How to buy a car at auction

Going back 20 years, buying a car at auction used to be the old-school method of obtaining a bargain buy.

It was very hard to bid at auction unless you turned up in person on-site and registered as a bidder.

Auctions have been generally slow to adopt online bidding, with the major auction houses giving preference to live bidding.

Like many industries, however, COVID-19 restrictions have forced them to an exclusively online presence.

The internet has increased massively the buyer audience compared to in-person live auctions, so competition has been high, especially during the lockdown months.

Be aware that the disadvantages of buying a car at auction remain – that is, no warranty and no consumer guarantees, such as the car being ‘fit for purpose’.

If you buy a dud, there are no come-backs. You own it.

Before bidding, research known problems of the car you’re interested in – for example, does it need regular timing belt replacement, and has that been done recently, or is it due?

Look for values at sites such as carsales and RedBook.

Auction cars can vary wildly in condition; for some auctions, it’s the cars nobody wants – often dealer trade-ins (that are not good enough for the dealer’s used car lot) or finance repossessions in poor condition.

It could also be an excellent vehicle of a type of car or price segment that no dealer happens to want or need that week, so off it goes to auction.

Spend time looking at all information presented on a car by the auction house and be suspicious of all of it. Remember, auction houses are dealing with hundreds, sometimes thousands, of lots each week, and can make mistakes.

So confirm that photos of the VIN number and build date and/or compliance date match those noted in the auction lot description and PPSR (Personal Property Securities Register) certificate, if given.

Any remaining registration is often cancelled before the sale; if not, and the car is registered in your state, that’ll obviously save you some money.

Buying a car at auction – Quick reference do’s and don’ts
• Do check all the car’s listing details for any errors
• Do check service history
• Do get transport quotes/availability before bidding
• Do register early in preparation to bid
• Don’t trust lot photos – look over them carefully for damage or missing parts
• Don’t go over your set bidding limit
• Don’t expect any warranty or comebacks

It’s much harder to see a car’s flaws in photos (especially paint condition) than in the metal, so your examination of photos should border on forensic. Look at everything slowly, closely, don’t rush, and preferably on a large desktop screen, not your phone.

If when looking at the photos you notice, for example, some panel damage, a few discreet missing parts under the bonnet, loose trim inside or a five-year gap in the service history, maybe now is the time to walk away.

But don’t be put off if the car has some of these issues; it isn’t always a sign of complete neglect. If it’s just one obvious dent in a body panel, for example, it might be just enough to put off other buyers and get you a bargain that needs just one simple, cheap panel repair.

Often the auction house will include a dash photo taken with the engine running (the give-away is the tachometer showing idle speed).

This is a good opportunity to check for any warning lights that stay illuminated with the engine on (which indicates a problem), such as an engine management light.

Be aware, though, that some warning lights may stay illuminated after start-up. For example, the ABS warning light only goes out after a vehicle reaches a certain speed for some vehicles.

Photos will sometimes include pages from the service book showing when and where services were done. Look for consistent, regular services with no big gaps in time or kilometres.

Perhaps call the latest workshop shown to see if they can give some background on the car, but remember that you are not a paying customer and so don’t wear out your welcome. Some workshops will not help you, citing privacy concerns.

An auction house must guarantee that no money is owing on the car. Often they will allow access to a PPSR report so you can confirm clear title.

If you’re organised, it’s worth getting an independent vehicle inspection through a reputable company such as RedBook Inspect.

Mechanical reports can get expensive if you’re not the winning bidder on several cars in succession. However, an inspection can catch potentially very expensive problems and can save you money in the long run.

It does make it harder not being able to see the car for yourself. Photos always make cars look better than they really are. Also, photos won’t tell you about the car smelling like an old dog.

The mechanics of online bidding are simple. You register on the auction website, giving your personal details and card details. Your card details are needed so that if you bid and are successful, the auction house can take a deposit immediately.

This amount varies according to auction house and the value of the vehicle, but it’s usually between $500 and $1000.

You then have a few days to pay the balance – often an electronic funds transfer is required.

