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Tips for Buying a Car at Auction

by Diminished Value Car Appraiser on July 6, 2018

Car auctions give an efficient and streamlined way for sellers to dispose of their inventory and for buyers to purchase cars at a reasonable price.

The top inventory sources at a car auction are:

Vehicle Inventory Sources at Auction
Captive Finance / Off Lease31.86%
Dealer Consigned / Trade-In21.62%
Wholesale Units / Repo14.42%
Non-captive Finance / Off Lease13.16%
Fleet / Demo Vehicles8.55%
Manufacturer / Corporate5.30%
Retired Rental Cars4.84%
Other0.24%

Below are tips to maximize an auction purchase. This article is written by Tony Rached who’s a licensed dealer and auctioneer. Mr. Rached bought and sold 5,000+ cars in the last 15 years via car auctions.

  1.  Analyze the source and intent.

    Car Sold by Dealers:
    If the seller is a car dealer, ask yourself, why? Dealers are greedy beasts, why is he selling this car for wholesale instead of retail? The car could either be:

    A- Aged inventory (on lot for more than 60 days), if so, why hasn’t it sold yet? Google the VIN# and see what he was trying to sell it for.
    B- Trade-in, mismatch. Some cars may not be ideal inventory for certain dealers, a Porsche dealer who gets a Diesel work truck on trade for example.
    C- Trade-in, POS. It could be a vehicle that’s a piece of sh*t, a car that woudlnever pass a safety inspection.
    D- A Trojan Horse. This is a car that has a major malfunction that is difficult to spot while doing a cursory inspection at auction. These are cars with bad electronics, hidden structural damage or a smell that can never go away.As a dealer, I normally would stay away from cars being sold by a peer, I simply dont trust car dealers especially if they’re non-franchise.

    Car Sold by Finance Companies or non-dealers:
    This is the most desirable inventory to pick from. These cars are compdities and sold in bulk. Sources can vary from:

    A- Off Lease.
    These are 3 to 4 year old vehicles that were leased.  If you have enough money to buy one of these, go for one with a balance of factory warranty. Look for the in-service date on a history report or call the service department at a franchise dealership.
    B- Fleet or Corporate.
    Another good source of inventory. These are cars that were operated by company executives, demonstrators and loaners. These cars are usually under factory waranty and sold green light.
    C- Repo.
    These are cars bogues decides to stop making payments on and the lienholder decided to repo and auction off. This is the least desirable inventory source as bogues usually dont service their cars well.  Look for sludge, bad tires and brakes.
    D- Rentals.
    I pe

  2. Inspect, Inspect and Inspect some more

    Cars are disposed of at auction, this means sellers wants them gone. Auctions are designed to sell a large volume of cars in a short period of time. Buyers dont normally have the time or allowed to put the car in the air and do a 40 point or whatever. If you have a mobile mechanic you trust, take him with, if not, below are a few items to look for:

    A- Check engine light. Many dealers bring an OBDII scanner to look for code, I say no. Look for readiness not codes. A good dealer will erase codes before sending the car to be disposed of at auction, however, he cannot fake the readiness. If the car has a check engine light, WALK AWAY. It doesnt matter how compelling the purchase is, walk away. You’re not smarter than the seller, he has more info than you and he decided to get rid of it.
    B- Odor. This is the second important thing to look for. You cannot resell a stinky car, period. Some people reek of body odor, some people smoke, some people have nasty pets who poop and pee in cars. I say no, if the car smells bad, walk away.

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