Buying Classic Cars at Auction

Most classic car enthusiasts are familiar with the televised car auctions like the Barrett-Jackson and Mecum events that are held in larger cities across the country. Although many classic and vintage vehicles are sold successfully each year at the high profile televised auctions, plenty of old cars and light trucks also cross the block at the many smaller government and public auctions too. Interest in car auctions has risen in the current weak economy and the number of bargain hunters looking for deals has increased too.

The competition at car auctions is getting stronger and there are no guarantees that you’ll end up with a true bargain. You need to know what you’re looking at, what it should cost and how to spot a lemon quickly, as at most auctions you cannot drive a vehicle before you bid on it. Many auction vehicles are sold in “miles exempt” condition, meaning you cannot rely on the odometer readings either. Government auctions will generally sell cars and trucks with known histories like retired police vehicles, but they can also contain a lot of plain sedans, base model pickups and other vehicles that were impounded or confiscated. Government and county auctions also attract many professional auto brokers who go to auctions all the time and they know what they’re doing. You might be able to score a car for a cheap price at a government auction, and you might not.

You can find good cars at public auctions too, but you won’t be the only person bidding on them. As auctions have gotten more popular, more people go to them and more cars of dubious origin are showing up for sale too. Some of the cars sold at auctions are those that could not be sold at wholesale dealer auctions, and the offerings can contain vehicles with altered odometers, hidden damages and even flood contamination. A shiny exterior will tell you very little about the actual running condition of a car or its history, so you need to be very familiar with the type of car you bid on and know how to spot signs of trouble quickly. Take it for granted that most of the inexpensive cars purchased at an auction will need some work done to them, maybe a lot of work.

Buying a classic car at an auction means that you probably won’t be able to test-drive the car, you might not be able to perform a thorough technical inspection of it, and at some of the smaller auctions you may not be able to verify the maintenance history and provenance. All of these factors make buying at an auction an exercise in minimizing your risks and sticking to your guns when it comes to the maximum price that you are willing to pay. If you are a successful high bidder, you’ll have to be prepared to pay for the car immediately and transport it from the auction yourself as it won’t be registered or insured, and you can’t just drive it away. You will also likely be required to pay a “buyer’s premium” of around 5% to 10% on top of the sale price at most venues.

If you know what you’re doing you can minimize the risks associated with buying a car at an auction. Part of knowing what you’re doing includes understanding the basic conditions surrounding auto auctions. One very important concept is the “reserve price” or the pre-determined minimum sales amount set by the seller. If the bids do not reach the “reserve price” the seller does not have to sell the vehicle and the high bidder does not have to buy it. Unfortunately, in most cases you won’t know what the reserve price is in advance, you will only know when it has been reached. Once the reserve price has been met, both buyer and seller are obligated to complete the deal. Cars that are sold without a reserve price are sold to the highest bidder regardless of how low the bid was. A “no reserve” sale might net a very good deal, or it can inspire a bidding frenzy that pushes the eventual sales price much higher than was expected or justified.

Not all auction bids are real bids however, as some might be what are called “chandelier bids,” which are false bids announced by the auctioneer to keep the bidding alive and moving upward. Chandelier bids can only be called out when a car has not yet met its reserve price, as auctioneers are not allowed to meet or exceed the reserve price with chandelier bids. Although there have been some attempts to ban chandelier bidding in the past, it is considered legal in almost every state today because the false bids below the reserve price do not create an actual contract for sale. Only bids above the reserve price can create a binding legal contract. It’s not impossible to find a good classic car at an auction, but it is getting harder. Buying a car at an auction does not guarantee you’ll get a bargain price either, but if you’re careful and you know your car values, you can sometimes get a very good deal.