Online Car Auctions for the Public: What Dealers Should Know

May 24, 2022

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Online Car Auctions for the Public: What Dealers Should Know

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Online auto auctions are one of the best ways for dealers to source cars. While wholesale online auctions are a fantastic way to get quality inventory, you can also occasionally find inventory  at some  auctions that are open to the public. Some examples include the following:

  • Online Public Auction Sites
  • Online Estate Sale Auctions
  • Online Consignment Auctions
  • Government Car Auctions

As dealers and auto industry veterans, you have an advantage at public auctions.  Your industry knowledge means you'll spot the good deals before the general public will. Knowing what to look for at these auction types will give you a leg up on successful negotiations. Some words of caution regarding Public Auctions though: 

  1. Information is Limited - The condition reports aren’t as complete as a traditional Wholesale Dealer Auction.
  2. Sell Price - Public bidders can drive up the value of a vehicle since they aren't looking to resell, are misinformed about the actual car value, or often don’t know the work involved in reconditioning a vehicle. 
  3. Limited Warranty/No Arbitration - Often these vehicles are sold “AS IS” with no warranty. 
  4. Time - If you are looking for specific units for your buyers, you might find the extra time to research the run list and look at the inventory not worth the time. Also sometimes getting your hand on the title can take extra time - specifically in estate auctions. 

Online Public Auction Sites

The main type of internet auctions are the online public auction sites. Online public auto auctions run similar to how other car auctions work, except they’re open to the public. The biggest thing you’ll want to watch out for is that some public auction sites have no arbitration. 

No arbitration means that if you found something undisclosed or wrong with the vehicle, there’s nothing you can do about it. All sales are final and not open to returns or refunds. Because of this, you’ll want to be confident in any vehicle you bid on in a public auction. 

Meanwhile, most dealer-only auctions have arbitration clauses baked into the contracts. These protect buyers from varying levels of damage and fraud. 

In general, you’ll find a few types of vehicles at standard online public auctions. Sometimes auction sites will specialize in one of these vehicle categories, while others will have them all. These types of auctions include the following:

Wholesale cars

While wholesale vehicles tend to go to dealer-only auctions, there are a few online car auction sites that offer wholesale vehicles to the public. With the high demand for used cars, you may want to look for public auctions that are wholesaling used cars to help supplement your inventory.

Salvage title cars

If a car’s estimated repair total is above the car’s value, then insurance will often mark the title as salvage. These are the cars marked as insurance write-offs. They’re damaged and not drivable until they’re repaired and given rebuilt titles. 

Rebuilt title cars

As the name suggests, rebuilt title cars are vehicles that have had the title rebuilt. After insurance marks a car as a salvage title, someone can repair it and the title is rebuilt if it passes inspection. Different states have different laws about rebuilt title cars being on the road. So moving them from state to state can be a pain for everyone involved.

Repossessed cars

Repo cars nearly always end up owned by the bank. Legally, banks can only sell to licensed dealers, so if repo cars are on these sites, they went through an intermediary. The condition of repo cars varies. They can be road-safe, damaged, poorly maintained, or wrecked during repossession. 

Classic cars and high-end models

Additionally, some wholesalers and broker car auction sites hold high-end public auctions. This is where you can find classic cars, collectibles, or high-end models. However, these tend to be for a very specific audience and are less bargain-driven than a standard online public auction. 

Online Estate Sale Auctions

Many online auction sites now hold estate sale auctions online. Estate sale auctions are not specifically for vehicles. You can find kitchen equipment, jewelry, collectibles, and more. But most importantly, estate sale auctions allow you to build your inventory. 

Still, these are the perfect places to pick up classic cars or cars with low mileage. However, there are a few things to watch out for when it comes to estate sale auctions.

  • Documentation: Documentation can be a concern with buying cars at these types of sales, so you want to make sure people have the title in hand. This means they know where it is and it’s in good standing. 

If it’s not in hand, you can run a vehicle history report to reveal the title history or work with the family to apply for a duplicate title. However, both of these carry risks. 

