How to buy a car at auction
Woot! I just bought a new-to-me SUV at the local auto auction. It’s a 2008 Mitsubishi Outlander XLS 4WD and is loaded. I don’t think I’ve ever been in a car that’s this loaded! Well, maybe I have — but definitely not one of my own. And it’s red with a black leather interior. How fun is that?
As you can tell, I’m super excited since:
- Sharing a car with my son has been a pain, even if it’s been a money saver (for him more than me).
- It’s been so very long since I’ve owned a vehicle that I’ve been crazy about. A Yaris may be cheap and have great fuel efficiency, but let’s face it, it’s not the most fun vehicle to drive.
Best of all, my new Outlander came in at $10,000 (yay!) at auction. Blue book value in Canada for this model is around $20-22,000. Add the sales tax and the maximum dealer fee of $400, and the total came to just under $11,000.
Last year, Nicole shared a great reader story about how to buy a new car at a dealership. But I hate bargaining. I don’t like it even remotely. Plus, I don’t really care if a car is brand new or not. I just want reliability — and a little bit of style. Besides, after reading Get Rich Slowly for so long, maybe I’ve become too cheap to go for a new vehicle.
This video shows what goes on at an auto auction.
How to Buy Cars at Auction
Buying a vehicle at an auction can be fun, but not a lot of people are familiar with the process. Since I’ve done it, let me share the steps it takes to buy a car at auction.
Find an auction that sells newer cars where the public is allowed to attend
Most auto auctions are run for dealers only, but some are open to the public. Vehicles at an auction are generally ex-rentals, off-lease, repossessions, or government vehicles. Mine was a trade-in being sold by a dealership. A quick google search for “your area or city + public + auto auction” should do the trick to find an auction in your area.
Review the inventory listing
Look at the inventory listing and pick a few vehicles that you really like. In this particular auction, there were 116 vehicles listed and several that I really liked. I knew that three of them would be out of my price range. (One was a Porsche Cayenne that sold for $49,200, and another was a BMW SUV. A girl can dream, can’t she?)
Check out the vehicles at a pre-viewing
Check out the vehicles at the auction house. There should be a pre-viewing session for the auction the day before. At the pre-viewing, you can start the vehicle but you can’t test drive it. (Although my son did accidentally put a car in drive and move it a few inches. He was so embarrassed, he thought they were going to kick him out.) Do all the things you ordinarily would when buying a used car: check underneath for fluid spills, pop the hood, bring a friend that knows more about cars than you do.
Do your due diligence
Do your due diligence on the handful of vehicles you want. Check out nadaguides for the (U.S.) book value, auto123.com for the best (Canadian) reviews. Check out auto forums on your selected models for personal experiences.
Establish your base price
Establish your base price for what you’re willing to pay. In my case, I was willing to go to $12,000 on the Outlander, but I was firm about that ceiling. (I think I would have got it for $7,500 if this one guy would have backed off. Oh well.)
Go to an auction to get a feel for how to bid
Go to one or two auctions just to get a feel for how the bidding goes. Usually they’ll start off with a fairly high number stated by the auctioneer. Do not jump in then. In my case, nobody was putting out the first bid for a couple of minutes — which felt like hours — and the auctioneer finally asked for a starting bid. I put out $5,000 to start. In hindsight, I wish I hadn’t because it seems like the first one to open their mouths always loses. But if there’s no starting bid, the auctioneer will let the vehicle go without bidding since they’re moving through these vehicles at a rate of about 15 per hour. I didn’t want to lose this baby.
Read the crowd before bidding
Watch the mood and trend of the crowd in the bidding before your vehicle comes up for sale. I’ve noticed that at auctions there are frugal crowds and there are spendy crowds. I don’t know why this is. I’ve seen furniture, tools, and kitchen cabinets sell for 10% of retail. But I’ve also seen them sell at what you’d pay for full retail in a store at the same auction house on different days. There doesn’t seem to be any rhyme or reason to it. Always be prepared to walk away. There’ll be another auction in a week or two.
Stick to your guns on your price
Really. It’s easy to get caught up in the bidding at an auction. It’s almost like they can put you into a suggestible hypnotic trance state.
