Tips & Strategies for first time bidder to buy car from auction

Tips & Strategies for first time bidder to buy car from auction

"Fity-fity-fity-twentytwo-fity-twenty-twenty-hamana-whatamybid-twentytwo-anda half! The bid is your way sir at twenty two thousand, five hunurt dollars.  Going once, going twice, fair warning-and-I-said-sss-sss-sss-Sold!!!".

So goes the lyrical-yet-laser-tounged chant of a tuxedo-clad auctioneer, "moving the metal" at another classic car auction. Public auctions of classic and collector automobiles are presented by auction houses large and small, in any city you can name, and some you can't. Picture it: a convention hall, or an outdoor, five-story tall tent is filled with cheering...or jeering...bidders, car dealers, sellers, shills and miscellaneous hangers on; its public addresses system cranked to the limit, for maximum impact. Every car that crosses the auction block is polished to a diamond-like gloss. The lights are hot, the action sometimes frenetic, and the deals?

eBay.com is the world’s leading online auction web site. Like I said, more than 2 million shoppers gather on eBay EVERY DAY to spend more than $86,000,000 bidding on almost every product and service imaginable — including collectibles, appliances, computers, furniture, clothing, toys, vehicles, real estate, and more.

eBay has designed a user-friendly system to make it easy for absolutely ANYONE to put an item up for auction and take payment with almost zero computer knowledge. By using expert strategies that are proven to work from the beginning, you save yourself a ton of time and rocket past your competitors — who don’t have the same “insider” advantage as you! 

Choosing the right car is simple. Ignore everything else and just sit in the driver's seat and punch the radio presets. Heavy metal and rap stations -- fuhgetabit! Angry talk radio -- no way! Christian music -- pay the asking price! Classical music -- take that pipe smoker for all he's worth!

An auction can be an excellent place to buy...or sell...a car of special interest. I've done both, and have lived to tell about it. That same auction can be a shark-infested feeding ground for the ill-prepared, ignorant, and/or emotional buyer. As with most transactions, advance homework and sound thinking can help you bring home your pearl...or avoid a potentially nerve wracking, financially damaging experience. Here are a few things to think about prior to signing up for a bidder's paddle.

First and perhaps foremost, go there with an idea of what you want, and what you should be prepared to pay for it. I've seen novices attend with no advance preparation, just to buy "whatever strikes them." They usually get struck over the head, figuratively of course, by making an ill-informed choice. Spontaneity is a wonderful attribute, but a car auction is not the place to display it. That said, if you don’t yet know what strikes your fancy, auctions are a great way to get a feel for what’s what. Just don’t plan on raising your hand until you’ve done some homework.

The act of placing a bid during the final seconds of an online auction is called "Sniping" and it's perfectly legal on eBay. Bidding wars and sniping are an eBay sellers dream and a buyer's nightmare. Remember; first, it's not human nature. If all you have to do is outbid the next guy by fifty cents or even five dollars to win, wouldn't you? Second, it doesn't make economic or strategic sense to place a bid anytime before the last five minutes of an auction.

A better strategy would be for everyone to "watch" the auction until the very end. Again, there are two good reasons. One, the price doesn't spiral up as just illustrated. Two, the auction has zero bids, so it attracts fewer bidders-- less competition. It's a fact that once an auction has at least 1 bid, it becomes a magnet for additional bidders. Shoppers scanning an auction page tend to jump to the ones with bids, figuring there must be something that attracted other bidders. The more bids, the more interesting the item looks.

Another reason for knowing your product is that values vary considerably, depending upon the specifics of a given model. A nicely equipped 1966 Ford Mustang convertible with a V-8, power everything, the GT package, and a 4-speed transmission might be worth (let's say) $25,000. The 1966 Mustang convertible with a six-cylinder engine, manual brakes, and no other options that crosses the auction block right behind it might be just as good a car from an appearance and mechanical standpoint. But because of the major differences in performance and equipment levels, it's worth a bunch less, probably not even half, of the well optioned performance model.

Most collector car auctions take place over a weekend. There's usually at least one day when the vehicles are available for inspection. Though you generally won't be allowed to drive a sale vehicle, invest the time to check it out mechanically, just as you would any other car purchase. If you are not yet an expert on your target marque, you may consider paying your favorite mechanic to attend with you, and give the car the once-over. Don't buy a car that you haven't inspected just because it looks nice up on the auction block, under those bright lights.

You are attending an auction or buying a foreclosure it does not mean that you are getting a bargain.  You should always talk to your local realtor that can explain to you what your current market is doing and give you a comparative market analysis on a home to determine whether it's a deal or not.

Some auction houses open their doors for previews several days before an auction. Others open only a few hours before each auction. It's smart to review buyers' guides to learn about prices and how to spot fakes. If you keep a few price guides in the trunk of your car, you can also do some quick research while you're at the auction house.

