Television makes it look way too easy, right? A car rolls up on stage, some people raise their hands as the price of the car goes up, there is lots of yelling, and finally one person wins the bid and is the new owner of the car. People cheer and the auctioneer moves on to the next car.
But snagging a car at an auction involves some real work and effort. There are five essential steps to successfully buy a vehicle at auction.
5 Steps To Win a Car Auction
You don’t just walk up with a pile of cash and start bidding. You have to sign up for the auction at the bidder’s office, sign some paperwork, get a bidder’s card, and show a line of credit or loan approval so the auctioneers know that you have the means to close the deal. They will want to make a copy of your driver’s license and current car insurance. Oh and among all those sheets of paperwork you signed was a notice of how much of a buyer’s premium the auction charges.
A buyer’s premium is the surcharge charged to you, the buyer, when you have the winning bid. Typically that is 10%, so if your winning bid was $25,000 you actually will owe $27,500, plus probably some sales taxes.
Some auctions do not charge a bidder registration fee, while most of the upscale setups will charge a fee. Of course, for that fee they include a fancy catalog, guest passes, a parking pass, and the all-important free drinks punch card.
If you signed up for the auction because you know a specific car is coming up for sale, you still need to do some research. Review what similar cars at recent auctions have been selling for. What mechanical issues does that particular make suffer? Are there common repairs that are required to keep these cars running? If you are buying something esoteric, is there somebody respected locally that can work on them for you?
If you are going to the auction without a specific car in mind, keep an open mind but be prepared to cram in some quick homework so you can have a fair amount of knowledge about the car/s that grab your attention.
When you finally see the car in person take a good look. Take your time and check out all sides and angles. If the owner is around or left a cell phone number, chat them up and ask questions about recent repairs, modifications, or issues that you see.
If you are serious about the car, this might be the one time you are allowed to pop the hood, open the doors, and take a close look. Bring a flashlight with you to see details, like VIN numbers and engine block markings. If the car is outside, you might be able to get the seller to fire it up so you can hear it for yourself.
Read the catalog listing for the car and make sure you know exactly what is said or not said in the disclosure. Is this a salvage title? When exactly was the crate engine installed? Is the odometer reading accurate? Etc…
Ok, you settled down and are interested in a specific car. Now what?
Keep an eye on the auction action and make sure you are in the bidding arena before the car is actually auctioned. Settle into a seat and watch the action to see how quickly the auctioneer is rushing the cars through. Watch the pace of the auction and feel the energy level. Avoid the alcohol for now and celebrate after you win the car.
Before you bid, know what your limit is and stick to it. If bidding stalls out somebody is sure to goad you into “just one more bid” and “it’s only $10,000 more.” But, if you let your emotions get away from you the final bid amount can suddenly get out of hand. Trust me, there is always going to be another car. If you overbid and win, you will always know and resent that you paid more than you wanted to get the car.
Listen carefully to what the auctioneer says as the car rolls up onto the block. Make sure you are bidding on the right car. Don’t assume that you are the current high bidder. Have the floor man, who is there acknowledging your bid, keep you aware of who has the bid and what the current bid is.
Just because the auctioneer suggests raising the bid in $10,000 increments doesn’t mean you need to go along with that suggestion. Instead, you could cut in half the suggested raise in price to only a $5,000 bump or even offer a $2,000 increase in the bid. There are lots of strategies here, and the winning one depends on the vehicle, your budget, and your competition.
Congratulations! The auctioneer hammered the car sold with your winning bid and everybody is shaking your hand. An auction worker will rush over to you and have you sign some paperwork, note your bidding number, and give you a receipt. But you are not done yet, partner.
You’ll have to walk over to the bidder’s office and provide the funds for the purchase. There you can also make arrangements with transport companies to haul your new-found treasure to your home or get the keys to drive it home. Don’t forget you’ll need to make arrangements to have a temporary license tag to drive it on the street. Check with your car insurance company, as most will automatically cover a new purchase for up to 15-30 days after the purchase. So you will have some time to shop around for a permanent insurance policy.
Although you may think the car is yours, most auction companies reserve the right to take up to thirty days to provide you a title to the car. Nothing is going to happen until they know for sure that the money has been moved into their hands and wire transfers can take a few days to be valid. If you paid with cash, things will move a bit faster.
Car Auction Success
By following these five easy steps you can navigate the auction madness and end up with a winning bid. Heck, it was so easy you might end up leaving the auction with a few cars. Is it possible to own too many cars? We don’t think so.