Get an inspection at the auction house
Get an inspection done at the auction house, if it’s available. That’s a Buyer Protection Plan for major components. In my vehicle’s case, that cost $80. If there’s anything wrong, you can go into arbitration and the seller can lower the price or you can choose not to take the vehicle.
If you buy a car at auction, you have to put a deposit down on the day of sale. You then have to make full payment on the next business day.
Here are some final selling prices from other vehicles at this auction. I left as soon as I bought, so I never did find out how much the BMW SUV sold for. (Maybe I don’t want to know.)
- 2003 PT Cruiser: $1,500
- 2010 Dodge Grand Caravan: $13,400
- 2005 Hyundai Sonata: $4,900
- 2007 Ford Escape XLT: $9,300
- 2009 GMC Yukon SLT: $25,300
- 2001 Ford Windstar SEL: $2,550
- 2008 Chev HHR LS: $3,000
- 1997 Jeep Grand Cherokee: $800
- 2000 Dodge Grand Caravan: $1,425
- 2008 Ford Escape XLT: $11,400 (Ha! My Mitsy is WAY nicer than that!)
- 2011 Chev Impala LS: $10,250
- 1999 Honda CR-V LX: $2,000
- 2006 Ford F250SD Supercab XLT: $7,000
- 2006 Ford F350SD LWB XLT: $10,000
- 2006 Ford F350SD LWB XLT: $12,500
- 2006 GMC Sierra 1500 4WD SLE: $6,100
- 2002 Ford Thunderbird Convertible: $12,250 (gorgeous – my son drooled over this one)
- 2010 Dodge Grand Caravan: $8,000
- 2006 Lincoln Navigator Utility: $15,100
- 2007 Dodge Charger: $4,700
- 2007 Jeep Commander Utility: $9,100
- 2007 Saturn Aura Hybrid: $13,000
- 2008 Pontiac Solstice Roadster: $8,000 (sexy car, but totally impractical)
- 2000 Chrysler 300M: $3,700
- 2008 Jeep Compass: $5,100
- 2006 Infiniti M45: $14,200
- 2004 F150 XLT 4×4: $3,000
- 2006 Chev Cobalt Coupe LT: $3,900
- 2008 Porsche Cayenne Utility Turbo: $49,200 (ay carumba)
- 2010 GMC Acadia Utility AWD: $25,100
- 2010 GMC Acadia Utility AWD: $24,100
The prices for some of these vehicles may seem high (and some of them really aren’t a good deal anyway) since it’s Canadian pricing which is somewhere around maybe 20% higher in Canada than the U.S. But it also shows that unless you do your due diligence on the vehicles, you really might not get a good deal. There’s no guarantee.
This almost makes me want to start a side business flipping cars. (Almost.)
I’m happy with my purchase, and I’d encourage other GRS readers to explore this as an option when buying a car. For me, the only thing left — besides paying for the vehicle with a money order — is deciding what to call her. Mitsy? Outie?
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There are 68 comments to "How to buy a car at auction".
Congrats on the purchase!
In economics we tend to think of auctions as a good way to get at the true price of an object. Of course, it isn’t quite perfect as there’s still problems with information asymmetries, and people can get a winner’s curse because the people who err in thinking the car is worth more than it actually is are the ones who are likely to win. On the other hand, the price can go lower if there just aren’t enough people at the auction for that to happen– you need at least two people over-valuing the object and willing to pay for it for one of them to over-pay.
#8 is really important because it is easy to get caught up in the heat of wanting to win– but you don’t win if you pay too much!
Your point on auction attendance is so true – it can make a huge difference in pricing. When I bought my hardwood flooring at auction (paid ~ 10% of retail), I went to an auction that was held in farming country in the middle of harvest. Almost nobody was there and the deals were amazing.
How do you find out about all these autions, like your flooring auction?
Agree with you. One bidder can not win an auction, because it is equal to the starting price. That’s why the cars must be posted to such auctions which has more potential clients or even partners. Car-Liquidation is an Auto Auction Association who helps sellers to gather bidders from all over the USA. So if one bidder will be from one state, from the other state will for sure appear another one. Because they have 1000s of auction partners and they share the sellers cars between them. So an auction car will be sold faster.
