#public auto auctions
PUBLIC AUTO AUCTION TIP 1- Understanding the basics .
Before buying a car at a public auto auction, it is useful to know about the public auto auction in a nutshell. A public auto auction is actually a business. The auction company is in the business of selling cars for people. They make their money by charging the seller a fee to sell the car for them and also charging the buyer a fee after making the bid.
Although this is similar to consignment, it technically is not consignment. Why? The main difference between true consignment and a public auto auction is that with true consignment, the seller sets his price and therefore knows how much money he will be getting. On the other hand, people who sell cars through public auto auctions cannot set their prices.
Where do cars come from? Despite the misleading ads, most cars that end up in public auto auctions are NOT government seizures and repos. Instead, most cars come from charitable organizations that are selling cars that were donated to them, and from businesses that need to get rid of company cars that barely run. Many cars also come from governmental agencies such as the welfare department or police department who want to sell the cars at public auto auctions because they barely run. Please note that these cars are NOT government seizures; they are cars that government agencies use for transportation, just like any business that uses company cars!
After the sellers register cars through the public auto auction, the auction conducts an auction and sells the cars to bidders. The bidders are YOU! When you pay for your car, the auction takes an auction fee from you (usually 10-15% of bidding price) and also takes a percentage from the seller. Then the auction sends the seller a check!
One of the biggest mistakes you can make when going to a public auto auction is to not know exactly what cars are worth. Why? Obviously, by not knowing how much a certain car is worth, you will be more likely to bid too high. Ironically, many people who bid at public auto auctions bid higher than what they could have bought a car for in classified bargain ads.
Before even thinking about bidding on a car at a public auto auction, do your homework. First, know what a car is worth wholesale. You can do this by buying a Kelly Blue Book, or even accessing various online sources such as the Kelly Blue Book Trade-In values homepage or Edmunds . By knowing what a certain car sells for at wholesale, you will know not to bid too much above that price.
Don’t forget that whatever wholesale figure you come up with doesn’t factor in the mileage! You might be thinking a certain bid is a good price at an auction without taking into consideration the high mileage, which is a guaranteed way to get burned.
Also know what a certain car sells for at retail. You can get the retail price from Kelly Blue Book, but Kelly Blue Book retail prices are intentionally over-inflated in favor of dealers who are the main subscribers to Blue Books! Therefore, the best thing to do is to actually buy a bargain classified, such as an Auto Trader and bring it to the public auction with you. Look at similar cars and come up with an average figure in your head as to what a certain car can sell for.
By knowing the wholesale price and the retail price, you will be armed with the knowledge which will hopefully prevent you from bidding too high at the auction and getting burned on a lemon.
In case you’re wondering, YES you have to do such research on ALL the cars you will potentially be bidding on. That means if you did your research on Honda Civics, but you didn’t do research on Nissan Sentras, you deserve to get burned if you get excited and bid on a Nissan Sentra at the auto auction.
PUBLIC AUTO AUCTION TIP 3- Know a little about cars .
It always humors me when people bid on cars at public auto auctions without having even looked under the hood! There is absolutely no excuse for bidding on a car without inspecting it for one simple reason. 95% of cars at public auto auctions are JUNK! That’s right. People don’t sell cars through public auto auctions because they run well. Most people sell cars through public auto auctions because they want to get rid of a problem car. Here are some basics on inspecting cars at public auto auctions:
CHECK THE OIL:
If it looks black like tar, the engine is probably good but the owner had a bad history of maintaining the car. If the oil is a clear tan, the oil is normal. If the oil is milky brown, the head gasket is blown. (public auto auctions are notorious for selling cars with blown engines)
ALWAYS START THE CAR:
Make sure the car starts without hesitation. There is nothing worse than being stranded at an auto auction.
CHECK THE TRANSMISSION:
If automatic transmission, make sure it shifts from drive to reverse and visa versa smoothly without delay. If manual, it should go into all gears without grinding, and the clutch should engage about 3/4 of the pedal height up. Some public auction employees go nuts when they see you do this. Just ignore them.
CHECK THE IDLE:
If the idle speed is high and doesn’t go down, don’t bid on it. If the idle speed is normal, make sure it idles smoothly. Many cars at auto auctions will not pass smog.
CHECK FOR SMOKING:
If there is excessive exhaust smoke, it’s a sign of a bad engine. This is common sense at an auto auction.
CHECK FOR OLD TAGS OR OUT OF STATE PLATES:
Old registration more than a year back can be very expensive. This is very easy to overlook at an auto auction.
CHECK THE OBVIOUS:
This includes all the little things that aren’t major, but can still cost you money and headaches. For example, check the brakes, a/c if the car has air, check for body damage, make sure all doors open and close easily and make sure all the lights and blinkers work.
I’ve covered all the major things to look for when inspecting a car at a public auto auction, but above all else. USE YOUR COMMON SENSE OR YOU WILL GET BURNED! If you have a bad feeling on a car, simply do not bid on it.
If you are not one of the first few people to purchase a car at a public auto auction, expect to wait in very long lines. The first long line is usually when you are at the public auto auction early in the morning inspecting cars. Most auctions make you wait in line in order to obtain keys to start the cars.
The second long line you have to wait in is the line to pay for the car after you bid on it and win the bid. This line is the most frustrating line to be in. After you bid on the car and win the bid, all you’re thinking about is getting to your car and driving it home. The last thing you want to do is wait in a long auto auction line with a fat wad of money in your pocket.
PUBLIC AUTO AUCTION TIP 5- Expect to get your ears blasted out .
One of the most annoying things about a public auto auction is the ridiculous volume level of the speakers, which are turned up louder than jet engines. Be smart and bring some ear plugs or you’ll be sorry in a few years when you have to say Huh? every time somebody says something to you.
PUBLIC AUTO AUCTION TIP 6- Arrive early .
Arriving early ensures 2 important things. First, that you will get a parking spot and; second, that you will have plenty of time before the auction starts to inspect the cars that you will be bidding on. Remember the golden rule: NEVER bid on a car that you haven’t inspected or you deserve to get burned!
PUBLIC AUTO AUCTION TIP 7- Buying and selling tips and tricks.
Have you thought about buying a car at an auction in order to re-sell it to make a profit? If you have, you’re not alone. Nearly half of public auto auction bidders are thinking the same thing!
There are 3 problems with buying cars at public auto auctions to try to make money. First, inexperienced bidders drive the prices up to ridiculous prices, which cuts into your profit. Second, the auction charges an equally ridiculous fee. Third, the auction takes your personal information so the state can keep track of who the buyer of the car is. Unfortunately, all states have limits on how many cars you can transfer in and out of your name per year.
PUBLIC AUTO AUCTION TIP 8 – For the serious buyers and sellers .
If you like the idea of buying a car and re-selling it to make money, but want to take it a bit more serious where the big money is at, consider getting a state dealer license. It’s easier than most people think and having a state license entitles you to benefits that only licensed dealers receive, such as attending exclusive private auctions for dealers only, where all cars do actually sell for below wholesale. A dealer license also gives you access to many new-car dealerships, where you put in closed bids for their trade-ins that they wholesale. There are many other benefits to having a dealer license. If you are thinking about getting a dealer license, there is an excellent source. Just follow the link below!