As mentioned in my previous collector series post: I like buying watches at auction houses.

Yes it is true, I made a few mistakes along the way and at times learned some bitter lessons. However I have been buying at auctions for seven years now and slowly understand how the auction game works.

Allow me to give you 7 strategies that have worked for me to be a successful buyer at auction.

---

• Try to go to auctions or attend the previews: You would be surprised how many collectors buy at auction but are never there personally. There are several advantages of physically being in an auction room. First if you’re at the auction chances are you got to see ALL the watches you want to bid on. I am still amazed how many collectors buy a watch without ever seeing the watch they want to buy. I consider this the biggest single mistake a collector can make.* True-most auction houses have global previews showing the major highlights. But being present at the auction allows you to inspect and see as many watches as possible, not only the highlights. This is the best way to learn.

Another advantage of being at auctions is that you can observe the auction room. This is something you cannot do if you bid by Internet or bid over the phone several time zones away. Being in the auction room allows you to see: who is bidding on a lot. Often big dealers who know what they are doing are bidding on lots.

Or a big collector you respect is raising his paddle. Of course many big collectors act anonymously over the phone (be aware that some room bidders are actually bidding by phone) but the point is being present in an auction room allows you to observe more closely what is going on. This is valuable information. Scared of bidding if your in a room or want nobody else to see? Not a problem. Get someone else to raise the paddle on your behalf. I have done this several times and nobody ever found out I was the real buyer. 

• Have a back up plan: This has been my biggest mistake I have made. There was one time where I did not have a back up plan. What do I mean? I had all my lots figured out and the budget set in my head. I was so sure that I was going to win a lot – that I did not have a plan B – in case I did not win. Having a plan B is crucial in building a collection. A few years ago the following happened to me. I had my sights set on a watch. At the same time of the auction I was selling two watches with which the proceeds I was going to buy my trophy watch. My lot came up and for some reason I suddenly became unsure. There was no enthusiastic bidding in the room for the lot, which made me even more insecure, and for some reason my potential purchase suddenly felt wrong. I did not bid and before you know it – it sold for a bargain price. As soon as the watch sold I was furious that I did not secure the lot. Now my problem was that I had plenty of gun powder (cash) to buy a watch since I was selling two watches at no reserve. And as a collector you want to build a collection, not decrease a collection. Selling two watches and not buying any was not a way to build a collection. In panic I leafed through the catalogue and ended up buying a watch I was not in love with. This move I did was out of pure ‘desperation’. I had failed. I did not calculate with not winning the lot.

In life you have to calculate with the unexpected. Always have a clear plan B!

• Make room for a very aggressive bid: When I buy at auction I think it is fair to say that I win more than I lose. That is not because I have more money than other collectors. Far from it. I am also not more intelligent than other collectors. But why I win has to do with strategy and persistency. When I target a watch – I usually leave plenty of ‘upside room’. Let me give you a real life example of what has happened to me. Lets say a Rolex 1675 GMT Master watch is estimated at $8-12’000. If I have my sights set on this watch and I like it-I calculate 2-3x the high estimate before commission. This is kind of my rule of thumb and strangely enough often represents what mint examples will sell for privately. What many collectors forget is that auction houses set conservative estimates to attract bidders. Many collectors are hesitant to pay more than 2x the high estimate for a watch and this leaves room for clever collectors to secure a lot. In the case of the Rolex 1675 – I was essentially ready to pay nearly $45’000 (including commission). Now most collectors will find this highly irrational – and to a certain degree it is. I am basically prepared in this case to pay up to 6x the low estimate for a watch. Why on earth would I do that? Sometimes if you want to the best of something – you are going to have to pay up! Leaving this much room allows you have a real good cushion.

I like to have a cushion. Because there is nothing worse that wanting a watch badly and then failing to secure it – because you didn’t leave enough potential upside room. 

• Have all your calculations ready: Before every auction I calculate exactly what is the maximum I am willing to pay on a lot including commission. This is related to the point above but goes in more detail. If I want a watch that is a dream and trophy example – I make sure that I have the budget to go far above the high estimate. I will not target a watch I am in love with – if the low and high estimate is within my budget but I cannot afford to go far above the high estimate. My chances are too low to begin with to secure that lot and I find myself just waisting time. I also try and focus on very few watches that I have good chance of winning at. I find that it is well worth my time to buy the best example in the world of a reference that you can afford – rather than trying to buy a dream reference of a watch that is in mediocre condition. The last tip I can offer here is: Set yourself your absolute maximum bid on a watch. Then add 10% on that if need be and have in mind a watch you are even willing to part within in order to help finance your bid. This helps enormously when it is time to bid for a watch and makes you bid aggressively with confidence. I am amazed how many collectors have all the watches figured out they want to bid on – but not their absolute top price they can afford. Have all your calculations and top prices ready in your head and written down.

