The excitement that comes with bidding on potential stock at a car auction is something only automotive dealerships will recognize. After all, car auctions give dealers the chance to get their hands on used cars at a fraction of the cost, compared to if bought privately. It’s certainly easy to see why car auctions are such an attractive option for dealers. But buying used cars can be tricky, even for the most experienced automotive professional. Here, we look at what to look for and what to avoid, before making your final bid at auction.
Online or offline car auctions?
We speak a lot about the digital revolution and the impact technology is having on the automotive industry – and car auctions are no exception. Buying used cars virtually via online auctions is proving to be an increasingly popular choice, but what are the pros and cons for dealers?
Online auctions give dealers access to vehicles nationwide
While online auctions give you easy access to used cars across the nation – if not further, as you’re not actually limited to just America, it’s important that you recognize the downsides to bidding for vehicles online.
Most in-person auctions are only for car dealers
The majority of in-person auctions are specifically for registered car dealers, which means they’re not open to the public. In contrast, pretty much anyone and everyone can bid on cars at most online auctions – which means more competition when bidding.
You might fall victim to online scammers
While using the likes of eBay Motors is an attractive option, bidding online does make you more vulnerable to falling victim to online scammers.
How to spot an online vehicle scam at auctions:
- The logbook is missing
- There’s a missing service history
- The Vehicle Identity Number (VIN) doesn’t match the one in the log book. This is a clear indication that the vehicle could be stolen
- The seller won’t share the vehicle registration number with you prior to viewing
- Are there images, and are they clear? Although this sounds obvious, never bid on a vehicle listing that doesn’t have any images. And if it does have images, make sure they are clear. You can always ask the seller for more photos – and if they are reluctant to, you know this is a red flag warning sign
If you are heading to an online car auction site, then follow these top tips to avoid being scammed:
- Never pay for the vehicle outside of the selling website. Online auction sites like eBay will protect you from fraudulent sellers and, if you do unfortunately get scammed, they will be able to refund your money once a dispute has been raised.
- Does the asking price seem too good to be true? If that’s the case, then the chances are, it probably is. Use your knowledge, expertise, and experience to evaluate whether the asking price matches the age, mileage, and condition of the vehicle.
- If you’ve successfully bid on the car and then, when you go to pick it up, the ‘seller’ has no idea who you are. If this is the case, then the chances are, that somebody has fraudulently taken pictures of somebody else’s car, then posted them online, before taking your money.
You can’t get up close to vehicles
One of the biggest downsides to online car auctions is, of course, that you can’t get up close to the vehicles, which means you can’t give them a thorough check-over before you place your bid. At least with in-person auctions, you can see what you’re bidding on.
Before you head to a car auction, you should spend time doing your research. And that means researching the auction and also, researching market trends.
Research the auction house
Research the auction house and make sure it is legit. And be sure to research local auctions too, not just the big-name ones – you’ll often find you can pick up the best bargains at smaller, more local auctions. In some cases, you’ll be able to view the vehicles that will be up for grabs ahead of the auction – if this is the case, be sure to have a browse so you know what’s available to you.
Research the market
Invest time doing your market research as well. What vehicles are popular at the moment? Is there a specific vehicle you’re looking for? Research average costs too, to prevent you from being caught out when bidding.
Know the auction house’s requirements and conditions
Every auction house will have some sort of requirement for you to be able to participate. You will need to show proof of your dealer license before you bid in any dealer-only auctions.
It’s also worth noting that both online and in-person car auctions are likely to come with some sort of fee and/or deposit. Make sure you know this information before you attend an auction, or place a bid – in some online cases, you’ll be asked to pay following a successful bid.
With this in mind, here is your pre-auction checklist:
- Are you taking part in an online or in-person car auction?
- Have you researched the auction house?
- Do you know the requirements and conditions of the auction house?
- Have you researched the market?
- What specific makes and models are you after?
- Do you know if the auction house/site has any fees?
