Planet Money - Auction fever (Classic)

Episode Date: November 12, 2021

Today, we go on a Planet Money roadtrip to learn the secrets of the auction world. We find some amazing bargains, some shady strategies and a giant big digger. | Subscribe to our weekly newsletter here. Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money from NPR. Hi, Jess Jang here. Quick heads up, you're about to listen to a rerun from 2016. It's one of my favorites. In the episode, Keith Romer and I go out into the field. Here's the show. The other weekend, we got up super early in the morning and we took a little Planet Money field trip.

We drove out to Long Island at these two parking lots in the middle of nowhere to listen to this guy. That's Jack Lyon. This is his auction. And it's this amazing scene with rows and rows of forklifts and tractors and just giant machines. It's not Sotheby's. People here aren't dressed in suits looking through an art catalog. No one's going to stick a paddle up in the air when they want to bid. Here, if you want to buy something, you literally just hop right into it and try it out. The key is just sitting right there in the ignition.

You want to drive a tractor? You drive a tractor. Wait, is there like a safety switch? I don't want to press on the gas by accident. I can't believe I can't start this. Do I, oh, it says clutch. Depress clutch. Yay! Hello and welcome to Planet Money. I'm Jess Jay. And I'm Keith Romer.

Today on the show, the secrets of the auction world. Maybe you've bought something at an auction before, like at a charity auction or some junk you wanted on eBay. But no offense, dear listener, that is amateur stuff. Today we go behind the scenes of a big auction where the stakes are a lot higher. At their best, auctions are and hundreds of machines for sale. But we're going to tell you the story of just one item. One giant item. A huge piece of construction equipment.

What are we looking at right here? It's a 345CL excavator cat. Now imagine I didn't know what that meant. What is this? To the layman. What does it do? It's just a big digging machine. It is a huge digging machine.

It's 45 metric tons. Instead of wheels that are tank tracks so it can go pretty much wherever it wants. Or crush anything it wants. It's got a big yellow arm grabby thing with a scoop at the end. I camp out in front of it to figure out who's going to buy this thing. Which of these big dudes in sweatshirts with the name of their construction company on the back, which one of these guys is going to bid? This is where I meet Dave Camara.

He owns some quarries up in Vermont. He got up super early. Drove five hours down from Vermont to get here. Thinking about buying this thing? I don't know. I'd like to, but that's what we came down for. We here means Dave and his two kids. The older one is a teenager who is also named Dave. Little Dave is wearing a camouflage jacket.

The two Daves together are trying to figure out what they think a good price for the digger is. But Dave's other son, he's already made up his mind. What are you doing the bidding? What's your name, sir? Grayson. Grayson? How old are you? Eight. How much do you think your dad should pay for this machine? $50,000.

$50,000? He's looking for a bargain. The digger is the only thing the Camaras want. It is the whole reason they drove all that way from Vermont. But they are not the only ones who want it. Little Grayson is going up against someone who is much older, someone who's gone through a lot of auctions. His name? Don Burns. Don is 81 years old.

He's a tall guy in a black work jacket. He owns a stone quarry down in Pennsylvania, which he says is a fun job. You get to blow huge chunks of rock up with explosives. Everybody calls me Boom Boom because I used to push the plunger. Don has this thing where he likes to play up how old and feeble he is. I have hard hearing. I don't see good. Okay.

I don't feel good, and I don't look good. Don has hearing aids. He walks with a cane. But Don Burns, he is a businessman. If he can get the big digger for the right price, he is going to grab it. And that right price will depend on what kind of condition this digger is in. And to figure that out, people kick the tires and test it out. This is the first way you can get tricked at an auction. Anyone who wants to can hop on any machine and try it out, and this opens the doors

to all kinds of shenanigans. I talked to John Fiorini, who's looking at a wood chipper. This seems to have a problem. Oh, yes. Why won't it start? I don't know. This is why people test out machines. Because maybe this one is a dud. Or maybe, maybe, somebody wanted the machine for themselves, accidentally left it on all day. What happens is with the dogs, sometimes they'll come inspected the day before, even the day before that, and they'll leave the key on or they'll hit a cap or something like that so it won't start. Oh, that's a ploy.

Oh, yeah, definitely. That's why you want to be able to inspect them early. But leaving it on to make the battery dead, that's shady. Yeah, it definitely is. If all the other buyers think that this machine is busted, the person who drained the battery or did whatever could swoop in and get it at a huge discount. People came and checked out our big digging machine, too. This one guy got on it, he smashed the bucket into the ground. Boom, boom, boom, boom, boom. So at the very least, everybody knows our digger works. But there's still so much that can go wrong for you at an auction. Because when

that big digger comes up for auction, the whole thing is going to go down in a minute or two minutes tops. Here, listen to this. They're selling a front loader. The numbers are just going by so fast. And the speed is not an accident. The bidders we talked to said before the auction starts, they come up with this number in their head for their maximum bid and they promise themselves they will not go over that number. But it's hard. Your perception of what that right price is going to be can change. As the bidding goes up, you start to think, maybe I have the price wrong. Maybe I should bid a little bit more. Maybe it's worth more than I think. There's also an emotional thing that kicks in. It's not even about buying the thing anymore. It starts to be just about winning.

You know, I want to win, I want to win, I want to win, I want to win. And then I've caught auction fever. That's a real thing. It's in the literature. And we saw it for the auction that you just heard for the front loader. The high bidder is this guy David Austin. Our producer Nick Fountain talked with him and his wife Kathy. What'd you just buy? A divorce.