  • Reputable auction house: Some disreputable auction houses will misrepresent vehicles in terms of use, damage, and history. It’s important to trust the auction house you’re bidding through, so do your research on the house before you place a single bid.
  • Value: Vehicle prices are not always the most accurate at estate sales. Some auction houses will start the bidding process at an inaccurate price. This can be intentional or come from a lack of industry knowledge. 

However, this weakness can also work in your favor if they don’t know the car well and end up underpricing it. Situations like this can help you pick up a great car for a steal.

Online Consignment Auctions

Consignment auctions are a unique auction type where the general public can sell their own vehicles. They use the consignment site as a middle-man. 

Consignment sellers set a reserve price. If the bidder meets that price, great! The bidder gets the car. If that price isn’t met, then sellers can choose if they want to give it to the highest bidder or try again next time.

Sellers tend to price higher than a car is worth, so it’s hard to get deep discounts at consignment auctions. However, there’s always the occasional seller who just wants to get rid of their car. 

Because consignment auctions get their stock from the general public, you can find almost any kind of vehicle at this auction type. 

Government Car Auctions

Government internet auctions for the public offer a wide range of both vehicles and surplus property. You can pick up laptops, heavy equipment, and office furniture.  They generally have a huge selection of vehicles, so you never know what you’ll find. You might see a decommissioned Crown Victoria, a motorcycle, a John Deere tractor, or even a Gator. 

Government auctions run differently in different states. Sometimes there are separate equipment auctions. But more often, you need to sift through other items to find vehicles for your dealership. Police auctions can also be separate, and a great way to snag decommissioned cop cars. 

Some government state agencies require an in-person mechanical inspection before purchase. This requirement varies state by state, so be sure to read the terms carefully when browsing in case you need to book an appointment. 

Government car auctions aren't always 100% online. The bidding and purchasing take place online, but you can often make an appointment to see the vehicle in person. This can be helpful for mechanically savvy dealers. 

Be cautious when buying from government auctions. Low funding can equate to older models with high mileage and potential damage. Now, there are a few kinds of vehicles dealers might consider from these auctions.

Parks Department vehicles

Trucks and SUVs will be common finds, but they’ve done their share of hauling trees and driving on rough terrain. Depending on the region, the vehicle could be in good mechanical condition with relatively low mileage. With some reconditioning, these vehicles can be valuable inventory. This is especially true since trucks and SUVs are in such high demand.

Public Works vehicles

Public Works departments have a ton of heavy-duty equipment. They also rely heavily on trucks and SUVs to transport materials and drive between work sites. These cars may have dents and dings. However, some are still in excellent condition. Like park vehicles, these cars include desirable models like GMC trucks that customers will pay for.

Personal work vehicles

These can be some of the best government auction finds. Government vehicles issued for travel are often gently used. The mileage may be higher and they could have passed through several state employee drivers over the years. But, if they have a clean history they are worth examining.

Decommissioned police vehicles

Who doesn’t want to bid on an undercover cop car? 

Some of these cars will have rough interiors or body damage. Because the police department is getting rid of these vehicles at a low cost, they aren’t banging out dents or refurbishing interiors. This is actually great for dealers. The public might not bid on a vehicle with a dented door or glass dividers. However, if you have a body shop and source parts to replace seats or fix up the interior, these cars clean up nicely.

Watch where the police vehicles are from. Local municipalities may have lower-priced car models and lower mileage. They often keep cars longer based on low budgets. If you're on the hunt for an old-school Crown Victoria, local governments might be your best shot. For state vehicles, it’s likely mileage will be higher, but vehicle models may be newer and more desirable.  For example, Chevrolet Tahoe is a popular model for State Police. 

Dealers Aren’t Limited to Dealer Auctions

Public auctions can be a great place to score rare, classic, or high-end finds. However, remember that public auctions price for the general public, not dealers. While they can be helpful for some specific needs, they are often less advantageous when it comes to overall inventory sourcing.

As a dealer, you’re always looking for the best deals on solid cars that you can resell. Often, this means sourcing at dealer auctions like ACV Auctions. Though sometimes public auto auctions can be a good way to supplement a few of your inventory needs. 

To learn more about how to buy a car at auction or other ways to source great inventory, check out our Ultimate Guide to Wholesaling for Dealers.