Wow, that is amazing. I have been told that buying at an auction is the way to go, but have never heard specifics before. When I need to get a new(er) car, I will definitely look into this. Thanks for sharing. Sounds like you got a great buy.
As an auctioneer I can tell you from a lot of experience that everybody on this site should be looking for and attending local auctions. The people who make a living buy at our auctions and resaleing on ebay or other means is truely amazing. One retired person built a 20 by 30 shed and did a garage sale ones a month and never did less then a $1000 and many time he told me he made 2 to 3 thousand on one day a month. He would purchase the piles of stuff we could not sale and sort through it and clean it up. We have purchase almost all of our furniture at auctions and most of it people who come over think it is brand new. Furniture is not selling very well because young people go to walmart or other stores and pay full price.
Victor. Thanks so much for your comments and insights. I am evaluating whether to got into buying cars at auction and reselling them. I did not know about other types of auctions. How could one find out more about other types of auctions? I lost my job sometime ago and have a family and am looking for a new career or way where I can make a good living. Kind thanks Sir.
Hi Mike: I just read your story and now in the year 2014 I am in the same situation you were in. What advice were you given? Where are you now? I hope you are doing Awesome! Can you give me some advice. I am looking forward to hearing from you. Thank you again…
We have purchased our last 2 vehicles at auction. Love it!
Our auction house also lets you pre-bid online, so you can see if there is early interest on some of your wanted vehicles. Actually on the day of the auction you can just go online and bid from the comfort of home!
We have found that ½ of kbb value is a good price to shoot for as that tends to be about where the prices end up.
If your local auction has too many non-dealers bidding then the prices can get driven up by them, so watch for who is doing the bidding! Dealers will drop out quickly in that case.
Mary, glad you have had success with this too! We didn’t have pre-bidding, that sounds like a great feature. There is online bidding available however and that’s a great alternative if you don’t live close to the auction house. To be honest, I find it fun to just go to auctions to people watch even if I don’t buy anything.
I agree that around 50% seems like a good final price. My ceiling was a little higher because this was the one I really wanted and they’re not particularly common. It also seems that prices get lower further into the auction process when people like me have bought what they came for and drop out.
Great article – I really appreciate that you detail how much work you did put in to finding the right auction and the right car. There is defintly something to be said for being able to pick out the dealers versus consumers. If all the dealers have dropped out – you’re fast approaching the ‘not a good deal’ range.
Thanks for the article Jacq. You make a compelling case that preparation (determining your max price, getting the car checked, conducting thorough research) can prepare you for a successful auction experience. I also understand that you prefer this format to bargaining. I for one don’t like bargaining either.
I have to disagree however that auctions are generally a good place to purchase high value items. Here are a few reasons why:
– Competitive ’emotional’ biding often arises
– There are often experts in the crowd. These are not good people to be competing against
– You yourself can become emotional
– Fees can be high
Its a risky environment for many people. Maybe good for you, but not for most people.
I hear you JP. I’ve been going to auctions for a fairly long time and have bought everything from alcohol (a case of Frangelico??) to tools, furniture and hardwood flooring.
I absolutely agree with your point on the irrationality. Rule #1 has to always be to be prepared to walk away and know your prices. I’ve seen people buy food items in an auction for MORE than they’d pay in a grocery store. Add in the fees and sales tax and it’s definitely NOT a good deal.
Very good points. I feel like I would find the process really stressful.
I’d need to go to an auction with a calm, sane friend, who wouldn’t egg me on. I know myself and I have to put myself on ebay probation sometimes. 🙂
Porsche and Utility don’t really fit in the same sentence, do they?!
My husband and I are planning to purchase a new (to us) car next year. Your experience at the auction has prompted me to look into auctions. We have a huge car auction about 15 minutes from our house. I’m going to go see if they are open to the public and start going. Thank you so much for this article. Congrats on your great deal!
I actually did flip cars from the local auction along with my son and his friends. I provided the cash, and they detailed the cars and sold them. We all made a little money (definitely not enough to quit my day job at the time), and it was kind of fun.
You addressed my concern about the inspection, although I don’t know if it’s as good as taking the car to a trusted mechanic.
Well done & good article! Auto auctions in the Seattle area work much the same way & yes, be prepaired to walk as some days are completely crazy with prices. Thanks!