• Target only a few lots and be opportunistic: What has helped me enormously is that I target very few watches per auction season. Between all the auction houses there are often 2000 lots or more to choose from. Even if you narrow it down – I see many collectors targeting 8-10 watches they are interested in. I think that is too much and causes confusion. I target 3-5 watches at most often focusing on two lots. I go through all possible scenarios then. What if I don’t secure the first lot – does this change my budget for the second lot? I think focus is extremely important at auctions and focusing on too many lots does not work for me. Having said that, I also think it is important to focus but at the same time be opportunistic. If a watch you didn’t think is not interesting at first but catches your eye at a preview and is selling for below value – be open to making a bid. 

• Set yourself a bidding strategy: It has taken me a few years to find out what is right for me in terms of how I want to bid. For example on the 1675 Rolex GMT Master that I bought a few years ago and set a world record, it was a slug fight between an Asian collector and myself. From $19’000 onwards it was a two way fight, with $1’000 increments. I was not going to give up and was going to fight till my high estimate had been reached. I was prepared to go up to $50’000 which was a little more than 3x the high estimate. In the end, the Asian collector gave up at $34’000. I admit it felt good to win and certainly my ego got ahold me at that time (it was one of the first watches I ever bought at auction and secured the lot with an on-line bid). While battling for a watch in increments is fun for the ego – I have found a more effective strategy that works for me. This especially applies to lots with a higher value (so above $100’000).

It is called the Sniping strategy**. It involves the following: When a collector does not want the auction to know that he is interested in a lot right away, he will observe the bidding until it reaches a certain price and the bidding slows down. A certain price by then has been reached which will have excluded most collectors except the two still fighting for the lot. Then, when it seems obvious that one bidder has won the lot and the ‘fair warning’ sign has been signaled by the auctioneer – the third collector swoops in completely unexpectedly.

Most of the time the under bidder is then shocked – there are three bidders now instead of two- and it is too late for him to act and the hammer comes down. It is a powerful and effective strategy and I have won one of my biggest lots in my collecting career employing this strategy. I won the lot with one bid (it was an anonymous bidder bidding on my behalf). It may not be the right strategy for everyone but this strategy definitely works for me.

What is important is that every collector finds a strategy that works for him or her.

• Know your limit: This is the most difficult to master- at least for me personally. I don’t like not winning and I don’t like doing hours of homework, setting a strategy, and then failing to secure a lot I want. But learning to accept defeat and walking away from a watch is just as important as winning. Even though I am an aggressive buyer and set large budgets and leave large margins of safety – sometimes I am just outbid by collectors with bigger budgets. That is life and the harsh reality and you have to deal with it. Just recently I had set a very large budget for a watch I was determined to buy at pretty much all costs. I was waiting to employ the sniper strategy and had my maximum bid figured out. I was confident. Ready to win like I normally do.  My budget was large and my cushion also good. But the bidding went way past my even most optimistic estimate of what I thought the watch was worth. I had not calculated with that and was completely outbid. Even though the final bid was technically within my general budget (not the budget I had set for the watch though) I accepted defeat. It did not feel right to go that high to secure that lot (although in hindsight the price the was fair – once again proving that you cannot pay enough for trophy assets). There have been several auctions now where I have walked away with nothing. That is part of collecting. As I mentioned previously I think the best collectors will have learnt to deal with failure and not winning all the time. Maybe I did not secure that watch (it was a Patek 3448)  but  I tell you – I learned a lot being in that auction room and observing. In the case of the 3448 Patek it re-defined how I should set my budget for this watch going forward. It was a good learning lesson.

You always learn by just being there. Even if your attending an auction and go home without a watch – you win by just being there and gathering experience.

---

Concluding thoughts

Buying at auctions is only one avenue a collector has in order to build up a collection. There are many other avenues (dealers, other collectors, flea markets, GTG, antique shows etc.) and all of them make sense for certain collectors at certain times. In the end what is important is that you buy the seller. Agreed this is an overused phrase and it sounds so simple – but it really is important. 

Buying at auction can be tricky and overwhelming, especially if your a beginner. It can be just as tricky and dangerous for the most experienced of all collectors. There are huge egos at stake, and large emotions. It can be all too easy to get caught up in the auction fever and make mistakes. Here are my seven strategies summed up again: 1) Go to auctions 2) Have a back up plan 3) Make room for an aggressive bid 4) have your calculations ready & be prepared 5) target a few lots but be opportunistic 6) set yourself a bidding strategy 7) know your limit. 

These steps helped me be successful at auction.

For sure, to be successful at auction, requires you do your homework long before the auction begins. This involves looking at the watches and having a strategy in place before the auction. Have a back up plan. Have all your calculations figured out. Set yourself enough room for an aggressive bid. When auction day arrives – then your ready and prepared.

In the end trust your instinct and gut feeling. This has never let me down.

---

(Credit: Main picture Phillipswatches. *Seeing a watch is absolutely critical for two reasons: 1) you only truly assess the condition of a watch by looking at it in person. 2) A watch can look awesome in a catalogue but once you try it on it might not look good on your wrist. There are many times I dreamt of owning a watch, tried it on and realized it was not right for me. **Credit: Nicolas Bybieck of Christies watches to alerting me that this strategy is termed this way)