How to sell your car at an auto auction
Selling a car at auction
- Ensure you have a clean title and no liens.
- Consider the costs against the benefits.
- Choose between a live or online auction.
- Choose a reserve price, if you want one.
Selling a car can be a time-consuming process. You may not have considered the time benefits of selling a car at an auto auction. In certain circumstances, selling a car at auction can save time, or even draw more money for a vehicle than selling on your own. Auctions can also be an ideal place to sell classic vehicles.
Generally, people either trade their older car at the dealer or, if they want to sell it themselves, advertise online. Selling at auction has a slight learning curve. Here are some tips to help you navigate the rambunctious world of auto auctions.
Ensure you can sell
Just because you have a car doesn’t mean you can automatically sell it at auction. Cars sold at auction must be lien-free. That means if you still owe the bank money for your car, you can’t sell it at auction.
You also must have the legal right to sell the car. Either your name must be on the title, or you must be a licensed dealer.
Consider the costs
Selling a car at auction can be a convenient and easy option, since the auction house does much of the work for you. There are other benefits as well: the auction house puts your car in front of prequalified buyers. It may feature your car in its own marketing materials, and it will provide storage for the duration of the auction.
But these benefits come with a cost. The auction house will charge a fee when your car is sold, which could range between 5 percent and 15 percent of the sales price. You may also be charged an upfront entry fee for listing your car in the auction.
Choose between live or online
There are two types of auctions you can use to sell your car: live and online.
- Live auctions. Live auctions are held in person. It’s what you see on TV or in movies, with an auctioneer and rapid-fire bids. If your car is in poor condition, you may have better luck at a live auction, where someone might bid on your car to use as scrap.
- Online auctions. In a post-eBay world, online auctions are increasingly common. Numerous websites, including eBay, allow people to auction off their cars online. Unlike live auctions, online auctions accept bids for a predetermined amount of time, typically a few days to a week. During that time, people can place bids against one another. The person who has placed the highest bid at the time the auction closes wins the vehicle.
Choose a reserve price
Once you’ve decided whether to participate in a live or online auction, you have another decision to make: whether or not to set a reserve price for your car. Auctions with reserve prices are called reserve auctions. Those without one are called absolute auctions.
A reserve price is the minimum price you’d sell your car for. If the highest bid is below the reserve price, your car doesn’t sell. You may still be required to pay the auction house for its services, however. You may be able to auction off the car another day, or you can try your hand selling it another way.
If you don’t set a reserve price, you run the risk of selling your car for a ludicrously low amount. That’s great news for buyers, but not for you as the seller. On the other hand, reserve prices can be a turnoff for some bidders. There are advantages and disadvantages to setting a reserve, but the decision ultimately lies with the seller and what they think is best.