Buying an used car without test driving it is a bit risky. Agreed you can arbitrate but, why should we make car buying experience such a complicated procedure. I might want to visit car auctions a few times before participating in auction. Good tips!
This is a good post, with solid advice. One of my favorite reader stories.
Of course, we don’t really know how good of a value these cars are without knowing mileage. Still, the writer got a pretty good deal on her SUV, so congrats on that.
As someone who works with cars, I can’t tell you how much this article makes me nervous. Car auctions are the last place you should be if you’re an average consumer looking for a deal.
If a dealership sends a car to auction, it’s because they decided the necessary repairs needed to make it “dealer-standard” were too expensive-often the car will looks outstanding and pass a visual inspection, and then when you get it home, you’ll find out it had a bent frame or some other major repair which can make the car quite dangerous. Dealers are in the business of making money, and if they think the car wasn’t good enough to sell, why on earth would you think it was a good bet? There’s a reason these cars go for half price at auction.
The promoted “Buyer Protection Plans” are the worst scams out there. They tend to cover some things, but not the major things that would cost you an arm and a leg, like a transmission.
If you are not an expert with cars, stay away from auctions.
K, I see your point and wouldn’t recommend anyone go into buying something as expensive as a vehicle without a thorough inspection.
I don’t agree on the auction risk being that high though. A relative owns a car dealership and they will often unload trade-in cars at auction if they don’t fit their inventory requirements / dealer profile.
There are disclosure requirements at auctions that I didn’t get into here since the post was pretty long as it was. That included a car-fax report, insurance claims, etc. If you’re talking about salvage auctions, I have no experience of those and wouldn’t go near a salvage vehicle.
Personally, I also had a mechanical inspection done as well just in case – just as I would do from a private seller or dealership.
No, I was not referencing salvage auctions. Local auto auctions are extremely tricky, and I would never recommend them as a thrift-shopping device to anyone by an expert. I work for several dealerships, and each and everyone one sends cars to auctions ONLY if they think they would do the dealerships’ reputation harm. I’m glad you think you got a great deal and I really hope you’re one of the exceptions, but I would proceed very carefully with the new car, and I would take it to the best mechanic you can find immediately.
K – Your assertions may be true for your stores, but that is not the case for the bulk of vehicles at auction. Many dealerships will send off brand trade ins to the auction (ex: Chevrolet dealer takes a Ford in on trade). Additionally dealerships will often “turn” their inventory sometime between 60-120 days. If they’ve purchased a car and it’s not moving many dealers will move it to get their cash back out of the car and put it back into another car that they might be able to retail, and make a profit on.
Scaring people off of cars at the auctions is completely unnecessary and a scare tactic. While in general auctions are dealers only (even public auctions) if someone is willing to be prepared than they shouldn’t be fearful.
Cars are also sent to auction when financial companies repossess them. They don’t repo unless the vehicle is worth about $5000 or more because it costs them that much to repo it, store it, file paperwork, pay someone to track it at auction, and loss they take at auction.
Thanks! Sounds like you got a good deal.
Thanks for sharing this “how to” guide! Have always been interested in attending, will now do so to check it out prior to next car purchase.
Thank you Jacq for providing some tips on how to tackle an auction. I have heard that there are some good deals to be made at auctions but I never considered it for myself because I just never knew how or what to do. Your article helps with what to expect and what to look for. I will definitely share with my husband. Thanks again 🙂
I used to work with a guy whose hobby was buying cars at the Repo Depot. He and a friend would split the cost and the friend, who was a mechanic, would fix what needed fixing. My co-worker, who was a very meticulous guy, liked detailing vehicles — it would be sparkling inside when he finished. Then they’d sell the car through a want ad and make a decent sum.
Great reader story. Interesting and informative. And, congrats!
Does anyone know how to do this, but with motorcycles?
Patrick, I’ve seen boats, motorhomes and motorcycles being sold at auctions. Not as common as regular vehicles but they’re out there.
Thanks for the info… appreciate the article!!!!
Congrats on the new vehicle too
Wow those are some good prices. I’ve heard a lot about buying at auction but have never put in the time to look at the details. Thank you for this post.
