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Collector Car Valuation Data Sources-The Big Auction Hype

Auctions:  The concept of collector car auctions has always baffled me.   Ask yourself, what value do they add to the car hobby?  Here are some Pros & Cons;  I like them because they are exciting, have bright lights and a lot of excitement. They are also a good pseudo snapshot on what the auction market is on a given item, sort of.   It is important to note that the auction market is a very different market than two people standing next to each other in person negotiating and conducting a transaction. Buying hay or cattle or antiques at an auction, in person, is one thing, but buying something like a vehicle at an auction, site unseen no less, is not for me.  It is a fad that has thankfully cooled for the prudent car collector yet blossoming for the mainstream public.  Note the term prudent I used there. Auctions are marketing events and while I love to see the wheels of commerce turn, as a buyer my preference is to spin my wheels a bit slower.

I like auctions because they are pseudo public transactions where the data can be used as “comparables” to like-kind items. While they are in fact skewed with buying and selling fees, and hype, they can be used as a guide, a VERY loose guide.  I don’t know if the buyer was there in person. Nor do I know how much they inspected the car, or if they even drove the car.   Maybe the sale price resulted from an auction that took place on a Thursday where there were 4 people in the room. The hammer still dropped, the car still sold. Is that a good reflection of where the market is at for that car? 4 people in a room on a Thursday someplace in Ohio? Worse yet somewhere in the desert?

I rarely use online auction results, i.e. eGouge, in valuing a collector car because I believe buyers are holding back a bit on their offer as a means risk mitigation because they are in fact buying something site unseen,  at least I hope they are.

Every car has a story and that story is a huge factor when I buy or sell a car. The story must be shared and understood.   I have to ask when buying or selling a car at an auction, or even worse at an online auction, how much of that story is able to be told and conveyed from seller to buyer? The auction house acts as a facilitator between buyers and sellers. There is immediately an insulator inserted between the buyer and seller, online or in person. This is going to restrict the conveyance of the story. That is a problem for me.

Auctions are a game you need to understand before you play.  I have bought and sold cars at auctions, and because of my experiences, and the reasons shared above, I avoid them for business but enjoy the people watching, the cars, and the social aspect. Again,  good entertainment and eye candy. However, I have seen first hand cars “short-saled” or “quick-hammered” to an auction house’s good buying customer. Often times the bids being announced are fishing bids by the auctioneer.  There is not any real money behind the bids even though the bids appear to advance in steps. This is just one example of the smoke and mirrors that take place.  Know your auctioneer and watch the room. Again much too fast and loose of a game for me to play in. No thank you. Please tell me what value these big auctions add to the collector car hobby?

Valuation- Collector car appraisers use auction results in valuing a car. Insurance companies use auction results in determining a car’s value for loss purposes.   This is really the only sales data out there. I use a combination and try not to use auction results. If I do, I create a separate “auction value”.  If you ever see a seller using “Appraised Value”, know that the only hard core data available to the appraiser was auction results. Again, auction sales are very different than NON-auction sales. Moreover, online auctions and very different than in-person auctions.

Word of mouth transactions can often be like the big fish stories, a bit embellished. Good sources I will trust, others I toss back into the lake.

Using asking prices as a data input to valuation is very dangerous. Most sellers shoot for the moon when listing a car for sale. Moreover most buyers are going to offer less, the sellers know this. The buyer wants to “feel good” about their negotiation tactics, so the seller builds in room to come down. Imagine if the asking price data is the majority or sole data in valuation? The result is you have a very inaccurate price.

As I stated above auctions are fun and exciting. Great eye candy and again good social events. To blend and consider auction results that include seller and buyer fees, hype and pressure, and alcohol, the same as a buyer and seller standing in a driveway or garage conducting a transaction is absurd. I have a horse on both races and know better than to trust auction data as the sole valuation metric.   You should too.  Use your gut.