I bought that 908M. What's your bidding strategy? Bidding strategy? I come up with a limit and that's where I try to stay at. And I went 2005 on it hard at my limit. Wait, are you regretting this already? Yeah, it's a lot of money. So if the speed doesn't trip you up, if you keep clear of auction fever, the people at the auction have another trick waiting for you. His name is Mike. Mike, I got two guys. Mike, why are you talking about getting drunk?

No, no, no, Mike, no, no, no. I got a tie bid. But you snooze, you lose. Give Mike some room. Mike's been bashed to move him around. Here we go. $1,000. Here we go. $1,000. Here we go. $1,000.

$9. Mike's title is ring man. His official job is to spot people bidding. But he's also doing something else. He is a big, big guy. And he is out working the crowd. He's squeezing people around the neck. He's whispering in their ear.

He's basically saying, come on, buddy, give me one more bid. One more bid. We talked to one bidder, Simon Riera. He'd just gotten the Mike treatment. So I saw Mike. He was up on you. He was grabbing you by the strings of your hoodie. He wasn't trying to get in your head? No, not really.

I don't think so. He's just a cool guy, that's all. This cool guy who wanted Simon to bid more. Finally, it's time to sell the big digger. All 45 metric tons of it. That's after the break. There's a crowd of men in work jackets and construction sweatshirts. They're already standing around this thing. Leaning against a big bucket.

Looking up at this giant, giant machine. At an auction like this, the machines they are selling are so big. It's not like you bring them across a stage and people bid from the audience. Here, the auctioneer and the people bidding on it, they have to go literally to the machine. Pull up, Tony. The auctioneer Jack is in this weird contraption. It's basically a portable office stuck in the bed of a pickup truck. On the side of the office in blue letters are the words Jack in the box,

because the auctioneer's name is Jack. And he's in a box. Here's the start. The digger is one of the last things at the auction. And it's not an accident that there's this long wait before people get to bid on it. The auctioneer, Jack, he told me that's one of his tricks. Now comes time for the equipment they really want. They want to go. They've been there two and a half hours. They're getting itchy, so they want to buy and go home. Around the digger, there's the old guy, Don, there's the family from Vermont with the two kids,

the white-haired auctioneer Jack up in his jack-in-the-box. He starts to work the crowd. Mike, would you do me a big favor? The operator in the machine, I need his first name. The little kid Grayson has climbed up into the cab of the digger. Grayson? Like he already owns the thing. How old are you, young man?

Eight years old? You go to school? Like school? You're like me. I used to like gym. The real starting price for this big digger is going to be $50,000. But that's not the first number to come out of Jack's mouth. He wants everyone to think big, so he says a huge number.

Everyone knows that $125,000 is crazy. Even Jack knows that. This is called the fish price. It's just there to set everyone's expectations. There's a technical term for this. It's called anchoring, because it anchors you to this big number. It's a technical term for this. It's called anchoring because it anchors you to this big number. It's like putting a physical price tag on the thing. You couldn't forget it even if you wanted to. Jack quickly backs off of this big number and comes down to the real starting price. You see how it works? It feels like we just saved $75,000. And the bidding just takes off. It's so hard to keep track of who's even bidding. Somewhere in this crowd is the guy with the family, Dave, with his kids who've been waiting all day.

The 81-year-old guy, Don Burns, he gives a nod. He's in on the bidding. 80,000. 80,000. 80,000. 80,000. Two and a half. 82 and a half. 82 and a half. 82 and a half. 82. Mr. Burns. At this point, Don Burns has the high bid. And the auctioneer, Jack, does this really weird thing. He stops the bidding entirely.

Mike, do you want tell you a little story. He starts to tell a story. When a construction auction business is 1985, and when the first gentleman ever came to our auction on Bull Road was Mr. Don Burns. Here's what's going on. This is Jack's final trip. Because at this moment, Don has the highest bid.

And when you have the highest bid, you feel like you own this thing. You feel like this is yours. And Jack wants that feeling to really settle in. If Jack can stretch things out, or if his ringman Mike can go scare up a higher bid from somebody else, Don will feel like his digger was taken away from him. Like, hey, that was mine, and you just stole it from me. And if it works, Don will go nuts. He'll pay anything to get the digger back. Jack stretches it out for as long as he can. But today, no one's falling for it.

You know what, Mike? Sell the machine! Mr. Burns, Pennsylvania, number is. So you bought it. Did we buy it? I really didn't need it. I got three of them. So why did you buy it? Because it was there.

I'm that way. You know, just like if I see a good-looking lady, you ain't recording me, are you? Yes, I am. Don doesn't care. He just keeps talking. If we learned one thing, it's that Don Burns really likes talking. At this point, I go over to Dave, the guy from Vermont whose son Grayson really wanted the digger. Grayson isn't entirely sure what just happened.

He is still telling his dad to bid. Bid! Huh? Bid! On what? $15,000. They already sold it? What? Who? One of the guys we were talking to earlier? He bought it? $15,000. They already sold it? What? Who?

One of the guys we were talking to earlier. He bought it for $82,000. How much are we going to bid on it, remember? It's $50,000. Hold on. Grayson is not the only one who left that auction wishing that they had bought something that they didn't get a chance to buy. You have to bring this up.

Just the circular saw. It't get a chance to buy. You have to bring this up. Jess, the circular saw. It was just a really good deal. It was a $25 circular saw. Jess Jang, you have auction fever. No, it's just a really cheap, really good saw. Auction fever. Wasn't there anything you wanted? I could just get hurt around tools.

If you have questions, comments, or want to sell me a circular saw, email us planetmoney at npr.org or reach out on TikTok, Twitter, Instagram, Facebook, or generally at Planet Money. The original version of this episode was produced by Nick Fountain. Today's rebroadcast was produced by Corey Bridges. Alex Goldmark is our supervising producer. And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.