Buying Cars at Auction: Your Guide to Buying Your Car OnlineJune 30, 2020
When it comes to getting a fantastic deal on a set of wheels, nothing beats the auction block. But how do you ensure that you do get a genuinely great deal? You’ve got to go in prepared when buying cars at auction.
While many experts agree that it is possible to get a car for a steal, keep in mind some caveats. For starters, auctions move vehicles that fail to sell elsewhere for many different reasons.
Many pros also attend auctions with plenty of tricks up their sleeves. What’s more, you won’t enjoy commonplace luxuries like the chance to test-drive the car in advance. You won’t even have much time to inspect it.
And once bidding starts, it goes quickly. Under these circumstances, are attending car auctions even worth it? If you avoid the most common mistakes, you can look forward to saving thousands of dollars.
Here’s how to buy cars at auction.
Let’s start with the things you must avoid when buying a car at an auction. While this first one sounds obvious, it can prove easier said than done.
Why? Because of “red mist” syndrome. This phenomenon occurs when you get so excited about the prospect of a vehicle that you leave all reason behind.
A variety of factors can spur you forward when it’s time to leave good enough alone. For example, if the auctioneer’s staring straight at you and waiting, not caving to peer pressure may prove incredibly difficult.
Especially if you’ve made the mistake of falling in love with a specific vehicle.
We’ll return to this in a little bit and provide you with some tips on avoiding auction overexcitement. Nonetheless, you need to start thinking about these possibilities now.
So, what do you do if everybody’s staring at you and your willpower is wavering? Turn your back to the auctioneer. They’ll get the picture, and you’ll save yourself who knows how much money.
A deal’s only as good as the soundness of the vehicle. So, you’ve got to do your research in advance. Bear in mind, though, that a clean car history doesn’t mean you’re free and clear of the “lemon” specter.
You’d be surprised what some reports miss, including flood damage.
What’s more, it’s ultimately up to you to make sure potential purchases are free from body damage and mechanical defects.
What should you do? Dig into some automotive forums online to familiarize yourself with the most significant issues that different makes and models experience.
Use this information to create a list of items you need to check out thoroughly.
Watch Out for Shills
It might surprise you to learn that dealers sometimes bid on their vehicles to ramp up the final selling price. Known as shills, they can put a severe dent in your pocketbook and destroy your dream of getting a deal.
How do you know if you’re dealing with such a character? Before the auction, pay attention to how each bidder interacts with the auction team. If they seem exceptionally friendly, you’ll might want to think twice about how high you bid.
Rookie Bidding Issues
When it comes to large auctions, much happens simultaneously. That’s why you must avoid the rookie move of poor signaling. Otherwise, you stand to lose the car you’ve been waiting all afternoon to see on the block.
How do you avoid getting overlooked when it matters most? Set the right tone immediately by making sure you catch the auctioneer’s eye. That way, they’ll know to look your direction once the bidding begins.
The swirl of bidding happens quickly, and you can lose a car in a matter of seconds if you don’t make it clear to the auctioneer from the get-go that you’re a contender.
Now that we’ve taken a look at the major pitfalls of the auction buying process, let’s go over some best practices.
Know What You’re Getting Into
While you might be inclined to start with virtual auctions like those on eBay, most experts agree that the real deals are to be found at a live auction. Why? Because vehicles often sell for trade-in prices.
That can equate to nearly half the sticker price for some used vehicles. But how do you go about finding the best auction for deals?
Start by looking for “public” or “open” auctions where you aren’t required to have a dealer’s license. There are also specialty automobile auctions. These deal in public service vehicles like those owned by government employees and police departments.
Public auctions don’t require entrance fees, which is a bonus. But be prepared to pay a fee should you decide to bid on a vehicle. This fee is usually around $50.
As for how you’ll need to pay for your vehicle? Cashier’s checks or cash usually do the trick, and you’ve got 24 hours to make full payment. That said, you’ll need to have a deposit ready on-site.
While you might be tempted to pay with a credit card, which some auctions allow, get ready for steep service charges. Many charge upwards of 5 percent.
Watch and Learn
Before you start bidding on cars, attend a few auctions to get a solid feel for the process. That way, you can get into the rhythm of how fast automobiles move across the platform where they get sold.
At the largest auctions, be prepared for multiple lanes of cars that remain in constant motion.
Besides understanding the way that an auction unfolds, pay attention to how customers bid. Learn the auctioneer’s style so that you know what to look for in terms of their delivery and cadence.
Don’t Go It Alone
While it’s fine to attend practice auctions on your own, take a friend on the big day. Preferably this friend should have some experience with car mechanics and assessing automobiles for purchase.