This meme is spot on…

Our worst fear has come true.  Someone is actually using auction results as data that drives costs that affect Joe consumer car guy each and every day, the premiums we pay for our collector car insurance policies.  Illegal, no of course not. Bad form and insulting to our intelligence? Absolutely. How stupid are we? The collector car insurance companies generate premium revenue based on their own price guide?  Here let me pour water down your back and then tell you it is just raining.  Driving the narrative or even contributing to your product’s narrative in the market place, is as shameless as it is disappointing.

Should price guides include auction data? Well actually yes. By definition a valuation price guide does include auction data. That being said, please be careful when using a published price guide. The price guides I have seen touted on the net today vary greatly. Some use data analysis practices that are not repeatable, meaning the results are not provable.  If you cant prove to me how you arrived at the answer, your answer is worthless. This means it is subjective and not objective. Subjective means it is one person’s or a group’s “opinion”.  I can form my own opinion and so can the rest of us. No need to pay for someone’s opinion.  I would gladly pay for a collection and output of good data, where a formal analysis is or can be done. I have not found this type of data yet. Stay tuned.

-Jake

 

Inflation Budget Buster – How to Mitigate Rising Costs

Its 2023 and the 40 year high rate of inflation has everyone’s household budget blown out of the water. Example: My annual homeowners insurance premium here in Minnesota for a 1,700 square foot rambler with a three car garage is now $2,500 per year, with a $1,000 deductible. My wife and I own ZERO jewelry, nor are there any crazy riders on the policy. Last year the policy was around $1,800, up from $1,100 8 years ago. The one year increase from 2022 to 2023 was over $700, in one year. We have had zero claims. I shop and shop, even as an insurance agent I cannot find a rate lower for the coverage I desire for less than $2,500/year.  How you retired guys are living on fixed income is beyond me. I am guessing everyone’s retirement budget is way off. I say don’t beat yourself up, no one could have planned for the Biden shit show we have in the Whitehouse. No one would ever have thought that an election could be stolen. OK, political stumping is over, but again I will say, elections matter, and stolen ones matter more.

To mitigate the rising costs of inflation my guidance is to subscribe to the theory of ‘If something is monitored it is managed.” Simply put, monitor your spend. Monitor your monthly expenditures, especially any and all subscriptions. While the subscriptions to Netflicks, Amazon, CostCo, and even hidden bank fees are small they all add up. How about a club membership in your annual collector car insurance policy? Those run $70 a year. I dare each of you to write down, yes on a piece of paper, ALL of your monthly expenditures. The auto payments you set up in your bank account and on your credit cards. Look for the insurance plan within your cell phone bill. Maybe it is time to revisit that?  Keep your list of monthly spend out in front of you, on paper. Watch it for a few months and revisit. Monitor it and managed it. You will find areas you can cut back on. If you and your spouse have separate checking accounts, well, maybe it is time to combine, so you can watch what is being spent. Yep, it might be time you need to address some spend they have. You might be surprised what you find.  $35-$40 a month on getting her nails done? $120 for a hair cut and a color? WTH? A box/kit of hair dye is $1.79 at the store. Tell her she looks pretty with grey hair. You might even need to put out. If she puts gas in her own car, she can color her own hair. (Full disclosure, my wife colors her own hair as you can imagine and, we have had joint checking accounts for 32 years, however my wife rarely if ever, puts gas in her own car.) Turn about is fair play , so be ready for your spouse to see your expenditures.

To put this concept into car guy speak, thing about how we tune up a car to run better, and or to get better fuel economy. It is not just one thing. It is a combination of many things. Air filter, fuel filter, plugs, wires, clean injectors, tire pressure, a bug deflector, a bed cover on a pickup. Look for the little things.

Shameless plug. I am an insurance agent specializing in collector car coverage. If you have a policy with Hagerty, one of my preferred carries, I urge you to revisit the Drivers Club Membership fee of $70/year. You can call your own tow truck if you break down, and is the color glossy magazine really worth it? Be sure to revisit my blog called Pet Peeve- Towing Coverage. The in-house agents at Hagerty are great, but they will not be objective on the Driver’s Club option. An independent broker, like myself, will review your policy and uncover ancillary fees and costs, that are not true risk mitigators, i.e. loss due to an accident or a perl. Contact me at jake@octaneroad.com to kick things off.

