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Buying A Car From Auction Vs Dealer



In this article, we are going to go over car auction prices vs retail. So, how much cheaper are cars at dealer auctions? How much do cars usually cost at an auction and what are the average dealer auction prices?




buying a car from auction vs dealer


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Lastly, the auctions will include a buyers premium. This premium can be as high at 15%. If you are buying a $200k, tack on an extra $30k in fees, not to mention your state sales tax, etc. Auction houses connect buyers and sellers, and they collect a premium for doing so.


All over the U.S., you can find car dealer auctions open to the public. That means buying cars at auction prices is an option for just about anyone, even if you don't have a dealer's license. If you're interested in buying cars at wholesale prices, take a look at our car auction guide to find out how to buy the car you want at auction, just like a dealer.


Car dealer auctions are open only to those with a dealer license issued by the state. You can get your own dealer license if you wish, but the process can be long and difficult. Each state has its own set of requirements for car dealer licensing, usually with a set number of cars you must buy and sell each year to qualify.


Buying, modifying and reselling cars bought at car dealer auctions can turn you a tidy profit. But if you only plan on buying cars for yourself, it's probably best to buy from auctions that are open to the public instead.


You can in theory, though the reality can be complicated. Hundreds of car auctions of varying size and type exist all around the country, some live (as often as daily in some places), some online, some both. Each one has different procedures, rules and fees. Some auctions are open to the public, some charge to participate and some are limited to licensed dealers. Complicating things further this year: The industry overall is just emerging from the COVID-19 pandemic, which affected live auctions in most states.


Wholesalers also play an important role in buying and fixing cars so dealerships can get vehicles that will sell fast without always having to do their repairs. Having enough cars on hand to sell during busy seasons is crucial for making a profit. Check out our post - Wholesaling Used Cars: The Ultimate Dealership Guide for more in-depth info.


While some low-end auctions sell troubled cars, most cars at auctions are high-quality used cars. This is especially true of the private auctions that many dealers attend. Compared to an average car buyer, a dealer also has a better eye for vehicles and can quickly assess feasible options. They're also likely to get the cars repaired and cleaned up so they can sell them for more.


One of the major benefits of buying a car from a dealer from an auction is the ability to negotiate. First, pay attention to the window stickers. Two important stickers to watch out for are "MDA" (market value adjustment) and "ADM" (adjusted dealer markup). Both of those stickers indicate that the price adjustment could be to sell the vehicle for a larger price without a clear reason.


Either way, you can use the knowledge that the car came from an auction to your advantage. If the dealer bought the car from an auction, there's a great chance they got a huge deal on it, which means they will have more room to negotiate.


Auctions are a common source of inventory for dealers that sell used cars, as they offer an affordable way for dealers to get the inventory they want. Often, the vehicles that come from the private auction dealers are in good condition. Investigate the vehicle's source and condition and consider a pre-sale inspection when buying a car from a dealer who bought from an auction.


When dealers buy cars from an auction, they typically make a profit between 25-45% because they can pay far less than the trade-in value for the vehicle. Dealers then mark the car up to the market price.


Based on your requirements, if you are looking to buy a used automobile, you will almost always do it either through a car auction or from a private seller. Both options are highly popular across the US, with their distinct sets of salient benefits but also their separate downsides.


These are all things to be cautious of. But it might make you feel better to know that most auctions uphold legal responsibilities and do everything they can to provide quality vehicles to their customers. Just be sure to get all the information on a car before buying.


During regular auctions, it is easy for dealers to get caught up in the heat of the moment and spend more than they intend to. With online auctions, buyers have the ability to set a maximum bid to avoid overspending.


Unless you are a licensed automotive dealer, the answer is no. Dealer auctions are only open to those with a dealer license issued to them by their state of residence. It is possible to get your own dealers license, but the process can often be long and difficult.