Your friend should also be prepared to help you go over the checklist of issues you’ve assembled for each make and model. After all, if you get to inspect the cars at all, don’t expect to have very much time.
This auction “wingman” will ensure you keep a cool head and have a readily available second opinion before bidding. As a result, they should represent a calming influence that won’t get caught in all of the bidding and competition.
Understand Your Risk Level Before Going In
You also need to do your research online. At the auction’s website, verify what kind of guarantee comes with each vehicle. For example, many auction companies rely on what they call a “stoplight system.”
This “stoplight system” applies to both live and online auctions. As the name suggests, it’s based on the color of stoplights and is used to rank the desirability of each vehicle.
A “green light” means that the vehicle is free from any known defects. As a result, if undiscovered mechanical issues rear their ugly head, then arbitration is possible.
A yellow light means the car has some acknowledged issues, and so arbitration is not an option. Finally, “red light” cars are sold “as is.” Period.
If the car engine decides to explode once you put the key in the ignition, you’re out of luck when it comes to any responsibility on the part of the auction company or previous owner. Approach these vehicles with the most care since they represent unknown quantities.
Avoid “Love at First Sight”
While it can be tempting to fall in love with what appears to be your “dream car,” don’t. Countless variables will impact which car you ultimately win.
These include everything from the car’s actual condition upon inspection to what others bid.
It’s far too easy to get caught up in the excitement of the moment. With auction cars, however, this can prove financially disastrous.
You’ve got to maintain your perspective and keep reminding yourself that you’re here for a deal. Not one ride and one ride alone.
Your best plan of action to avoid one-car temptation? Besides asking your “wingman” to keep you in check, go over the “run list” carefully. You can find it online, and it’ll help you get in the mindset of identifying a variety of cars that could suit your needs if the price is right.
Just avoid getting too excited over any particular vehicle. After all, you’ll have to pay to have your car shipped, so you need to budget for those expenses.
Decide Your Top Spend in Advance
Another way to avoid overpaying at the auction block is to calculate the maximum amount you’re willing to bid carefully. How should you determine these figures? By doing your research in advance.
That means getting online to check out car pricing guides. You’re likely most familiar with Kelley Blue Book. Don’t stop there, though.
Edmunds proves another great resource worth checking out. Once you’ve got trade-in values for vehicles you’re interested in, memorize these numbers. That way, you can agilely make bidding decisions on the big day.
Make Sure Each Car Checks Out
The tips above all relate to advanced preparation before auction day. But what should you do once you get there? If possible, inspect each car that interests you.
You may even have the chance to sit in the vehicle. Bear in mind a test-drive is almost always out of the question. As with the “stoplight system,” each car will likely come with an online rating on a scale of one to five.
A five represents near-perfect condition. Three means the unit shows signs of normal wear and tear.
If the company doesn’t rank cars, they may include a detailed list of mechanical malfunctions and other imperfections you need to know about.
That said, don’t stop there. You should also get a vehicle inspection report for each automobile that tickles your fancy. That way, you’ll be less likely to receive a nasty surprise.
Before You Buy a Car from an Online Auction
The tips we’ve discussed above generally apply to the online car auction process, except for live car inspection. So, you’ll still bear the brunt of researching each vehicle in terms of value and condition.
Because the virtual auction process proves new to most customers, you’ll find many great online resources to help you navigate every step of the process.
A good auction site should provide tips for searching for vehicles as well as the process of bidding on and winning them. For example, get answers to the following questions:
- How do I buy a car from IAAI?
- How do you buy a car from Copart?
- How do you buy a car from ADESA auction?
You’ll also want to rely on the expertise of the auction specialist. Here’s an example job description detailing the varied activities and areas of expertise auction specialists have.
As you can see, these individuals come with an invaluable amount of information on dealer auctions. Make sure you take advantage of their assistance. For example, they can draw your attention to optimal vehicles based on your specific budget and needs.
Caveats of an Online Auction
Last but not least, you’ll want to make sure your funds are readily available once the bidding begins. Auction cars don’t come with financing options, so you’ll need to put down an immediate deposit.
Strictly speaking, you also won’t want to exceed five business days to make payment. If you do, not only will you lose the car but also your deposit.
Of course, check each auction company’s specific requirements as the number of days for transaction completion may vary.
Buying Cars at Auction
There’s a compelling lure to buying cars at auction. Some individuals walk away with exceptional deals, and there’s always a thrill when you get something of value for much less than it’s worth.
That said, you’ve got to know your stuff before you start bidding. Whether it’s online or at a bricks-and-mortar event. Fortunately, the tips above will put you in a much better position to walk away with a great ride.
So, do some research, find a wingman, and get ready for an exhilarating experience. Then, get a vehicle shipping quote in seconds based on real-time market-based pricing.