Are Auto Auctions Open to the Public on the Level?

Auto auctions “open to the public” appear to be opportunities to grab some real bargains, especially if you know your way around engines, disc brakes and electrical systems. Not so fast, there, Henry Ford. When you can find an auction that’s open to everyone (most are restricted to industry buyers), there are more dangers awaiting you than you might imagine.

This isn’t to say that all of these auctions are rigged – far from it. But the way that many are set up, a private buyer may find that he’ll be taking his “new” car to the junkyard before it’s time for the first oil change.

When you find an auction that looks promising, here are some important facts to consider before getting pulled into a game you’re unlikely to win.

Gov Auctions

Government auto auctions open to the public

It would seem that an auction of government-owned cars, which are usually police vehicles, would be the perfect place to grab a well-maintained car at a bargain. That used to be the case, because these autos normally come with detailed histories and odometers which haven’t been tampered with.

The problem is that the competition to purchase cars at government auctions has never been more fierce. Taxi companies are there hoping to find a great buy, and the people who drove cars on the job often show up at auctions to rescue an “old friend.” But now, brokers haunt government auctions in order to purchase buses, trucks and even cars which they sell overseas to be used for public transit.

This tough competition means government vehicles often sell for more than retail. You can still occasionally find bargains, but you could just as easily wind up overspending.

Where do the cars come from?

This is a key question to ask, ideally ahead of time, before hitting any auto auctions open to the public and hoping to score. Cars sold at auto auctions normally come from one of three sources. Banks and finance companies auction off repossessed cars that they just want to get rid of; these are usually the best vehicles to bid on if they’ve been properly maintained. New car dealers auction some of the used vehicles they’ve taken for trade; these often have mechanical issues the dealers don’t want to bother fixing, and might be worth looking at if you’re good under the hood.

Then there are used car dealers. If they have vehicles that they’ve had no luck selling on their lot, to other dealers, or at dealer auctions, there’s got to be something really wrong with them. Guess where they take these cars – and who they try to sell them to? That’s right: public auto auctions filled with sheep ready to be slaughtered. You’re smarter than that, right?

Gov Auctions

Use your brain, not your eyes

The worst thing you can do at an auto auctions open to the public is fall in love with the look of a car. In fact, before you even set foot into the auction venue you should research the cars you’re interested in. Get their VIN numbers and a Carfax subscription, and carefully check out any that seem worthwhile. Be sure the vehicle has had only one (or maybe two) recent owners, has been maintained by a dealer, and hasn’t been kept in an area prone to rust or hit by a natural disaster. Also, research current market prices for the model and mileage so you have a good idea of a realistic price to pay.

When you’ve narrowed down your list, inspect the cars in person before bidding, checking everything from the engine condition, fluid levels, brakes and tires, to the way the interior has been kept. Ripped-up upholstery is a sure sign the owner probably didn’t care about engine maintenance, and a musty smell is a sure sign of previous flooding. Make sure the door and trunk VIN numbers match the windshield number, so you know there hasn’t been a major rebuild. If the auction is one of the few which will let you drive the car if you show up a few hours early, be sure to take advantage. One other insider tip: see what radio stations the owner listened to. News or soft rock might be a better sign than thrash metal.

Don’t believe the paint or the patter

You can bet that any auction car that looks great has been prepped more than a bride on her wedding day. It’s easy and cheap to cover up problems with paint, bondo and a good detailing. Engine issues can be hidden by adding extra-thick oil. And obviously, don’t believe the odometer. Some sellers may just be making the vehicle look good in order to maximize profit. Many others will be doing whatever they can to hide serious flaws and get rid of the car.

Once the bidding begins, the auctioneer isn’t there to make sure you get a good deal. He’s there to sell cars, pure and simple. Anything you hear from the auction block (except the current bid – more about that shortly) should basically be disregarded. The auctioneer isn’t working for you, he’s working for the sellers and will say whatever he can to encourage bids. That doesn’t make him a bad guy, it just makes him a guy doing his job. It’s up to you to do yours, which is to stay in control and only bid what you think the car is worth.

Gov Auctions

The game is stacked against you

The auctioneer is working with a seller’s “reserve” price, which is the level that bids must reach before the car will actually be sold. He’ll do whatever he can to encourage higher bids so the reserve is met; some will even “acknowledge” bids that haven’t been made, just to push prices higher.

On the other hand, many of the buyers are dealers or professionals with lots of auto auction experience. They often refuse to bid until the last minute, in a tacit agreement to “sit on their hands” to keep the final selling price as low as possible.

That’s the dynamic working against you: a silent war of wills between the auctioneer and the pros, in which you have little say. The only smart tactics are to determine the price you’re willing to pay, go no higher, and refuse to be pulled into the mini-drama.

If things go wrong

It’s true that all vehicles purchased at local public auto auctions are sold “as is” – if the vehicle is a clunker, that’s on you. However, there are a few exceptions. Some auctions use a red-yellow-green-blue light system, in which a green light means you can test drive the car right after the auction is over and you’ve paid for the vehicle. If there’s a major problem with the car that wasn’t represented beforehand, like a blown engine or a bad transmission, some auctions will refund your payment.

Once you’ve left the auction with your used vehicle and you discover a major, undisclosed or misrepresented issue, you have one option left. Call and fax the auction immediately, and cancel your check (never pay by cash). Most would rather take the car back than deal with bad publicity and lawsuits.

For the most part, though auto auctions open to the public are “caveat emptor.” Be sure you have enough self-control – and a strong stomach – before taking part in one.