Before bidding, find out what the buyer’s fees are. Buyer’s fees at auction vary, but expect to pay from $300 to $600 for a typical car purchase.

Some auctions have a set fee, others are a percentage of the sale price. Prestige and classic car auction fees can be a lot higher; a $100,000 car might cost you about $3000 in auction fees.

Some auctions also have an administration fee on top of the percentage; usually it is low, around $60.

You should always pick over the fees link on the auctioneer’s website before you bid, so you know exactly what you’re going to be up for. Call the auction house for clarification if you’re unsure.

If you win at auction, the auction house gives you a limited period to have the vehicle collected, usually three to four days, or they start to charge a storage fee.

Get transport quotes, if required, on the car you’re keen on. At the time of writing, states are opening up after COVID restrictions, but be aware that the demand for vehicle transport is still high at the moment, so it is worth asking transport companies how busy they are.

Some will be able to collect the vehicle from the auction house quickly but may need to keep the vehicle at their depot until an interstate truck has space to bring it to you.

When you are ready to bid, like any auction, decide what bid you are willing to go to, and do not go over it.

Not doing this will mean you’re buying with emotion, and all you need is another buyer in the same frame of mind and suddenly you find yourself with a very expensive purchase.

Auctions can feel very competitive too, but again, don’t buy into it. If another bidder wins the lot over your bid, then there will always be another car.

The types of online auction include the timed auctions (seven days, for example) or auctioneer ‘live’ auctions (held online).

The timed auctions give you the luxury of considering your bids more carefully. You don’t hear any auctioneer, just see the highest bids and in some cases an anonymised list of bidders (bidder’s initials and suburb, for example).

You may not know how much interest there is in the lot until the last days or hours – or minutes even – of an auction. So what looks like it’s going to be an absolute steal minutes before the auction’s finish time might quickly end up very pricey.

If you are bidding in a timed auction, note carefully when the auction ends. For some auction websites, you can set up an automatic reminder email close to the auction’s finish time.

Be aware that some auction houses will extend the bidding time past the auction end if there still appears to be sufficient bidding.

Often you can set your maximum bid amount before the auction’s end and the auction website will bid automatically for you in the set bid increments up to your maximum. This can be attractive if you have an unreliable internet connection or can’t bid in the auction’s last moments for some other reason.

A ‘live’ internet auction is the traditional type of auction where an auctioneer takes bids in real time, just like a normal in-person auction. Each vehicle is given a lot number, and unlike a timed auction, each lot is auctioned one after the other, taking bids for about a minute before the auctioneer calls the result.

Technology varies, but you often can only see the bid increments on screen for each lot and only hear (not see) the auctioneer calling the bids.

For this type of auction, you need to register for that particular auction, know the lot number of the car you’re interested in and roughly when it will come up during the auction; some auctions can have hundreds of lots.

You will need no distractions at your device when your lot comes up, because you will be bidding on it ‘live’. If you have a meeting on or have to go somewhere, you need to reschedule or miss out.

Bid increments can vary from $100 to up to $1000 for premium lots. Sometimes, if a live auction is stalling, the auctioneer will reduce the bid increments to get bidding moving again.

Some auction houses such as Pickles offer ‘buy it now’ cars. These (usually ex-fleet) cars are first put up for sale at a fixed, buy-it-now price. If the cars don’t sell for the fixed price, then they are often cycled through the auction system.

Fixed price sales are not auctions at all, rather a no-hassle way of buying a car with no haggling. Unlike the auctions, the car will have a statutory warranty (if applicable) and a cooling off period. But like the auctions, you can’t drive the car before buying it.

A reserve means that there is a minimum sale price set, and the vehicle won’t be sold for less. No reserve means exactly that: the highest bid gets the car.

Timed auctions can hint at the reserve but rarely give them openly. With live auctions, the auctioneer may start bidding below the reserve, and perhaps announce that the car ‘is on the market’ (or similar) once bidding has met reserve.

If it does not meet reserve, the auctioneer will refer it – which basically means the auctioneer refers to the seller to see what they want to do – either for the auctioneer to sell for the highest bid, offer the car at reserve price to the highest bidder, or to put the car up again in a future auction.