Auto Auctions Defined:
When it comes to purchasing a car, consumers have various options. An auto auction is one of those options and can be a great place to pick up a car for a good price or an outright bargain. Before you launch into any bidding, however, you need to know what you’re doing.
Although auto auctions have been around for decades, interest in car auctions grew when the bottom fell out of the economy in 2008. Consumers were reluctant to purchase new vehicles and were looking for good deals with used vehicles.
With a little advanced research, car auctions offer a good opportunity to save some money. While it has become more competitive with the increased interest, you can still find some great prices at auto auctions.
The types of cars made available through auction houses tend to be former personal cars, rental cars, cars seized by a government agency, former government cars dealership lease returns, salvage, classic/antique, and even used cars from dealerships. Generally, a significant advantage to auto auctions is volume. Hundreds of cars can often be made available through any auction house, thousands across a state.
There are two types of auto auctions available in the state of Michigan: government and public. Each has its pros and cons.
Government auctions typical offer two types of cars: former government agency cars (such as police or other civic jobs) and car repossessed by certain government agencies.
When government agencies are ready to update or replace cars, they tend to replace them in bulk. These agencies often turn to an auction house rather than selling them individually. Government auctions offer those cars as well as certain types of repossessed cars. Rather than selling them individually, government agencies will put them all up for auction with a local, reputable auction house. We wrote about this in this blog post. Former agency cars tend to come with known histories and good maintenance records. Without being able to test drive the vehicle, this should provide some reassurance. However, be certain to perform a thorough visual inspection!
Vehicles repossessed by the government (cars impounded for criminal enterprise) sometimes come with no keys and likely no maintenance record or histories. A buyer would need to have the car re-keyed once purchased.
The competition at government auctions, however, can sometimes be fierce with individuals as well as dealers seeking cars with a relatively safe history. It can mean fewer deals for bargain shoppers, and often provides an advantage to dealers who arrive at these types of auctions with a lot of experience. Government auctions are generally not for the novice bidder. They are run rapid-fire and those with previous experience will definitely have an advantage.
There are two types of public auctions: those open to the general public, dealers, and retailers and those exclusively for dealers/retailers.
There are some deals to be found at auto auctions. However, buying a car at public auction isn’t without some level of risk especially for the novice bidder. An unknowing bidder could encounter unethical sellers and even cars with doctored histories. Just like with government auctions, you can not test drive or perform a thorough inspection on the vehicle before you bid or purchase it. You will need to do a very careful visual inspection of the auto to look for any red flags (often hard to detect). We recommend only participating in auctions held by reputable auction houses. Reputable auction houses offer you some level of reassurance.
One downside to purchasing at auction is the inability to test drive a car or to check its mechanics. If you’re a mechanic, or know a good, inexpensive one, then buying at auction will not pose a significant additional expense post-purchase. If you’re not savvy with cars or you don’t know a mechanic, then it’s important to keep in mind that it could be possible you might need to make some repairs to an auction bought car.
Advantages to Auto Auctions:
There are two main advantages to purchasing a car at auction.
The first advantage can be pricing. If you are careful, do your research before bidding, and can get your questions about a car answered, you could end up with a good deal.
It is important to note that your final bid price isn’t what you end up paying overall for a vehicle. You will need to add auction fees and license fees as well as taxes. Keep this in mind when bidding on a car. Set a maximum price prior to bidding and stick to it. We always recommend doing through advance research on the value of a car prior to buying it. Keep that in mind when setting your maximum bid for any vehicle!
The second advantage to purchasing at auction is that if you are buying from a highly-reputable auction house, the cars are generally in pretty good condition. Some auction houses will make a vehicle’s history available to potential bidders, so it’s always a good idea to ask if it isn’t obvious prior to bidding. It isn’t always the case, of course.
Tips for Purchasing at Auction:
- Conduct a very careful visual inspection. Look for any telltale signs of restoration. Overspray, uneven sheet metal, and puddles under the vehicle could indicate the car has been refurbished.
- If possible, smell the inside of the car looking for a musty or mildew smell. That could mean water incursion such as is common with flooding. You don’t want to buy that car!
- At a government auction, some wear and tear might be visible. That’s not necessarily a sign the car was neglected.
- Check the VIN in several places of the car to ensure they match up. If they don’t, it could mean a rebuilt auto, and that could mean it was in a major accident. You will probably want to walk away.
- If you can, pull the fluid dipsticks to look for clean sticks which likely indicates that the car was well maintained. (Keep in mind that one indicator on its own doesn’t equal good maintenance.)
- Do your homework on car values and pricing before you go. Set a maximum amount you’re willing to spend on a vehicle and stick to it!
- Remember that buying an auto at auction means that you are purchasing a vehicle “as is”. There are no warranties or returns, but there might be some surprises once you take a car home. Again, purchasing from reputable auction houses can pay off.
- Lastly, watch other bidders carefully to see what they’re doing. By studying other bidders across several auctions that same day you might also notice that one fella who seems to be bidding numerous times helping to drive a price up but never actually buying anything. That’s a red flag! It’s a good idea to attend a few auctions before actually bidding. You’ll be more familiar with the process and some of the regular bidders. Talk to other bidders. You’ll likely find them willing to offer some advice and tips to novice bidders!
Charity Auctions located in Detroit allows you to donate your car. It also allows you to direct your donation to any charity you choose or one of their listed charities. An advantage with Charity Auctions is that unlike some other auction houses, you don’t have to wait for the car to sell to donate the proceeds of your car’s auction.
State of Michigan Auto Auctions is the state’s Department of Technology, Management, & Budget Auction (DTMB) website. All cars posted are sold to the highest bidder just like in a live auction. The site allows you to purchase previously used government agency vehicles.
Midwest Auto Auction is a public auction house based in Redford, Michigan. It offers both live and online auctions of cars, trucks, and boats. Live auctions are held each Friday a.m. with viewings available throughout the week. They also accept pawned cars.
Motor City Auto Auction is different than other traditional auto auctions. Typically, many auction houses only allow dealers and resellers to bid on cars. Motor City, however, allows the general public access to the same same deals.
Copart Salvage Auto Auctions sells a diverse array of vehicles in addition to cars. They also sell trucks, SUVs, ATVs, trailers, motorcycles, dirt bikes, boats, jet skis, and snowmobiles, as well as classic cars and even fork lifts. They also buy vehicles.
Grand Valley Auto Auctions holds weekly auctions open to the public and have been in business in western Michigan for more than 25 years. They usually offer more than 100 vehicles weekly including trade-ins, used car dealers, repossessions, company vehicles, and public consignments. They also sell boats, bikes, RV’s, ATV’s, trailers, snowmobiles, etc.
Insurance Auto Auctions, Inc. specializes in salvage auto auctions. They focus on the automotive total-loss industry throughout the United States and Canada. They offer help with processing and acquiring total-loss, recovered-theft, fleet lease, dealer trade-in and collision damaged rental vehicles.
Mid Michigan Auto Auctions is only for dealers.
Newsletter and Blog:
If you’d like to learn more about auto auctions or maintain abreast of the latest information and news on auto auctions across Michigan, register for our Newsletter! Being a well-informed consumer makes you a wiser and better consumer more likely to save money. Also, watch our blog for regular updates on a variety of auction topics!