Guide: How to Buy A Car at Auction? Part 1
Ever wonder about how Auctions work?...Where do the cars come from? Are they good running cars? Do I need to be a dealer to buy a car at auction and of course...What's the final price? You are not alone. For most of us auctions have seemed like some mystical island, like in the TV show LOST...far far away, yet there could be one right down the road from you in your State. You may have heard of friends of friends who have gotten amazing deals at auctions or who know a dealer that will get the car for you. Regardless, the questions remain. How do I get in a Auction and once in what do I do?
Before I started working at New England Largest Public Car Auction I knew as much about car auctions as a Tourist for the first time in New York City knows to get around the Subway! Two management postions later and a few years since I now understand an enormous amount of information that I would like to share with you about how car auctions really work. The reason (aside from wanting people to read this blog) is because I feel there is a huge void and lack of information that the public should be able to obtain and I feel that you have the right to know exactly how a car auction works.
Now I am not speaking for every auction out there, but I know enough to help give you some key tips that will have you well on your way to saving thousands on your next new car without the assitance of anybody.
The Questions you should be asking?
Emails are ok, but nothing tells you more about an auction than a simple phone call.
1.Can I go?
At the get go you should ask if you can attend the auction in person or online and if so how much does it will cost. It should be free or a couple bucks no matter what! Many auctions now allow online bidding which is super cool and many sites like proxibid.com are fantatsic to browse and see what options out there.
2.Whats your Auction Fee?
Then you should ask about Auction Fees. All auctions have fees it's how they are paid. And it's not just the admission fee it's called a buyers fee. Usually it's helpful if you ask what is the range of auction fees you may have to pay on a car from highest to lowest. For example, an office rep should be stating that fees range from $100 for cars that are under $500 and go up to $600 for cars $15,000 and up. Allot of people think Auctions fees are on a percentage based sliding scale, not always the case.
Now that you have asked these questions you may already know if the auction is going to be a good fit based on how open they are with sharing you this basic information that you have a right to know as a consumer.
3.Do you allow Test Drives? What a crucial question. You must absolutely not be afraid to ask about there observing times and if you can have the keys to start up the cars, but most important test drive the cars before you bid on the car. Who in there right mind would buy something as expensive as a used car without driving it first!
4.Where Can I read you Registration?
READ READ READ! You need to read the registration.
The Regsitration is very easy. It only a page or two, but extreamly important to read every detail on your own. Take five minutes and sve yourself a potential nightmare! This is where you sign on the dotted line you agree to the Auction fees the Green light Red Light system and or any other policy the auction wants. All Auctions are unique and have different rules for example http://www.interstateautoauction.com/buyingatauction/faq.htm This is your education time and don't take it lightly.
5. The Prices
This can be very hard and very easy at the same time. Prices at auctions should be wholesale prices not dirt cheap prices. You do get what you paid for. Get over the dream of a 2005 BMW that is in good condition for $2,500 it's not going to happen and if it did your going to pay for it eventually in spades. The wholesale can be best defined as a price that is less than what you would find on a car dealer lot not matter how cheap the lot seems, the same car at an auction should go for less. I usually go by the Kelly Blue Book Price and take 50% off the retail or I use the NADA book that is very accurate as well.
If you ask a staff member of the Auction keep in mind they do not own the car. So you may get a ball park as to what the car could go for at the auction. Remember nearly all auctions do not actually own the cars. They just run the cars through the auction and have an auctioneer auction them off.
My rule of thumb is go on craigslist, autotrader, or cars.com verify what a similar car is going for and if you can save a couple thousand dollars or more you know the price you are paying is less than what you would pay a dealership or a private seller. At that point your risk is in what needs to be fixed. The funny part about it is if you purchase the car from a dealership or a private seller your still in the same boat. You need to say to yourself this car is not perfect it's old and no other cars this old would be perfect either so what am I going to need to get it to pass inspection. Will it need new brakes, new tires, really anything now a days can cost $200-$800 so you should take that into account and expect to at least put in some more money after you buy it.
Next up we will go over reaserching an auctions and how to participate in them
