What to Know About Buying a Car at Auction

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A classic car auction in Arizona/Image Credit: RM Sotheby’s

Contributing Author: Craig Fitzgerald

In 2022, there are more opportunities for regular citizens without a dealer license to purchase cars at auction than ever. Auctions represent not only an opportunity to find cars that may be hard to find locally, but they can also provide a chance to buy something for less than if you purchased it directly from a private seller.

We’re only going to be talking about auctions that the general public can participate in for this story. Dealer auctions require a dealer license to participate, so we’ll stay away from the non-public auctions that companies like Manheim, Southern Auto Auctions, and Adesa operate.

There are a few things to consider before you buy a car at auction. It’s not free, and a buyer doesn’t have many more protections buying at auction than they would if they purchased it from Craigslist.

What is an Auction?

Auction crowd/Image Credit: RichLegg

An auction is a marketplace where a consigner (the seller of the vehicle) offers their vehicle for sale through an intermediary known as an auctioneer. Bidders then place bids on the vehicle, hoping that their bid is high enough not to get outbid by a competitor. The bidding process continues until either a time limit has been reached, or the bidding has been exhausted.

What’s the Difference Between a “Live” Auction and a “Timed” or “Silent” Auction?

An eBay auction listing/Image Credit: eBay

A live auction is the more familiar format, where the auction is happening in real-time. The auctioneer – whether they’re online or in-person – presents the item, and bidding increases until there are no more bids.

A timed or silent auction works a bit differently. In this type of auction, bidders get a chance to view the item, but instead of presenting live bids, bidders offer one sealed bid. At the time of the auction, the auctioneer unseals the bids and awards the item to the highest sealed bid. There’s no opportunity to counterbid.

eBay auctions are sort of a hybrid of both types because the bids happen in real-time and there’s an opportunity to raise your bid, but there’s also a time limit to the auction. Bids are only accepted up until the point that the auction time has closed.

When Does the Bidding Close on an Auction?

A BringATrailer Premium Listing/Image Credit: BringATrailer

That varies quite a bit, depending upon the auction. In general, bidding on a live auction will close when the bids have been exhausted. An auctioneer will announce that they’re closing the bidding when the crowd has run out of steam, and if no other bids come in, they’ll “hammer” the auction to a close. No other bids will be accepted at that time.

eBay changed this and set a chain of events in place that are still being reckoned with today. eBay auctions are timed, so that on a particular day and time, the auction will close. That led to a lot of crafty bidders developing “sniping” software that allows them to put bids in at the last possible second so that they won’t be outbid.

That’s an unfair advantage that modern automotive auctions like BringATrailer hoped to address. Their auctions are also timed, but the trick is that if a bid comes in at the last minute, that time is extended an additional three minutes to allow other interested parties to counterbid. It makes it fair for bidders, who have a last chance to increase their bid, and it’s great for sellers, who obviously want to make as much money on their sale as possible.

Most of the other online auto auctions like Hemmings Auctions and Cars&Bids work the same way. It’s why they’ve managed to steal so much business away from eBay, which has never changed its timed auction policy.

Can Anyone Bid on a Car at Auction?

A Hemmings Auctions listing/Image Credit: Hemmings Auctions

Unlike the Three Stooges-style trope of unsuspecting bystanders bidding $10 million on a painting just by scratching their nose, bidders at auction are all preregistered. That’s true both in-person and online. When you register to bid at most auto auctions other than eBay, you’ll often be asked to present a letter of credit from a bank, proving that you at least have the credit to make a purchase.

Automotive online auctions at places like Hemmings Auctions require that bidders have a credit card on file, in order to help prevent fraudulent bids. BringATrailer requires a credit card and places a 5% hold on the card when the bidder places a bid. If you lose the auction, the hold is lifted immediately. Cars&Bids does the same thing but places a 4.5% hold on your card.

Do I Inspect a Car Before Bidding?

Under the hood/Image Credit: dragana991

You can inspect a car if you’re bidding on it in a public place. Classic car auctions like Mecum, Russo and Steele, and RM Sotheby’s typically stage auctions in a public location, accepting live bids from bidders in the room, as well as those online.

Even in this circumstance, though, you’ve only got a limited opportunity to inspect the vehicle. You can see it, and you can generally touch it, getting under the hood and into the interior to inspect for imperfections. Some sellers that happen to be near the vehicle may start it for you. But you don’t have an opportunity to drive it, and you don’t have the opportunity to put it on a lift to get a good look at what’s going on underneath.

With online auctions, you’re really limited to photos, descriptions, and any videos that the seller may provide. Online auctions like BringATrailer and Hemmings do offer the opportunity to ask questions of the seller, which can help set your mind at ease about any inconsistencies you might find in the photos.

Is Bidding on an Auction Car Free?

How much/Image Credit: vtwinpixel

Bidding is free, but if you win the auction, you will be assessed a percentage of the sale price, known as the “Buyer’s Premium.” That fee can range from not a whole lot to a chest-clutching figure. For example, the buyer’s premium at Cars&Bids is 4.5%, with a minimum of $225 and a maximum of $4,500. At the opposite end of the spectrum, the buyer’s premium at RM Sotheby’s is 10%, with no maximum. Find yourself winning a 1968 Porsche 911 R at RM Sotheby’s for $3.36 million, and you’ll be writing a check to the auctioneer for the price of a nice house in the suburbs.

What About Getting a Car Home?

Towing a car/Image Credit: MAXSHOT

Congratulations! You’ve won the auction on your 1972 Ford Maverick! The bad news is that it’s in Wyoming and you’re in Boston. How are you going to get it home? That’s something you need to think about LONG before you’ve placed a bid, because it’s 100% your responsibility.

Before you consider placing a bid, you should find out where the car is, and request a few shipping quotes from reputable automotive shippers. The cost can vary wildly depending on the distance, the time of year, and the mode of shipping (open trailer, closed trailer, etc.)

The shipping cost should factor into your purchase price. For example, I purchased a 1966 Jeep CJ5 in Virginia about a year ago. Getting it back to Boston was feasible for me because I have access to a truck and trailer, but that would require 20 hours on the road, plus a hotel room, tolls, gas, and all the other costs required to drive that far. Instead, I found a shipper who hauled it to me on an open trailer for $660, which I factored into the price of the vehicle, and it still made sense for me.

There are a million questions when buying a car at auction, but every single one of the sites we mentioned have FAQs and videos explaining the process. It’s an interesting, exciting way to buy a vehicle, as long as you’re aware of the caveats.

Craig Fitzgerald began his automotive writing career in 1996, at AutoSite.com, one of the first online resources for car buyers. Over the years, he’s written for the Boston Globe, Forbes, and Hagerty. For seven years, he was the editor at Hemmings Sports & Exotic Car, and today, he’s the automotive editor at Drive magazine. He’s dad to a son and daughter, and plays rude guitar in a garage band in Worcester, Massachusetts.