How to Sell a Car at an Auction
Knowing how to sell your car through an auction so that you make the most amount of money possible while … Continued
Knowing how to sell your car through an auction so that you make the most amount of money possible while keeping administrative issues to a minimum is a fine art. In this guide on how to sell a car at auction we look at car auctions themselves and what you can do as the car seller to help the process along as well as upping your chances of getting a good price for your vehicle.
It is a good idea to contemplate selling at car auctions as auctions are one of the best and easiest ways to sell your automobile, though sometimes it does come with some pretty steep commissions from auction houses and dealerships.
What Is A Car Auction?
Before selling your car at auction and learning how to do so, it is perhaps a good idea to fully understand what a car auction is in the first instance.
For starters, a car auction works like all other auctions in that customers congregate to bid against each other with increasingly higher prices they are willing to pay for a car. In this way, you get what your car is seen to be worth on the open market so you know you are getting a good price for it in that you will achieve the true market value of your vehicle.
This is the theory behind car auctions. They obviously come with a set of practicalities too, which be investigated throughout this guide.
So, Why Use an Auction?
There are many positives to using car auctions to sell your vehicle. For starters, it is incredibly easy given that once someone has bid for your car, and they are the winning bidders, they have to buy it, with no backing out. Therefore, you know that there is a high chance that come the day of your chosen car auction, your vehicle will no longer be in your hands when it is over.
However, car auctions can come with some pretty steep commission costs. It is not unusual for this commission fee that goes to the auction house to be around 5% and then there is the VAT on top of that. Additionally, to make it worthwhile attending, customers often pay less for the cars on sale than they would privately. This compensates them for the fact that they cannot do the same amount of due diligence on the car (though that is not to say they buy cars blind) and also the fact that they do not have the same amount of flexibility to back out of a deal as a private sale does. While this may not get you the highest achievable price for your vehicle, you do at least sell your car quickly.
However, on some occasions, if you are lucky enough to have two bidders in the room that are exceedingly keen on your car, you may find that your car actually achieves more than it would in a private sale. This is often the case if you are selling a classic car that is rarely sold on the open market. One of the reasons that auction houses are great places to sell these types of vehicle is that they will be able to help you with advertising your car to specific clients of theirs ensuring that you maximise your return.
How Should I Choose Between Car Auctions?
There are many reasons to pick between car auctions. Location is a huge motivation for many. Obviously, for you as the seller, picking one that is local to you is by far the easiest option.
However, there will be far more dotted around a country and some may be more suited to the car you are selling than others, so the make and model of your vehicle should also be a factor when you choose a car auction house. Some auction houses are specialists – and not only in terms of classic cars either. Some will actively sell cars that fall into the ‘old banger’ category or others will solely be interested in selling four wheel drives.
It pays to do your research therefore before finalising your choice of auction house as that auction house will attract a certain customer, and that customer needs to be one that wants to buy your car.
How Much Will Car Auctions Cost Me?
As previously mentioned, the commission charged by your selected auction house will usually be around 5%, but auction houses also have entry fees which are usually around $150. The commission is on the final sale price achieved so it is in the auction house’s interest to get you the best possible price. It is important to remember that the commission comes off the price achieved so is borne by you the seller, not the customer.
Is It Possible To Set A Reserve Price At Car Auctions?
Sellers can absolutely set a reserve price at an auction and an auction house will work with customers to see what type of price they are trying to achieve. They will investigate with you the age and mileage of your car as well as the service history and general condition to determine whether what you are seeking is a realistic and viable option.
If you set a reserve price however, you have to allow for the possibility that your car may not sell that day. However, if the auctioneer gets bidders to close to the level of your reserve, they may approach you to see if you want to halve the difference with the highest eventual bidder to achieve a sale.
Are There Any Other Car Auction Considerations?
There are lots of considerations to take into account when looking into how to sell your car at auction. One of the most practical tips is to figure out how you will get home from the auction in the first place, given that you are banking on your journey being a one way trip for your car – but not yourself! Other points to note are:
Before you get to the car auction:
- Wash and polish your car. It may even be worth spending that little bit extra on having it cleaned professionally.
- Take your car for a service as close as possible to the auction date. This is a huge incentive for bidders as they will know that they won’t have any costs soon after buying your vehicle.
- Have a third party assessment completed. By doing this, you are being as transparent as possible in your sale so that customers can bid on your car knowing full well what they are buying.
- Leave a copy of the service history in the car. This is a big reassurance for future buyers that buying your vehicle won’t leave them with a whole host of unforeseen bills in future.
What to do on the day:
- Sellers don’t actually need to be around on the day of the auction for the sale to go ahead. That’s not to say it isn’t a good idea to be present however. It allows for any questions about your car to be answered quickly.
- If you do plan to attend, try to get there a couple of hours before your car goes on sale. There have been instances where some buyers try to disable a car close to its sale so that they can bid at a lower price.
What Actually Happens On The Day Of A Car Auction?
When your car comes up for sale, the auctioneer will announce your vehicle and then go on to list its characteristics and details. If you have had a good working relationship with your auctioneer, this is where their knowledge of your car, that you imparted, can really make a difference to the price you achieve.
Your car will then be driven into the auction house itself and the traditional bidding of an auction starts. Your auctioneer can actually start bidding against bidders in the hall to get the price closer to any reserves. This is not against the rules nor seen as unethical as the car won’t sell if it doesn’t reach the reserve you have set anyway. What they are trying to do is garner the interest of several bidders so that the price achieved is as fair as possible.
After the sale, your auctioneer will call you or email you regarding whether your car did in fact sell – and if it did, for how much. They will then discuss with you, if they have not done so before, how you would best like your monies transferred into your account. They will obviously send you the money however you like, less their fees. The amount of time that this takes depends on your bank, the buyer’s bank as well as their own financial processes.
How To Sell A Car At An Auction: The Bottom Line
Selling your car at auction is therefore a great deal easier than many believe and should not be seen as a place to sell classic cars only. They can be a fantastic option for any type of car on the road and are ideal for those that really want a quick sale.