Is the vehicle being sold ‘as-is’?
This is really important when bidding for a vehicle. If a car is being sold ‘as is’ then this means you will be agreeing to buy the vehicle in the state it is in, without any repairs. If you successfully bid on the vehicle, then any repair costs will be your responsibility.
Pay attention to the auction lights: red, yellow, green, and blue. These will indicate what state the vehicle is being sold in:
- Red light: Sold ‘as is’.
- Yellow light: This means the auctioneer is going to make an announcement regarding an issue with the vehicle. If the yellow light is on, be sure that you hear the announcement (or ask the auctioneer about the car’s issues) ahead of bidding.
- Green light: This means that the car has been successfully bid on. If you are the winning bidder, you now have between one and three hours after the sale (depending on the auction’s rules) to inspect and potentially drive the vehicle. You must pay for the vehicle once taking it off-site.
- Blue light: This means that the title is yet to arrive at the auction. So, if you’re the winning bidder, then your check won’t be processed until the auction receives the title and if you don’t get the title within 30 days of the purchase, you can return the vehicle and get all of your money back.
Inspect the vehicle before bidding
While you won’t be able to take the vehicle for a test drive, you should be able to sit in it. In some cases, you’ll be able to start the engine before putting it in gear. It might be worth you taking one of your mechanics, if possible, so they can do a thorough check of the vehicle for you.
A top tip from us is to get to the auction early if you can, so you can spend time inspecting the vehicles before the crowds start to arrive.
Interior spot check
- What does the steering wheel, driver’s seat and inner door handles look and feel like?
- Are there any smells in the car? Think tobacco and other strong odors that might be difficult to get rid of, especially if the interior is cloth.
- Is the driving position comfortable?
- Is there enough leg and headroom?
- Does the car have all of the features that you’re after? Are these features working properly?
Exterior spot check
- Does the car have any dents or scratches that might cost you a lot of money?
- Are there any rust spots? Major rust spots are a big red flag.
- Is the windshield damaged at all? Be aware that some chips and cracks can actually lead to the car failing its safety test, which could result in costing you thousands.
- Look at the paintwork – is it all the same level and color? If not, this could be a sign that the vehicle has had repair work.
- Check the tires. Are they worn out? Are they worn out unevenly? If so, this could indicate that there is an issue with wheel alignment. Are the wheels damaged or have cuts? If this is the case, then they will need to be replaced, which will cost money. Are the tires of a reputable brand? Ideally, they should all be of the same brand.
Remember, it’s as much about checking the car itself, as it is about understanding its former owners. If a car has been treated well and with respect, then this will reflect in its condition.
Common mistakes dealers make when heading to a car auction
Here is a list of common mistakes we think dealers make at car auctions:
- Making an impulsive bid. Remember, the aim of buying at auction is to generate stock for your dealership to sell. Go to an auction with your business hat on.
- Bidding for the sake of bidding. Don’t worry if you don’t find anything – if you can’t find a car adequate for bidding, then walk away.
- Focussing on too many cars. Give your attention to a maximum of five cars. If you spread your focus across too many vehicles, you could miss out on some great bargains.
- Underestimating the value of pre-auction research. Do your homework, it will pay off.
- Not taking into consideration any additional payments and fees. We’re not just talking about auction fees but also money for extra work on the car – be realistic with your budget.
You’ve successfully bid on a car, it’s now time to sell it
So you’ve gone to auction, found a used vehicle, and successfully bid on it. Now, it’s time to sell that vehicle at your dealership. Take your marketing up a gear by using SnapCell. The SnapCell app makes it easier than ever for those in the automotive industry to create professional-looking videos at the simple click of a button. Guaranteed to boost engagement thanks to features including live video – SnapCell Live – and SnapCell Messenger, a communication tool that allows your dealership to instantly connect with customers on a one-to-one basis. Turn potential buyers into successful leads using SnapCell. Schedule your free demonstration today.