Great post! I personally haven’t bought any cars at an auction, my brother has. Perhaps next time I’ll go with him to see if I find any must-haves 😉
Wow! Well I know where I’ll be buying my next car! I can’t believe how cheap some of those went for! Ive heard of car auctions before and never really knew how they worked or how I could get one, but this is definitely something to look into next time!
They say luck is when opportunity meets preparation. Knowing the worth of car if the key to getting a good deal. Point received.
This is a really interesting way to find a car. I know my Dad, who used to work for the government, knew about auctions for old federal vehicles.
I do, like one of the commenters before me, caution people to get the vehicle inspected before they buy it overall.
Way to go, Jacq!
Having shared cars with family members for years I can definitely relate to this.
And I love your writing style, hard to believe you aren’t full time staff here.
Enjoy the Outlander, must feel awesome!
I’ve always wanted to go to a car auction, but when it comes to buying I’m so picky about space and gas mileage I’d probably not bid on anything. Looks like a good deal if you want to flip cars, though.
Too funny– I love the Outlander. It’s not time for me to buy a car but it will be in a year or two. And auctions are on my list of places to look into. This is a great piece– a perfect example of an awesome Reader Story.
Don’t forget that vehicles that have been in accidents (and I’m not just referring to cars with salvage titles) can end up at these auctions. My first boyfriend bought his first car at an auction. It was a “sexy” car, that ended up being nothing but trouble.
There’s also a tendency to buy at the top of your price range, wherever you’re shopping. Spend less, in case there are expensive repairs in your future.
People: there’s a sucker born every minute. In a lot of cases, there’s a reason these cars are at auction, especially now when the used car market is historically tight. Caveat Emptor – Let the buyer beware!
If any of you are contemplating going this route, it is worthwhile to investigate on getting access to dealer-only auctions. They typically have greater inventory available, higher quality and generally lower sales prices than general public auctions.
My dad bought a full-size Nissan pickup a few years ago, 15k miles on it for ~$12k, after finding a person with a dealer’s license who was willing to go in and bid on his behalf for a particular vehicle.
I think my dad gave him a list of qualities (full-size, X mileage, X year, Japanese make, price cap), and the licensed-dealer bought it and took around a $400 commission on the deal.
Thank you for including the results of other sales. I will likely get our next vehicle at an auction (but I have a friend with a dealer’s license) so it’s good to get a taste of the bids.
First off, congratulations on getting a magnificent SUV at a magnificent price. The Outlander is an under the radar sort of pick which makes it an exceptional value in the used-car market. Purchasing it at action simply amps up the savings.
Second, auctions possess great value if you know what you’re doing; on the flip side, the risk is great too. I would liken it to buying a property off MLS (dealership) vs. the courthouse steps (auction). Personally, I like to leave the auctions to the experts.
For people who need to finance, cultivating a relationship with a reputable local used-car dealer (oxymoron?) might work. Tell them what you want, pay them a $500-1,000 or so over their cost, and call it day.
Funny you say that Smedley, I ran into a dealer during the pre-viewing and he offered to pass along a pretty nice Volvo on the lot at cost plus $1,000.
A Volvo would have been nice, but the Outlander you bought is a steal, and commish-free! You have people tripping over themselves to pay double what you paid for a comparable Honda CRV.
Drive the Mitsubishi for 10 years and you will have won the war against auto depreciation.
The thing that this handy guide seems to leave out is that the auctions where you can get the best deals, period, are limited in many, many states to those buyers with a DEALER LICENSE only.
There are countless people whose eyes bug out at wholesale auction discounts, only to arrive at these auctions to be turned down because they do not have a dealer license.
In, my opinion, the small dealer licensing structure is something of a state subsidy (via agency capture) to the independent used auto sales industry.
I think long term updates on this story would be great. The story of Jacq’s Mitsubish Outlander, total cost of ownership, etc… as some of the comments are about the auctions not being a safe bet for the average consumer.
