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I’ve bought and sold over 500 vehicles at various car auctions since 2002. Police auctions, Bank-repo auctions and State & Local Government auctions are all fantastic places to buy cars at wholesale prices. Like anything, but, not every car at these auctions is a winner waiting to be bought for pennies on the dollar. Finding the best deals at the best auctions takes a small research. But, the fact remains, you’ll never find a better deal on a used car somewhere else.
Why are Auctions such a fantastic place to buy a car?
The largest reason, of course, is the price. It is very common to get vehicles for 50% not more than retail. Especially, given the state of the economy, people want to buy reliable, fuel-well-organized cars at fantastic prices. If you can do the leg-work to buy these cars at auctions…you can quickly start making a very excellent income for a few hours of work a month.
The other huge draw to car auctions is that there are no dealers to argue with. Used car dealers are notorious for doing anything to sell a car. They have this reputation for a reason. By buying at auctions, you don’t have to worry about haggling over prices or having a salesman follow you all over the car lot.
Despite the obvious advantage of buying at auctions, I’m amazed how many people stay away because they reckon that the vehicles are in poor condition or that there’s some huge ’secret’ to finding these car auctions.
These are the two largest and most expensive myths about Car Auctions….
Firstly, are there junky cars at these auctions? Yes. But are there fantastic cars in fantastic condition? Unquestionably.
Over the years, I’ve bought many low-mileage seized autos that were in brilliant condition. They were seized from a drug-dealer (or whatever type of criminal) by the police and auctioned off to help the local government bring to somebody’s attention cash. I’ve also found a lot of fantastic deals at Bank-repo auctions. Fantastic cars in fantastic condition that were simply repossessed by the bank because the person didn’t make their payments….and I was there to take advantage of a fantastic deal. I’ve bought a lot of higher-end cars from these two types of auctions (especially BMW’s) because criminals tend to drive nice cars and banks repo cars that a name thought they could meet the expense of but really couldn’t.
A further fantastic source of what I like to call more ‘functional’ vehicles are government outfit auctions. A lot of state & local agencies are constantly buying new vehicles for their fleet and selling off the ancient ones. Not just police but, environmental agencies, department of transportation, city inspectors, etc. all drive government owned cars. These are traditionally very well taken care of (they’re required to by law) and have relatively low mileage. These make fantastic resales because they’re low-cost, reliable cars and people (especially in this economy with these gas prices) are permanently looking for such cars.
How do you find the excellent deals at these auctions?
A lot of people are still frightened away from auctions because they reckon they have to be a mechanic to be able to separate the excellent cars from the “lemons”. I admit, I fell into this group when I started. At nearly every auction you can inspect the cars previous to submitting a bid. While you won’t be able to take them for a test drive, many will still come with a manufacturer’s warranty. I’ve bought a lot of ‘government’ cars without even seeing them because they are permanently in such excellent condition. But here’s a quick checklist which I recommend for anyone just early out – this will help you avoid getting a ‘lemon’:
1. If possible, start the engine and listen for anything scarce (or to see if it starts at all). Note most auction sites will sell these cars “as-is”. If you’re able to get a look at the car while the engine is running, you’ll be able to tell a fantastic deal about in what condition it’s in. Check the exhaust to make sure it’s clean, check the air conditioning, heat and all the power options (windows, seats, sunroof, etc.).
2. Check for water hurt under the seats, floor mats or in the trunk.
3. Lift the hood and check the oil. Check for white foam on the dipstick (this means there’s likely water in the oil tank) and check for any grains (i.e. sand or sediment). If the oil looks reckon and pasty it’s likely the car wasn’t evenly maintained. These aren’t automatically deal breakers but I’d exchange my bid accordingly.
4. Check the transmission fluid too – you’ll want to see that’s it’s clean and not dark or sticky. Look at the tailpipe for excessive soot.
5. Check the exterior as well. This is simple and you’re really just looking for what condition it’s in. Is there rusting? If so how much? Look for paint foam or welding marks. Also, keep an eye out for slightly different shades of paint, rough surfaces or body panels out of alignment. Also, make sure and check the engine compartment for new bolts or bolts which don’t match in color.
As you get more comfortable with buying at car auctions you’ll learn what’s a ‘dealbreaker’ and what’s not. As I mentioned, unless a government car looks really terrible in the picture, I’ll submit a bid without even looking at it. Even if a car I’ve just bought needs a tuneup, new brake pads or an alignment, I keep that in mind when I’m bidding. If I can make $2,000 on a resale, I’m pleased to spend a further $300-$400 to get it into shape. You’re still getting a fantastic deal because of the buy price.
I would also recommend (especially as you start out) getting a CarFax or AutoCheck vehicle history report. These are low-cost ways to get a lot of information on the car you’re interested in.
When I started out, I got an AutoCheck report for every vehicle I was interested in and it gave me more than enough information to make an informed choice.
Even if you DO end up getting a ‘lemon’…i.e. you didn’t get an AutoCheck report and bought it sight unseen and it needs a new transmission that you don’t want to spend the cash on? Then you can permanently sell it at the next auction. A name will permanently want to buy it and fix it up…
How do you know what to bid?
Previous to bidding on any car you should know the “comps” or resale principles. Look at Kelly Blue Book, Edmunds.com, the NADguides, the MMR prices (check out our website for more on this) and, of course, ebay motors and autotrader.com. Look for akin cars with similar mileage and establish a range of prices. The low end of this range is you target bid price.
If the bidding gets too high just walk away…I remember a touch an experienced auto trader told me at my second auction when I was getting worked up about a BMW I was bidding on. “don’t get to excited kid…In this game, you permanently have a further ‘at bat’ “. What he was saying is: don’t spend too much on a car because there is permanently a further deal out there. I finished up letting that BMW go to a name else but I got a further one a week later for several thousand less. I permanently try to remember that bit of advice.
How do you find these auctions?
A lot of these auctions can be tough to find. Only very recently have they started advertising online but most have had websites up for years. The result is…a simple “Google search” isn’t going to turn up anything.
You can permanently find some local auctions in the paper which is a excellent place to start. I’ve spent years compiling a list of these auctions by state which is a further excellent resource to save you a lot of time and cash. Check out my site for more.
The bottom line. You can’t meet the expense of NOT to look at Car Auctions.
I’ve been amazed at some of the deals I’ve found over the years at these auctions. It’s been enough to surpass my day job and for much less work. Even if you’re interested in just buying one car for yourself, you can’t meet the expense of NOT to look at a Car Auction. So what are you waiting for?!