I've been meaning to write up my lessons, experiences and tips in some sort of organized fashion, but I've realized that's not going to happen, so I'll just post brief patchwork bits, as they occur to me.
Here's a nice article from Edmunds on public auctions. I know a lot of it will seem confusing (don't worry, I'll explain the process), but at least it'll get some terms and industry practices out there (and best of all, it's not from me: I've had friends look at me like a conspiracy theorist, when I explain this stuff and details I use in my detective work on the car and other bidders)
Know your make/model and the reasons you want it.
Research the specific candidates in advance. Read not just the authoritative sources and review sites, but the enthusiast sites. Find out what kind of things commonly go wrong with that year/model. Research the competition, too! My wish list often changes dramatically after research
Two things that will make me *immediately* tell a friend they aren't ready:
1) being in love with a specific make. Chances are, others at the auction will be, too. Remember: dealers make money on quick turnover--"darlings" are worth much more to them than to a buyer who will drive the car for years. At my local auction, Hondas became the "darling" (when Toyota was dethroned) and a Passport consistently sold for twice the price of lower-mileage Isuzu Rodeos with better options and condition, though both are the exact same car, designed/built by Isuzu.
2) having too broad a range. I often I see a list of models that are nothing alike. Sometimes there's a logic there (esp. if you have two cars) but more often that logic falls apart on impartial examination.
Less 'known' brands (Buick, Oldsmobile) can go for pennies on the dollar. My dad got a 2005 Caddy in perfect condition for less (in 2012 dollars) than I paid for my first used beater in the 70s! (Caddy lovers don't shop auctions)
Make an inspection checklist for each candidate
You should have a base checklist, of course. There are some easy telltales of body/frame work or excessive wear that ANYONE can spot on any model. (Dealers can hide flaws due to their expected profit margin, but cars at auction rarely bother to replace tires/batteries, touch-up paint, etc.) Check the fluids. Look *under* the car and in wheel wells (a web- or cell-cam helps) Inspect the interior (I'll list tips) and make sure ALL the electrical comfort features work (a good sign of a well maintained car, and often an expensive pain to fix after purchase) Take the test drive seriously -- most drivers have no idea what to look for. Use a $25 bluetooth OBD reader and the free Torque applet to read the past failures recorded in the car's computer (or see if that was wiped to hide them!)
Beyond that you should have a specific list for each car. If the VIN history shows flood or rust prone areas, check the affected parts. Very often, cars with a bad reputation for a certain part may only have 5% (expensive) lemons that you should avoid, while 95% are perfectly fine. know what recalls are in effect--a problem that a dealer will immediately fix isn't really a problem. (A friend knowingly bought a car with bad rear-end rust for almost pocket change, and then drove it to a dealer, who paid him several thousand dollars under a recall buyback because it was "beyond fixing") Quite a few known model defects show up by a certain (early) mileage or not at all, others can be seen on a cursory inspection, if you know where to looks -- as enthusiast sites will tell you.
Be willing to invest several weeks. Wait for the right car/bargain. There's often significant rollover from week to week, so there may not be anything exciting each week. Don't hesitate to check out other makes/models, just because you can -- no saleman pressure here! You can go to a local library and do research before bidding on an unexpected find. My auctioneer has real-time internet bidding -- helpful if you're prone to bidding frenzy (I'm not), and esp convenient for their Saturday morning "second chance" auction for cars that didn't sell at the main Wed. evening auction. If a sale fell through or a reserve wasn't met, you may get a better deal at home in your bunny slippers
While I can't overemphasize the benefits of KNOWING cars (bring an expert if you can), in my experience, you can weed out 95% or more of the bad auction cars without having any real idea how cars work at all, especially on bank repos and new car trade-ins. They don't invest time and money in hiding flaws. (Used car dealers may -- so know the seller!)
Be reasonable in your expectations
There are few guarantees in life. Even a dealer's guarantee usually only lasts a few months. It's a sad fact that people who are strapped for cash often feel they can't "afford to take a chance", when in fact, they can't afford the convenience of a sure thing. When they chase bargains, those often turn out to not be bargains at all.
Whatever you're willing to pay a dealer, you can probably get that car at auction for half that. Set the other half aside (mentally) for repairs. If you properly inspect the car before buying, it's highly unlikely that you'll spend anywhere near that in the next 2 years. (dealer-bought cars will need repairs in time, too)
If you have a bit of extra cash, it actually gets to be a cheap hobby. I once bought a SUV for the summer, decided I didn't want it, spent a Saturday afternoon cleaning it up and resold it at a profit at the following week's auction -- all without driving it off the auction lot. (Note: I politely explained my problem to the auctioneer and asked permission to park it. Don't try to pull a fast one.)
In the process, I learned everything I need to know about SUVs (and why they're wrong for me), but if my needs hadn't changed, I'd have happily driven it until a "peak sales" month (like tax refund season) when I could have covered not just my auction fees (as I did) but MA tax/insurance too. In many states, buying temporary cars is extremely practical, but MA tax rules put a damper on it.
There may be a temptation to buy "more car" instead of banking the savings. BMWs, Jaguars, etc. often go for Toyota prices because the small dealers aren't familiar with fixing them. You may be getting a repo bargain or you may end up facing a big repair bill in a year (perfectly normal for a Jag), and realize that you can't "afford" such a fancy car (but you can often resell/trade at a profit)
Source: http://www.exisle.net/mb/index.php?/topic/73924-buying-a-car-at-auction/
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