Do the homework, sometimes even ‘bad’ car can be a great deal at an auction. I recently bought a minivan that was listed as having a blown transmission. A little research discovered this is a common problem for that make and year. At the preview, I had my mechanic (whom I trust) on speed dial and got an estimate on the spot to replace the transmission with a new, 5-year warrentied rebuilt one. The bids on the van were low (who’d buy a vehicle with a bad transmission?), and even with the purchase price, the cost of the new transmission and towing to my mechanic, it still came in way below KBB value. And I know it has a worry-free transmission for the next 5 years. So don’t let even a ‘problem’ car scare you off if you’re willing to do the homework and hassle of getting it fixed.
So great to see a story from a fellow Canuck! I’d never thought of going to a car auction – something to consider in the future.
Great post, nice to see women getting out there and thinking outside the box. Most women leave it to their “used car man” to do the legwork. I have bought real lemons from Car dealerships before, so it’s not a given that the vehicle you buy from THEM is good.
Homework is important, as pointed out, and I think she drove away with a great deal.
Kudos Girl!
You have inspired me.
Jackson, I’ve had the same bad experience buying both used AND new cars from dealerships (a little Geo that was practically a disposable car). Nothing’s more important in this arena than getting a good, reliable vehicle. And I’ve learned from experience that 4WD is a must for me in the winter. 😉
I never thought about purchasing a car at an auction before! It seems like there may be some great deals out there and that it’s a sound way to get a ride at a discounted price. It doesn’t seem too difficult, either, now that I know how to go about it. Thanks! Great article!
Thanks for helping us to know about auction while buying a car.
Very helpful. I just crashed my car and it was suggested to me that I try an auction. All the other articles I’ve found are helpful but a bit technical. This is a good overview. You’ve made me want to see what I can find. Also, the list of cars and what they sold for was useful. Good article. 🙂
As a car salesman you only get paid commission and it’s pretty low unless you have a certain number of sales then they up your percentage a little bit..
Good article, very well laid out and easy to understand and follow. Thanks for sharing. I know your tips will save me thousands.
Very helpful article. I really appreciate that you wrote in details how to find the right car auction and the right car. I want to buy a car from Repokar Auto Auction and with these good tips will be very easy.
The article is interesting…This is a very helpful way to find a car.
Now We would know that the vehicle should be inspected before buying it.
I am going to visit Repokar and make my desired purchase. Thanks a lot for infos!
I am wondering once you win a car at an auction can you just drive it home? Will the auction house supply you with temporary license tags?
No usually you have to haul it out your self.
Hello J.D. Roth,
Above, you are given such a good tips to buy a car from an auction. Especially I really like your guidance process where you are described all point steps by steps. These guidelines will help to car buyers to take right decision.
Hello Spohy,
J.D. Roth founded this blog. Jacq is the author of this post. I think the article reflects Jacq’s experience and advice, not necessarily J.D.’s.
First of all I want to congratulate you for buying your new SUV. I’m glad that your experience with auto auctions was a good one. I also happen to believe in this trade as my brother is also a car dealer. He got his car dealer license cum auction license through DLC Network. Ever since, I have seen him doing a great business.
These auto auctions are the best way to find a good car because the cars that are being auctioned are thoroughly inspected and are given a good price tag. Moreover, I got my brother to buy a nice vintage redone car for my wife from one of these auctions.
[4:11:15 PM] UD: If anyone needs a good deal on used cars, you must definitely look forward to these auctions. For those who wish to make a good money with the car dealership business, you should definitely get a car dealer license.
I don’t understand the use of closed auto auctions. I want to have access, even if only theoretically, to any car auction in my country. Better than other places I like Repokar Auto Auction in Los Angeles, where any car is accessible for any customer who entered the site.
BEWARE of public car auctions. If it’s too good to be true…then IT IS.
* public auctions are cars that dealers/wholesellers don’t want
* let me stress this point – dealerships/wholesellers don’t want these cars. These are the bottom 10%
* don’t look at blue book/nada/whatever. That’s book value…not market value
* never buy a car without test driving it
* you better know exactly what you’re doing
Yes there will always be exceptions…some people will say I got a car for xx% off…and runs perfectly for 10 years…will you be lucky to be part of 0.1%…or fall into the 99.9%
Also if these hotshots can buy a $20k car for $10k, why don’t they make a business out of it? They can easily unload the car for $13-14k and make a quick profit.
And I REPEAT – If it’s too good to be true…then IT IS.