How to Bid on Cars at Auction
How to bid on cars at auction and still get a great deal? I give you a winning step –by-step strategy. Go to a few auctions before actually participating in one yourself. Get to know some of the players. Yes, actually ATTEND the auction in which you are bidding cars on. Sure, you can bid online (many people do) phone, but would you really buy a car you hadn’t seen? Do you really think that anyone ever brought a vehicle online that was better than they expected? To buy cars at the wholesale Dealer auctions, you have to have an Auction Access account.
Be ready to walk away at any time
The # 1 Rule is
Always be ready to walk away…Never get caught up emotionally in a bid for a vehicle. How to bid on Cars at auction successfully is to never Get Caught Up in the Bidding! It’s easy to get carried away during bidding. Energy is high. Excitement is there…your heart is pumping….your blood is racing. Yeah, but don’t do it. You will wind up winning the bid, yeah…but also wind up spending hundreds more than a car is worth. Don’t pin all your hopes on one vehicle. Be ready to walk away. You have to have at least 5-10 vehicles that you have your eye on…and still be ready to walk away if none of them match your financial criteria. Decide what you criteria should be.. like half of the street value… or something like that. You have decide ahead of time..how much profit you want to make on a car.
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Always add additional $250 for selling costs. Add additional $300-500 for mechanical costs and prep. Now if you do all that and you can not see at least $1,500 net profit on that vehicle…then leave it. It will not be worth your time. I always like to shoot for my target of doubling my money. If I pick up a vehicle for $2,000 …its because I have already calculated its “Street Value” to be at least $4,500. Or you can go by the MMR value versus the Street Value. Look for a spread of at least $3,500 to leave yourself some wiggle room on (auction and/or dealer) fees and price negotiations with your potential customer. Of course you can buy cheaper cars for $500 and sell them all day for $1200. You decide at what point you want to enter the market and what type of cars you will buy and sell.
Note: I personally don’t like auction style of bidding. I only purchase vehicles thru the “Buy Now” option
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Know Car Values Before You Bid
This is probably where most people don’t spend enough time in preparation. Another very important point in how to bid on cars at auction is you have to do your research. The idea of bidding online is not to actually bid online (you can if you want to of course)…but to see what cars are available. Look thru and pick out 5-10 cars that catch your eye. Based on your business model you will filter out the cars…. You may focus only on luxury cars…or Toyotas…or whatever. Make your list….
Next you want to check the value of these 5-10 cars on your list. I like Cargurus.com …and you also have Kelly Blue Book and Edmunds give a general idea what used cars are worth. But also take time to research local prices on Craigslist and in classified listings. You want to calculate as close as possible…and jot down the street value of each vehicle.. Now my definition of the “Street Value” of a vehicle is the midpoint between the highest and lowest average price points. So if you see that your local auction house has a sweet 2009 Mercedes CLK350 ..you do your research and you want to write down the street value of next on your list.
You do this for every car. Initially this will take you 1-2 hours. A great element in how to buy cars at auction is to do your prep work and take it very seriously. After a while, if you go to the auctions regularly and do this whole prices regularly…you will get the time down to 30-40 mins. This is your most powerful tool to making money at the Dealer Auctions…is by knowing the street value of the cars you are bidding on. You will get good enough eventually that you can glance at cars and immediately get a feel for their approximate street value.
You have to have a Mechanic on standby
If you are planning to make money in this business, you have to have a mechanic that you trust. Develop a relationship with someone that you can keep on retainer or a fixed price to do any necessary “prep mechanical work” before you resell your vehicles. How to bid on cars at auction successfully is have a mechanic on standby or if possible to go in with you. f you are attending only Adesa or Manheim auctions..the cars are of greater value and in better mechanical shape, but you will eventually come across a car you bid on and buy..that needs a transmission or a new starter.
make friends with a local mechanic
This is going to happen. I would suggest you factor in $250 – $500 per vehicle for this mechanical fixes. It is even worthwhile to develop an automatic business savings plan where you take 10% of the profits from every car you sell and place into a bank fund just for “emergency” Mechanical Repairs
Do a visual check wherever possible
Look for small cracks in the windshield. Look underneath the vehicle for signs of fluid leakage. Make sure the VIN is clearly marked. Then check other places where the VIN might appear, such as door and trunk lid stickers. If the numbers don’t match, the car may have been in a major accident and rebuilt. Look for more promising alternatives. If a car has been well-maintained, when you pull the oil or transmission fluid dipsticks the lubricants should be clear and clean.
Many vehicles at auction sell in “as is” condition. That means there are no guarantees, no warranties and no means of legal recourse. If you don’t have the stomach to survive discovering you’ve bought a heap of trouble, don’t bid in the first place. This shouldn’t be a big issue tho, if you are dealing with Adesa on Manheim Auto Auctions… All vehicles go thru a background check and are cleared for bidding.
A visual check is not always possible , but it is important aspect of how to bid on cars at auction and be happy with your purchase. If all you have is pictures, go thru them with a fine tune comb. Call the seller if necessary 9and this is why I only do a “Buy Now” ..because I can deal one-on-one with the seller. I’m not competing with a group of people. How to bid on cars at auction is not to bid, but to focus more on “Buy Now” vehicles.
Use Your Common Sense
Cars at Adesa, Manheim and other Dealer Only Auctions tend to vette their cars a bit more. The source is primarily off lease vehicles and such…Usually you can take a look at these cars..look under the hood, under the undercarriage…interior, etc. Cars at government and public auctions sell on visual inspection alone. So look at everything and look for telltale signs of repairs such as paint overspray, less than smooth sheet metal, puddles under the vehicle, scored brake discs, an uneven stance and a million other details.
How to buy cars at auction is you have to use your best judgement with less emotion. Yes..use your eye…look for stuff that looks out of place. Gravitate to the better quality higher value cars as you can afford. They will give you the less problems (and give you bigger profits). You can get a sense of how a car was treated by looking at the interior and under the hood. Use your nose, hands and legs, too. If a car smells oily, or damp. Leave it.
Go with your gut…if it feels off. Leave it.
BIDDING is best done where you can be seen by the auction ringmen. They watch the crowd, so make sure you’re fairly close and that they can see you and your paddle. Hanging back and joining the bidding late can sometimes work, but it can also generate another bidding surge, as somebody thinks they’re missing a bet. Set your top price and don’t go above it.
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Watch the other Bidders
I like to stand just to the far left or far right…so I can scope the entire front line. Take your time and watch the action closely on all the cars up for auction. Watch the people who are pulling out lists. These are the “research crew”. Mostly newbies…(veterans never bring paper lists! Lol). Watch out for guys who bid on every car. When the vehicles that you want come up..NEVER bid on it first !…NEVER bid on it first. NEVER EVER BID ON IT FIRST. I hope you got that. You don’t want to show interest or excitement at all. Only get into the bidding after the first few feeler bids have been launched and accepted …and you feel the vehicle has hit a “baseline price point”.
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