Once your vehicle has been scheduled for auction, all you need to do is sit back, relax and watch as 100s of dealers bid on your car. Once your car is sold, we will handle all of the paperwork and cut you a check. Sound easy? It is. Have a vehicle to sell? You can get started here


However, when I left I had a go at buying at auction and flipping the cars for a profit using my skill and experience. I bought four cars over a couple of weeks and I broke even on one and lost money on the other three.


Travel Trailer - May buy, sell, or exchange used travel trailers. May buy, sell, repair, or rebuild salvage motor vehicles and nonrepairable motor vehicles. May use dealer's temporary tags, buyer's temporary tags, and metal dealer license plates on travel trailers only. Exempt from the security requirement.


Trailer/Semitrailer - May buy, sell, or exchange new or used utility trailers and/or semitrailers. May buy, sell, repair, or rebuild salvage motor vehicles and nonrepairable motor vehicles. May use dealer's temporary tags, buyer's temporary tags, and metal dealer license plates on trailers/semitrailers only. Exempt from the security requirement.


Before you buy from a dealer, find out about dealer or manufacturer warranties, what they cover, and for how long. Ask if the dealer performs service or subcontracts to a repair shop. Be sure all agreements, guarantees and warranties are in writing.


For a used vehicle purchased from a New York State registered dealer - the proof of ownership is the Certificate of Title (MV-999), or a transferable registration for 1972 and older models, signed over to the dealer, and the dealer's Certificate of Sale (MV-50) showing ownership transfer to you. The dealer must complete, and you must acknowledge by signing, the appropriate odometer and damage disclosure statements.


Public auctions are where many cars in "wholesale heaven" will wind up. These are cars that can't be sold at a dealer auction because no car dealer would ever want to invest in them for the price the seller wants.


  • Level 1: Banks and other financial institutions: These sellers are not in the car business. They are in the lending business. Finance companies simply want to sell their vehicles at a reasonable price and be done with it.Most public auctions will put these sellers at the beginning of the sale because, on average, they offer the best inventory and the most reasonable selling prices. A public auto auction with plenty of these sellers is well worth the visit.

  • Level 2: New-car dealers: These days, new-car dealers will keep most of their trade-ins, but not all of them. Often this is because it takes time and money to diagnose and repair issues for makes with which they are unfamiliar.A Toyota dealer can easily sell a well-kept Camry. But a Land Rover or Saab with multiple minor issues isn't worth his time. If you're someone who performs his own maintenance and can spend a healthy amount of time at enthusiast forums learning about potential issues ahead of time, new-car dealers are an excellent source of cheap vehicles.

  • Level 3: Independent car dealers: These sellers are in the business of selling used cars. If they can't sell a car to a retail customer, they will bring it to one of three different places: another car dealer, a dealer auction or a public auction.If the first two are not successful for a sale, then the dealer will try the third. This way, the dealer can sell the vehicle to someone who doesn't know what he's doing.Public auctions serve the purpose of finding the people who fit the "clueless" mold. If you're still daring enough to shop at one, it's vital to not be among the clueless.



Get a subscription to one of these vehicle-history report services and use them to vet the cars in which you're interested. Has the vehicle been sold to several parties over the past year? If it has, that may reflect serious mechanical issues for the car. Was the car maintained by a dealer? Did it come from the Rust Belt or an area affected by one of the recent hurricanes or floods? Does it have a current emissions certificate? You can learn about all of these potential stumbling blocks before you ever attend the auction.


When you get to the auction block, there will usually be a mass of people staring at the auctioneer and auction staff. Most buyers will simply park themselves among the herd and believe in the hype that's being promulgated from the auction block.


If dealers can work together to lower the purchase price of vehicles by refusing to bid up, they will. The dealers are professionals who know how to play the game to their collective benefit. My job as the auctioneer is to protect the seller from "the family" of experienced buyers and get the vehicle sold.


More than 98 percent of the sales at public auctions go off without a hitch. But if you wind up buying a vehicle that truly has been misrepresented on the auction block, you have the right to walk away, cancel your check and fax a follow-up notice to the auction the following morning. Public auctions hate bad publicity almost as much as they hate an unfriendly judge with a real gavel. 041b061a72


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