By the way, If you are saying yes to the Hagerty Driver’s Club membership,  then I am guessing your wife spends more that $120 to get her hair done. You have zero reason to complain about the cost of a cup of coffee at the local cafe.

Onward- Jake

Project Car Coverage

Many hobbyists enjoy creating contrast by restoring collector cars.  I am one who truly enjoys finding, at times extracting, collector cars, and then restoring them. This process often times takes years to start on the project, and then additional years to complete the restoration. While the car is not on the road, needing liability insurance coverage, I still want to ensure my project car is protected should it get stolen from storage, or loosing the car to a total loss peril, i.e. fire, tornado etc.

Thankfully collector car insurance carriers offer project car coverage without the need to buy on-the-road liability. This often times cuts the premium in half. A vehicle cannot cause damage to another person, or property if it is not on the road.

Check out this Pro-Tip here for details on my ’69 Plymouth GTX I keep insurance coverage on even thought it is not on the road.  Before  you know it, a project can get $50-$60k tied up in parts and other costs.

Link to the restoration at www.jakesgeneralstore.com my personal collector car restoration blog. https://jakesgeneralstore.com/69-plymouth-gtx/

To kick things off to get the right coverage on your project cars click and complete the submission form here at Octaneroad.com

Collector Car Insurance

Hot Rods To Restomods

Back in the ‘40s and 50’s the term was Hot Rod. In my opinion that term has lived on and has been synonymous with cars from that era. Over the years we have seen customs, day-two add-ons, low riders and cruisers, Prostreet, and Tuners. Today there are Restomods that get mods, short for modifications. Thankfully there are collector car insurance policies that will cover any of these vehicle types and everything in between.

Here is a nice breakdown;

Hot Rods and Street Rods

Typically pre-1950 American vehicles with large engines, detailed paint jobs and structural modifications.

Resto Mod

Classic vehicles with a modernized drive train and safety features.

Pro-Street

High horsepower vehicles that are tubbed and caged

Custom Cruisers

1960s and newer big-bodied vehicles with 22” rims or 100-spoke wheels, hydraulics or airbag suspensions.

Custom Imports/ Tuners

Generally 1980s and newer Japanese and European cars with performance and/or aesthetic upgrades.

Kick things off with a quote here, that will lead to an application for coverage. – Jake

Additional coverages built for modified vehicles 

Cherished Salvage®

If a covered total loss does happen and you want your vehicle to live on – to rebuild, for parts, or for personal reasons – with Cherished Salvage you can keep it and still receive its Guaranteed Value. No salvage value will be deducted from your final payment if you choose to retain your vehicle*. Cost is 15% of your vehicle’s physical damage premium.

Spare Parts

Your policy through Hagerty automatically includes $750 of comprehensive coverage for spare parts. Additional coverage is available beginning at just $1.

Automotive Tools

Coverage for personal tools used to maintain your modified vehicle including toolboxes, storage cabinets and accessories.

Automobilia

Includes any historic or collectible automobilia items such as posters and signs, gas pumps, model cars, license plates and much more.

 

* Any deductible and/or salvage value if vehicle is retained by you will be subtracted from the total amount paid. Guaranteed Value includes all taxes and fees unless prohibited by state law.

Policies subject to final underwriting. Insurance carrier determines final risk acceptance. Some coverage not available in all states. This is a general description of coverage. All coverage is subject to policy provisions, exclusions and endorsements. Octane Road Insurance Brokerage DBA- Octane Road Jacob Mayne Agent.

