For years, enthusiasts have envied auto sales managers for their access to wholesale auctions, where the holy grails of used vehicles could be scopped up for ridiculously low bids became the stuff of urban legend (and water-cooler bragging rights). It’s a wonder that the open-to-the-public versions didn’t come along sooner, fulfilling every retailer’s dreams of bidding wars from eager and financially qualified buyers driving prices up beyond any expectations.
Public auctions can be a great place to find almost any type of vehicle, from something needing a complete restoration to a set of wheels ready to go. Currently, due to pandemic regulations and limits on public gathering sizes, most auction houses have either gone virtual or temporarily shut down. But due to popularity and profits, they’ll likely return to business as usual, as soon as possible.
How do used car auctions work?
So, how do these work? Auction houses will post available vehicles at upcoming events, giving buyers a chance to peruse inventory before deciding to sign on for virtual bidding or attending in person. To weed out window shoppers, most houses often require registration fees or refundable deposits required.
Sellers are also required to provide clear titles (meaning no outstanding loans) in order to list vehicles and have to complete info packages, including mileages, any collision repairs, and any add-ons or special equipment.
In addition — and in compliance with provincial regulations — some are required to have repair history documents. Potential buyers attending in-person auctions sometimes have limited access to inspect vehicles before the sale starts, but not always — most bidders are forced to make a decision from a distance.
Most will have a minimum reserve
Vehicles crossing the block may or may not have minimum reserves set by the sellers. Auction operators try to convince sellers to set these reserves based on previous transactions for similar makes and models. It’s in the interest of sellers to pay attention to this because if their product fails to sell, they will likely still be on the hook for a listing fee as well as additional storage costs. Sometimes, sellers attend the auction in person — back when live sales were allowed — giving them the opportunity to reduce their minimum price when their vehicle is on the block but not receiving any bids.
What happens if you buy a pig in a poke?
There are arbitration and return policies for all auction houses, and you should read their terms from beginning to end before even considering attending. Some firms set minimum sale values in order to qualify for arbitration — say, $3,000. Any vehicle below that threshold is pretty much a final sale, unless it can be proven the seller deliberately misrepresented the vehicle’s condition.
Other limitations can involve repair costs, such as anything less than $1,000 is on the buyer’s tab and not available to arbitrate. Some firms will process returns for any reason, but will only refund the purchase price plus taxes, leaving the buyer on the hook for any auction fees. Check on the time limit to file a claim to get out of a purchase; some are as short as the end of the next business day. Plan accordingly by making sure you have the ability to complete a thorough inspection within the timelines.