By Aaron Turpen, Cowboy State Daily columnist
A lot of people in Wyoming are turning to automotive auctions as a way to get a vehicle. It’s easy to screw this up, though. Especially if you’re new to vehicle auctions. Let’s talk turkey so you don’t look like one.
With the used car market the way it is, a lot of car buyers are looking elsewhere for deals. Unfortunately, we can expect the new and used car markets to remain high for some time, thanks to supply chain shortages and the resulting glut of inventory. Because new cars are harder to come by (and thus more expensive), used cars are in high demand and also fetching premium prices. Some buyers see auctions as a potential way out of that.
While it’s true that vehicle auctions can be a way to save a lot of money on a vehicle purchase, it’s even easier to get stuck with a high-priced lemon instead. There are many types of vehicle auction, but many of them are only open to those holding an automotive dealer’s license. For the rest of us, there are public auctions.
Before getting all excited about a public car auction, though, let’s look at all of the downsides. Because there are several.
- First, you won’t likely get to test drive anything.
- Second, you may not even be allowed to start the engine or open the doors/hood.
- Be aware that most of the vehicles on offer are likely unsellable at dealership lots for various reasons. That’s why they’re at auction.
- Next, you must pay cash. There is no financing available. Cash, cashier’s check, money orders, and wire transfers are the most common ways you’ll be able to pay. Know before you go.
- There will be fees associated that go over and above what you bid for the vehicle: expect to pay 10 to 20 percent over and above the bid price in auction fees. Nevermind vehicle registration, transportation, sales tax, and so forth.
- The breathless deals where buyers paid half of the vehicle’s (supposed) value or less are usually stories, not reality. This kind of score is extremely rare. You’re more likely to catch a jackalope in the wild than you are to get a deal like that at an auction.
If you’re still dead set on trying to win at a public auction, though, there are some things you can do to raise your chances of finding a deal.
It’s important to know where the vehicles at most public auctions come from. A particular auction may have one or more of these vehicles up for grabs. Some should just be avoided as they’re very unlikely to be a good deal in the end.
- Dealer Lemons: The most commonly found vehicles at public auctions specializing in vehicles are dealership “lemons.” The vehicles a dealer just cannot sell for one reason or another. These are generally the vehicles to avoid, as they’re more likely to have serious or pending issues.
- Estate Sales Vehicles: Vehicles at estate sales and the like are about the same as most vehicles you’d probably find in the classifieds. They’re hit-and-miss, but may have more information associated with them as they probably haven’t had a long list of ownership transfers. You might find a deal here.
- Surplus and Liquidation Lots: Vehicles at many auction lots, especially surplus/liquidation lots, will mostly be of corporate or government ownership. These are the most likely source of great deals. Most dealerships have little interest in these vehicles and most of the vehicles will have a solid service history and probably weren’t owned by more than one entity.
- Rental Car Auctions: Occasionally, you will also find used vehicles through rental car lots. That’s unusual now, as most major rental companies now have their own sales networks and dealership setups, but there are still rentals at auction sites. These can be a mixed bag, but don’t expect anything fancy at most of these. And expect high mileage to be the norm. Nearly every rental car up for auction will have a long repair history to go with its maintenance record.
- Salvage Vehicles: Most salvage auctions are attended by junkyard owners and parts scavengers. You may have issues with licensing or insurance for a salvage titled vehicle from one of these auctions, but you may also find a great deal as well. Most of these vehicles are insurance buyouts where the insurance company is hoping to get some of its money back.
There are a few other places that vehicles up for auction can come from, but these are the most common.
Most online auctions are either not local or won’t give you any more information than a few pictures and shots of the odometer and VIN. There may or may not be any kind of service history included and you probably won’t be able to get hands-on with the vehicle in any way until you buy it.
Some exceptions here are the Wyoming surplus property auction, which is technically online, but which allows people to come to their office during business hours to view items for sale. Casey there is a pretty cool guy and all of the stuff for sale is from the State of Wyoming and a few of its affiliates. There aren’t any cars as of this writing, but there are a couple of snowmobiles if you’re interested.
In person auctions are the preferred way to go if you’re looking at private purchase. In Wyoming, most of these are attached to estate sales and the like, but you might find the occasional dealer lot surplus auction or bankruptcy liquidation.
Otherwise, you’re probably going to have to travel out of state for more options. In my experience, auctions in Wyoming usually have few road-worthy vehicles and lots of other things. Be prepared to weed through a lot of farm equipment, random off-road vehicles, and assorted gear to find any kind of car, SUV, or pickup truck. And most trucks you’ll find will have been rode hard and put away wet.
What you can expect is that at a non-dealer auction, your diligence can pay off with significant savings on a used vehicle. Expect to save ten to twenty percent over Kelly Blue Book “street” or “dealership” price.
A bit less compared to the National Automobile Dealers Association (NADA) price. You’ll likely be somewhere in the “wholesale price” range after you’ve paid the extra fees. From there, the inevitable repairs or refurbishments will shrink those savings. Which is why it’s important to eyeball the vehicles closely before bidding.
Here are some quick tips to finding success as a vehicle auction buyer:
- Scope it out. If the auction is recurring or run by a company that offers many other auctions, even those without vehicles, go to those auctions and scope them out. You don’t have to buy or even register, usually. Just go and observe. Get an idea for how the auctions are run and what you can expect.
- Find out if there are any guarantees associated with sales. There usually aren’t any. But you may get lucky. And find out if they have an in-house assessment system for vehicles being sold. The “traffic light” version is most common, with Green being best and Red being basically scrap metal on wheels.
- Inspect the vehicles as much as you can when you attend. If it’s a large auction with several vehicles, make a list of those you want to check out and stick with it. Don’t be distracted by shiny paint or crowds “Ooo”ing over something.
- Set prices for each of your choices. Keeping the auction fees in mind, set a top value you’re willing to pay for each vehicle you want to bid on. Stick to it. If you’re hoping for “that one” you probably won’t get it. Be ready and prepared to bid on multiple options instead.
- Don’t get carried away in the auctioneer’s excitement. Crowds often get heated and excited while the auctioneer accepts bid after bid. This excitement can lead to a fear-of-missing-out (FOMO), driving bids upwards. It’s what auctioneers are paid to do. Don’t fall into that trap. If the vehicle’s bid goes over your top price, stop bidding.
- Be prepared to pay immediately. And know what the accepted forms of payment are before you bid. If you don’t have either cash on hand, a cashier’s check, or another accepted way to pay for the vehicle as soon as the auction is done, you’ll be in some trouble. Bidding without being able to pay at an auction comes with harsh penalties–both legal and financial.
Auto auctions can be a great way to find a real deal on a used vehicle. It’s a gamble, however, and the more experienced and knowledgeable you are, the better your chances of finding that deal. Most buyers barely break even on their purchases and many lose money over the long term once repairs, fees, and other costs are added in. So tread carefully. But who knows? You might find exactly what you’re looking for.
Aaron Turpen is an automotive journalist living in Cheyenne, Wyoming. His background includes commercial transportation, computer science, and a lot of adventures that begin with the phrase “the law is a pretty good suggestion, I guess.” His automotive focus is on consumer interest and both electronic and engineering technology. Turpen is a longtime writer for Car Talk and New Atlas.