 

Pet Peeve: TOWING Coverage

Pet Peeve: TOWING Coverage- I am not a fan of insurance companies offering towing coverage through an insurance policy. Insurance policies are for liability, Comprehensive, and Collision coverage in the event of a covered peril loss.  Your collector car is on the road one one hundredth of the time that your daily driver is, yet you are buying towing insurance coverage? First off, the chances of a break-down in your hot rod are slim and none, given that you rarely drive the car. IF a breakdown should occur, call a buddy, a pal, your wife, or here is a thought, call a damn tow truck yourself!  The towing coverages offered are for hook up and have very limited towing miles included. Most of the time you WILL pay something for the towing. Save the money on the premium.  Negotiate with the tow truck driver yourself since you are paying the bill directly.  The chance ratio is very low here. Stop buying towing coverage through your insurance policies. As your insurance agent, I will do my darnedest to talk you out of it. -Jake

*For a direct insurance quote and application on your collector car visit the insurance information page here. Click the Submission Form

**If you are with Hagerty Insurance, contact me today for a policy review. Being insured properly is more important than receiving a glossy magazine in the mail. I can review your policy inside my Hagerty Agent Dashboard.  Email me directly at jake@octaneroad.com to kick things off.

*** Yes, the picture above IS my tow truck with the Daytona on top. One of the great hunting stories at jakesgeneralstore.com Visit my hobby blog by clicking here

 

NOT STOLEN! Enclosed and open trailers

Enclosed and open trailers- A lot of us have enclosed and or open car trailers. These trailers are not cheap. Please make sure they are listed on your homeowners’ policy. If they are not listed on your homeowner’s policy most policies will not cover them if they are stolen, or damaged by a covered peril. Simply call your agent and ensure the trailer is covered. Of course, most auto policies will cover the trailer when it is hooked up to your tow vehicle, which would include when it is going down the road. When unhooked and stored, please make sure you have coverage through your homeowner’s policy. Just give your agent the VIN.

Also, do your part to protect your trailer from theft. Thieves are more brazen today than ever before. Always use a tongue lock AND a wheel cable lock. These are mere deterrents and thieves can and will cut through both. I take an extra third precaution and park a blocker vehicle in front of the trailer, or a snow plow etc. In the winter I plow a pile of snow in front of it.  Snow is a great theft deterrent.  Yes finally all of that snow we have here in ‘Minnesnowta’ has a good use. In addition, I am a YUGE fan of tracking devices. They are very inexpensive. – Jake

Collector Car Insurance: Why the hype Jake? 

Collector Car Insurance: Why the hype Jake?  Insurance products come and go for consumers. For decades collector car insurance products have evolved in a good way as the collector car hobby has grown. There was a need for better, more specific coverage for collector cars.   At first, most major insurers would not even cover a Ford Model T for liability on the street. Now there are several carriers offering that coverage.  Then the battle ensued over valuation in the event a total loss came into play. The collector car insurance industry responded with Agreed Upon Coverage and Stated Coverage. These two terms are very different, so get educated before you sign up for one or the other. Bottom line is collector car insurance is as much as 40% cheaper than your mainstream auto insurers. For auto enthusiasts, including late model cars, tuners, modern muscle etc., collector car insurance makes owning one, or multiple cars, far less expensive. The policies MUST be structured properly. That is where I can help. Learn more at octaneroad.com

In 2004 I opened my first general insurance agency in Minnesota. At the height of my insurance career, I managed a commercial property & casualty insurance territory serving the franchise automotive industry. In 2020, after becoming frustrated with the collector car insurance market, I launched Octane Road Insurance Brokerage to help my fellow hobbyists understand what’s what.   Octane Road offers collector car insurance in all 50 states! Octane Road Insurance Brokerage understands the collector car insurance marketplace and is appointed with only top tier insurance carriers like JC Taylor, American Collectors and Hagerty.  Talking to an in-house customer service employee in a call center at one of the insurance carriers may not get you the most non-bias advice.  Based on my experience I know very few in-house representatives are experienced automotive hobbyists. I am a life long car guy and an insurance agent.  As your agent I MUST look out for your best interest, which is why I am a broker/agent vs a direct agent. Contact me at to get non bias advice without having to explain why your Mustang II front end under your street rod is more safe than the OEM design. Feel free use the quote form here COLLECTOR CAR INSURANCE . – Jake

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