. As always, he drove a tough bargain, but he’s back. Look for more “Hammer Time” articles from our rogue buy-here-pay-here specialist in the future! — JB
“Did he just try to run me up on a $500 car?”
The auctioneer had seen my bid, taken it, and then moved his body to a 90 degree angle from where I stood. He quickly took a bid. A bit too quickly for me to believe it.
Magically, a $600 bid had been taken somewhere between the sea of bodies and the coke machine, as he quickly went back to me looking for more. I saw the low mileage 1994 Geo Prizm with the banged up body slowly move away as the auctioneer tried to make eye contact and get me to bid again. Except I wasn’t watching from the same spot anymore. I walked away. The shill bidding that would have cost me at least $150 was now worth nothing.
I knew his trick because, a bit over 10 years ago, it was my job to help the auctioneer make it work.
I was a ringman. The guy who hooted, pointed, hollered and helped the auctioneer use his powers of persuasion to create a competitive market out of nothing more than thin air.
The bumping tactic this guy used was as common as kudzu here in north Georgia. You find the nearest crowd that the bidder can’t easily make out, bump the bid up with a ringman who knows how to create the urgency to buy, and then go back to your bidder.
I usually don’t mind this. It’s done a lot in our business, and for one unescapable reason.
The seller has a reserve price. If he doesn’t get a bid that is at least close enough to comfortably sell that vehicle, he won’t sell it. The auction won’t get a buy fee and sale fee, and maybe, the auctioneer and ringman will be as much in demand as that 18 year old Geo Prizm that looked like it got into a fight with a Volvo, and lost.
That’s what pissed me off. Not that I was bumped, because that’s just part of the wholesale side of this business. What got me all wound up was that the auctioneer had obviously tried to bump me after the reserve price had already been met. An unforgivable sin because he blew a deal that could have resulted in a win/win for all parties. .
Blown opportunities aside, there are times when a buyer and a seller need a bit of shill bidding to get a deal done. If I bid $10,000 on a low-mileage 2012 Honda Accord EX, and the seller wants $15,000, you can bet that the auction staff is going to simulate competitive bidding, You can also count on the fact that I, as a long-time car buyer, am going to have to use my judgement as to what I’m willing to bid.
This ability to see things and restrain myself didn’t come cheap. Some experiences in life require what can kindly be called, a tuition payment. You literally have to keep paying for certain things until the wool is no longer in front of your eyes. Shill bidding is just one of many, many tricks that come with buying vehicles at a dealer auction.
Shill bidding is especially common during the period after Labor Day and before Thanksgiving. This is the time of year when you have no spending holidays. Few if any tax returns, and the weather gets cold, which means folks spend less time shopping for used cars in the great outdoors. When demand is slack, the auction staff is under more pressure to bump the price of a vehicle into a sellable range.
This is also the time of year when I find some of my best deals; especially when it comes to certain types of vehicles. Want to buy a convertible on the cheap? Buy it between October and mid-November. Better yet, buy a non-running convertible with a bad engine. You may have to wait until spring time to sell it, But if you’re using your money, and only your money, you can invest wisely and yield a long-term return that would even make a loanshark envious.
There are other factors during this time of year that make shill bidding more common. The model changeover is in full swing. So late model vehicles, especially those that are unpopular, will experience their strongest drops in value and a greater risk of investment. A lot of dealers will bid (and not bid) accordingly. Then there is the biggest financial issue of all in the car business. Floorplans.
A dealer will typically have a certain number of days, usually between 60 and 90 days after the initial purchase, when a floorplan company will allow him to try to sell that car without having to pay for it in full. After that time period has come and gone, he will need to pay the initial purchase price of the vehicle along with a substantial fee and other related costs.
Dealers who rely on floorplans, don’t have the luxury of buying cars in October and then paying for the purchase price before the public at large gets their end of year bonuses and tax returns. The floorplan company will want their money on the date due and not a single day later.
So they can’t bid on as many cars; especially those cars that will require plenty of time and money to fix. With fewer dealers bidding against you, there is a better opportunity to buy that steal of the deal.
Which brings us back to the handiwork of that auctioneer. Most of the time when you take a bid that is sideways to you as an auctioneer, your motion is rigid. You need to first look (or hear the ringman), find the person in a crowd that was initially part of your peripheral vision, and then take the bid. Then you go back to the other bidder. This process usually results in a series of short, jerky motions.
This auctioneer simply bounced back and forth with the same steady motion, which let me realize real quick that he had no money at all. As soon as I saw the bump, I walked away and stopped making eye contact with the auctioneer. He couldn’t find any buyers and the vehicle was no-saled.
Later on in the auction, it was brought back in the barn and I got it for $350. I needed the engine in that Prizm for an older Corolla I had with a clean body. The net cost for the engine was nearly free since I could sell the remnants of this vehicle to a friend of mine who has a nearby junkyard. That engine, with all of 88k, is what I needed for the non-running Corolla I bought a few weeks before.
Thanks to paying my “tuition” in times past, I got the car I needed for good money. Which brings me around to your experiences as a buyer. Was there a time when your tuition, or your intuition, lead you to a deal or trap that most other folks wouldn’t realize? Feel free to make it car related, or life related. After all, stories like these can be the cheapest educations around.
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Let me add my appreciation for seeing you here again.
I am curious to know why the issue of "shilling" would be a topic of interest to private citizens who don't have dealer licenses, a dealer business, and access to dealer auctions? Certainly everything in this post is true and factual. Its why buying at auction is not for the naive and/or faint of heart. It is what it is. The auto auction is the heartbeat of the auto business, both new AND used. Its about as pure of a market as exists. Non market participants don't understand used vehicle values. Most think it is simply a matter of looking up the value in a book. One could look at a run of identical models run through auction and be amazed at the difference in the prices they bring depending on where in the auction those vehicles sell, who is representing them, and a variety of other factors. There is a reason they are called "guide books." A guide book in the hands of someone without real auction experience is a dangerous thing.