Chapter 5. Selling A Vehicle At Auction
Consigning a Vehicle
Sellers who represent their vehicles accurately, sell consistently and set realistic prices, earn the buyers’ trust and enjoy more success at auctions.
Inventory Into Cash
Nothing is more important to a consignor’s success than turning inventory. Auctions are the best way for consignors to turn slower-moving inventory into cash.
Consignment to Auctions
Consignments to auctions are from varied potential sellers, including dealers, manufacturers, banks, rental car companies, leasing companies, government agencies, company car fleets and other commercial institutions.
A consignor can register vehicles into the sale day inventory in several ways:
• Vehicles can be registered by telephone, fax, or e-mail with the auction’s sales and/or vehicle registration department.
• Vehicles can be registered electronically using an auction’s online service, where available.
• Vehicles can be delivered to the auction site.
To consign a vehicle, the consignor must provide a full description of the vehicle, including the VIN (see VIN, pages 80-81.) For best results, the consignor should have the title at the auction prior to the sale.
Maximizing a Vehicle’s Value
There are several ways sellers can enhance the value of vehicles they are trying to sell. These include reconditioning, certification, and effectively representing the vehicles on the block.
Most auctions are equipped with reconditioning operations, including:
• Paint Services
• Dent Removal
• Body Work
• Glass Replacement
• Upholstery Cleaning, Replacement or Repair
• Tire Replacement
• Presentation of a Condition Report (which can be used to discuss recommended reconditioning services to consignors and buyers)
Many auction companies offer consignors a vehicle certification program. The program allows the seller to choose a level of certification.
Consignors opting for condition reports will receive the evaluations, which can be utilized in the sale process to assist the seller in determining a fair value for the vehicle.
Seller on the Block
When vehicles are personally represented by a seller, there is a positive sense created in the lanes that the seller is standing behind their vehicles. If consignors cannot attend an auction where they are selling vehicles, the auction’s dealer sale representative can be asked to stand in on the block. It is helpful if the sellers establish a realistic floor price on their vehicles so the dealer representative knows the minimum price a seller will take.
Pricing Consigned Vehicles
For effective results in the auction process, it is critical for a seller to set a realistic floor price. Several factors come into play in determining appropriate price expectations, including the vehicle’s condition and color, and the demand for the particular product at that time. Once the seller’s expectations are determined, a seller may set a “floor price” for the vehicle. During the auction, the floor price is a key determinant on whether the vehicle will be sold, or become an “if” sale or a no sale.
First impressions really do matter. Buyers will take into account the condition of the paint, tires, interior and other aspects of a vehicle. Other items to consider are the make, model, year and odometer reading of the vehicle that is being sold, along with the general condition of the vehicle. Also important are the number and type of add-on features.
Premium colors will usually bring a premium price. Popular color vehicles can sell for $1,000 higher than the same vehicle with a less popular color.
Volume levels can affect pricing. An excessive amount of a certain make or model can lower prices, while a scarcity can raise the bids. Many consignors check the run list and confer with the auctioneer for assistance. To determine market demand at previous sales and the resulting prices, market reports from the auction can be obtained from auction staff.
The majority of vehicles go through the lanes with a floor price – the asking price of the vehicle. To eliminate the floor price or change the floor price, the consignor should contact the auctioneer or auction dealer representative. Auctioneers prefer to have an established floor price, as it helps focus the bidding process. If the bidding does not reach the floor price, the seller standing on the block can indicate to the auctioneer that they will take the last bid and forgo the floor price.
No sales occur when the bidding in the lane does not reach the floor price of the seller. While consignors have the option of no-selling their vehicles, usually the vehicles will not appreciate in value, and it is worth their considering the costs of holding inventory longer and possibly selling later for even less. Usually a vehicle brings the best value the first time across the block.
If a consignor has any vehicles that have not sold, they can ask to put them through the lanes again that day, store the vehicle until the next sale, offer it for sale online or arrange for the vehicle to leave the auction site.
“If” sales occur when the floor price of the seller has not been met, but a potential buyer wants to make an offer on the unit after the car has left the lanes. In these circumstances, a buyer advises the auction staff of their bid, which will be relayed to the seller.
Services for Sellers – After a Sale
Following a sale, the auction seeks to assure the completion of the transaction is a beneficial one for the seller. In this effort, auctions provide title guarantees, payment guarantees, and serve as an objective arbitrator, if required.
Trained auction staff will facilitate the transfer of the title to the buyer.
The auction is a neutral trading floor that guarantees the consignor will get their money from the winning bidder. The auction pays the consignor for their vehicles when the title is turned in, even if the buyer has not yet paid. The consignor is not responsible for collecting the money, nor do they have the risk of bad checks.
Arbitration protects both the seller and buyer. Buyers can request arbitration. However, if a buyer’s complaint is not open to arbitration, the buyer still owns the vehicle and the seller does not have to take time dealing with the complaint or negotiate with the buyer.
Frequently Asked Questions
Q. Does a consignor need to consign a minimum number of vehicles?
Q. How does a consignor correct information that is wrong on the invoice?
A. Prior to the invoice being printed, corrections can be made by contacting auction personnel. After the invoice is printed, the consignor can correct facts by contacting their dealer sale representative.
Q. What if a consignor does not have a title for a certain vehicle?
A. Vehicles that do not have the title at the auction run in the lanes with a blue light, meaning “title absent.” The seller has a limited amount of time to submit the title to the auction for processing. Many times there is an additional fee for absent titles.
Q. What if a buyer is from another state?
A. Auction title specialists are aware of the title requirements in all 50 states and can handle the transaction.
Q. If a vehicle doesn’t sell, is there a fee charged?
A. Generally, fees vary depending on auction policies.
Q. Should a dealer expect to sell everything he consigns?
A. Yes. As long as the dealer has set a reasonable floor price, the vehicles should sell.