If you love getting a good bargain on cars by avoiding dealership fees, vehicle auctions are the place to be. You get not only to purchase cars at cheaper prices but also an advanced look at some of the most unique models, enabling you to hit two birds with one stone. What’s more, auction processes are often so fast that you can drive away with your new car right after the post-auction inspection. If you play your cards right and get a car at a reasonable price, you may even sell it in the open market for a good profit. However, for you to reap any of these and many more benefits, you need to understand how this whole process works. The guide will contain all you need to prepare for forthcoming auctions.
How Do Vehicle Auctions Work
One thing you should know about auctions is that they are highly competitive, which makes them fun environments, but it also means that you must walk in armed with enough knowledge. Part of this homework lies in knowing how the whole process works so that you can make your move at the right time.
Here is how it all plays out:
Stage 1: Research and Scheduling
Most people know what kinds of cars they want to buy and will look at auctions that serve those specific markets. For example, if you are looking for a Mercedes in any class, your eye will be on the auctions with such cars. Here are some of the factors to consider as you look for possible auctions:
- Location. Is the auction near you? Some auctions are physical, others are online, while others use a hybrid approach. Convenience matters, especially if you are after a common car model and are not after a collectible.
- Car models. Look at the car models, the years of manufacture, their conditions, and any other important factors.
It’s best to filter auctions based on location and car models so that you have a handful of options – it makes it easier to attend the events and find the car that matches your needs. However, if you are getting into the auction business to source cars for your dealership, the more auctions you go to, the better your chances of offering variety to your clients.
Stage 2: Payment and Registration
While some auctions have an open-door policy, most limit the number of bidders by imposing preliminary registration processes as follows:
- Identification: You might need to verify your identity by providing a valid government document such as a driver’s license, passport, etc.
- Payment: Some auctions will charge you an entry or registration fee. Online auctions often have fees ranging from $20 to $100, while physical auctions range from $50 to $200. Other auctions require you to pay a refundable deposit, which you get back at the end of the auction, or whose amount goes into paying for the car you bid on at the event.
Once you have selected the auctions you wish to attend, it’s important to ask what registration requirements apply to you and proceed with the registration. Only then can you get a bidder’s pass and number, which will be essential in the auction.
Stage 3: Pre-Auction Activities
Knowledge and preparation are some of the most important aspects of any auction, and using them to your advantage gives you an advantage. As such, capitalize on the following;
- The pre-auction inspection. While not all auctions allow you to do this, inspecting the cars before the auction enables you to determine which are worth bidding on based on the potential value they will give you.
- The rules review. All auctions have specific rules on how to make your bid, what payment options are available, any transaction fees you may incur, etc. Learn as much as you can to avoid missing out on opportunities.
It’s best to inquire about these things before the auction day as some activities, like the inspection, may not be available on D-day.
Stage 4: The Auction
Try to arrive at the auction early to get a good spot and review the rules again. Here is how the day goes down:
- Setting the stage. An auctioneer will lead the bidding process, focusing on one vehicle at a time. Each time they present a car, they will give information about its model, year of manufacture, history, and other factors pertinent to the bidders. They will then state the lowest bidding amount, e.g., “Bids start at $10,000.”
- The bidding process. Following the announcement, bidders will then have the chance to make their moves per the rules, which can be showing their bidding cards, raising their hands, or signaling the auctioneer. For example, the auctioneer may prompt bids by saying things like, “Do I hear $15,000?” Then, anyone willing to offer that amount will signal their willingness. You can also voice your bid, e.g., “$20,000.” This back-and-forth will continue for a while – it is thus important to be alert and ensure you are aligning your bids with the value of the car and your actual budget.
- Closing the bids. The bids will continue streaming in until people reach a cap when nobody else is willing to outbid the highest bidder. The auctioneer will then close the bids. For example, if the last bidder chose $80,000 and has no competitor, the auctioneer will say, “$80,000 going once, $80,000 going twice, sold!”
Note: Some cars have a reserve price, aka the lowest amount the seller is willing to accept. As such, even if someone has the highest bid, they will not get the car if they do not meet this threshold.
Stage 5: Post-Auction Activities
If you win the bid, you will have to make the payment per the rules. Now is also the time to inspect the vehicle to ensure it matches the listing. You can then complete the transfer paperwork to have the vehicle registered in your name before arranging to have it delivered to you. Some auctioneers will offer the transport for free, while others will do it at a fee – you can even drive off with the car if you have completed the paperwork.
And just like that, you will have bought a car in an auction!