While you are attending the pre-inspection, you'll need to pre-register and be issued a bidder's number. Most auction houses require that you post funds or have an irrevocable letter of credit from your bank before you are allowed to bid. Some firms now offer financing, and a few even take credit cards, but most are still established around cash sales. They will also issue documents describing the terms of the sale. Read them and make sure you understand the commission arrangements, as most sales require the buyer pay a portion of the auction house's fee. This "Buyer's Premium," usually 8-10%, must be added to your cost of the car and should be figured in when you are assessing your maximum bid.

Trading in the marketplace takes place in real-time, and you stand in competition with other savvy market traders who also want to profit from great bargains. You also need to spend enough time so that you can see the current trends. Items that sold well yesterday may have stagnated overnight. As you spend time in the marketplace, you will start to recognize the signs that signal "buy" or "sell." Of course, the longer you spend trading, the more profit you will make. (But make sure you take breaks to eat and sleep.)

It is important to note a key rule of the auction process, that is, if the car is passed in below the reserve, the owner through the agent or auctioneer will first negotiate with the highest bidder for the purchase of the property.

If you have participated in the bidding or have been sitting back watching how it is progressing, and the auctioneer announces the property is going to be passed in, it is a good strategy at this point to make sure you are the highest bidder to secure the option to negotiate with the vendor.

Cars...and indeed most items sold at auction...are offered one of two ways: "Reserve," meaning the seller has set a floor as a minimum price. If the bidding does not reach the pre-established reserve, the seller can withdraw the car as a no sale. The seller generally pays a minimum fee to the auction house if the car does not sell. The other method of offer is "No Reserve." This means the car is loose and selling, as they say in the trade, and will be sold to the highest bidder regardless of price. This type of offering usually generates more interest from buyers, and a lesser fee to the seller, as everyone knows the car will be the next one to sell.

The bidding process goes quickly. Most auctioneers roll 15-20 cars across the block every hour: that's about three minutes per car.  When you are bidding, you'll generally be assisted (accosted might be a more accurate definition) by one of the auctioneer's helpers, or "ring men," that work out in the audience. Yes, they are there to help you, but remember their job is to sell cars.  Don't let them, or anyone, rattle your concentration. You have every right to know the current bid, which made the current bid, and the bid being asked for. If unsure, ask for clarification, and be careful not to raise your own bid. Legitimate auction houses won't let this happen, but the pace does get brisk.

Where your used car comes from can be an important factor when considering longevity. For example, if you are from a state that has weathered hurricanes, there may be a disproportionate number of flooded vehicles on used car lots. Likewise, if you are from an area that frequently experiences heavy snow, used car lots may be full of vehicles that have endured those hard miles. Don’t forget to order your vehicle report so you know where the car has been registered. Believe it or not, where the car has been driven can make a big difference in wear and tear.

So many people are changing cars theses days trying to escape the curse of high gas prices. But they need to be realistic about the car they are considering. Take a moment to think about the percentage of highway and city driving you do. If you aren't honest with yourself about these fuel economy numbers you'll be changing cars again in a year.

And one more thing. Fuel economy isn't everything. You still need a car that you're going to love driving after a few years. So look at the Edmunds.com editors' and consumer ratings. Not all cars are created equally. And looking at fuel economy rating doesn't tell the whole story.

It also pays to learn a bit about the auction house presenting the event. Do they guarantee clear title and Smog Certification? What happens if title cannot be transferred or located, or the car is not as represented? I witnessed an extreme example of this situation. A Corvette represented to the crowd...and to long-standing auction presenter Rick Cole...by the seller as an ultra-rare 460-hp 427 V-8-powered roadster.  The car turned out to be an exceptionally well-done fake. Yes, it was still a real Corvette, but it began life as a more garden variety model and was worth tens-of-thousands of dollars less than what it sold for at Cole's auction. Cole bought the car back on the spot and went after the shady seller. Is the auction house promoting your event willing to do the same?

By now you might be asking yourself "with so many potential risks, why would I want buy at auction?" In spite of the aforementioned caveats, there are plenty of reasons to do so. First of all; selection and convenience. You may have the chance to inspect several, even dozens, of cars in one place that may fit your criteria. Then there's the specter of competition. If a seller sees that he is competing with nine other '66 Mustangs for the same potential buyer group, he may be a bit more realistic in his price expectation. No Reserve offerings are often a valid indicator of the current market, as they tend to gravitate toward current realistic values. If you don't really know what you want yet, an auction is a good place to see a cross section of cars and learn their approximate values.

And occasionally, there is a genuine bargain; that proverbial hidden pearl. I once attended an auction built around the sale of a Chevrolet collection. All the Chevy experts, dealers, buyers, restorers, and groupies were there. The auction house tossed in a few odd-lot Fords and Dodges for variety. But the audience was there for Chevies and paid little attention. The off-brand, No Reserve offerings found new homes at very friendly prices.As a buyer, you want to pay less, not more, so forget record sale claims.

Source:

Most of taken from http://blogs.motortrend.com . Also used other sources such as:
http://www.souq.com
http://usedcar.lifetips.com
http://www.domain.com.au
http://www.essortment.com
http://www.auctionriches.com/
http://www.wannanetwork.com
http://www.gaiaonline.com/
http://wholesalegopher.com
http://blogs.edmunds.com

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