Navigating wholesale vehicle auctions platforms can be difficult if you’re a first-timer. Especially if you don’t know the different auction sale terms. More times than not you are very likely to make purchase mistakes that will cost you some unplanned expenses and in some cases, you might end up with a lemon!.
Wholesale vehicle auction platforms like Auto Auction Mall will give you access to a huge inventory of used vehicles and of course help, you save thousands of dollars…if you know how to go about it and most importantly, understand auction terms and what they mean.
In this article, we will break down auction price terms for you to understand.
If you have explored Auto Auction Mall or the Copart platform, you may have come across terms like current pre-bid, buy now, etc. These terms can be a bit confusing, especially if you’re new to online auctions.
Let us take a dab at what these terms mean and how they can affect your purchase if you don’t have a grasp of them:
Auction Sale Terms
Pre-bids are bids placed on a vehicle before the live auction of that vehicle. If you are on an auction platform like Copart, you can see the current pre-bided amount of the vehicle before the auction date is due. Some people mistake the pre-bided amount to be the actual cost of the vehicle – but this is just bids placed.
You may be tempted to place a pre-bid but we don’t recommend this. This is because pre-bids make the vehicle more expensive and benefit the seller. Also, a pre-bid cannot be canceled raising the price of the vehicle. During the live auction, starting bid begins from the highest pre-bidding amount. So the more pre-bids – the higher the starting bids and the costlier the vehicle.
For example, if the highest pre-bid on a car is $5,000, the opening bid during the live auction will be $5,000 and can only go up from there.
If there are no pre-bids on a vehicle, the starting bid will be lower – making the vehicle much cheaper.
Also if you make pre-bids, you drive the cost of the car higher than its actual value – giving the seller more leverage to sell a less valuable vehicle for a higher amount. Imagine a seller smiling to the bank after selling a scrap vehicle for loads of cash.
Pre-bids are not recommended!
2. Buy Now Price
Buy Now price means that you can purchase a vehicle outrightly without going to the live auction. A buy now can be done until one hour before the auction starts. This is the easiest way to buy a vehicle. You wouldn’t need to go against other buyers or worry about meeting the seller’s reserve in the auction.
Sometimes a buy now is not advisable, if the value of the vehicle is not worth the Buy Now price. You may win the vehicle at a lower amount during the auction – though not always the case. Also, only about 15% of vehicles on our platform come with a Buy Now price.
3. The Live Auctions
This is where the real action happens. All vehicles in wholesale vehicle auctions have their dates to go on sale. The live auction is where different buyers from all corners of the world have a chance to purchase a vehicle for their preferred bid cap.
There are three types of auction sale/sale approval conditions – Seller’s Reserve, On Approval, and Pure sale.
Seller’s reserve means the seller has a minimum amount they want to realize from the auction/sale of the vehicle. If a buyer is the highest bidder at the auction but the final bid price is not up to the seller’s reserve, the vehicle is sold on approval but the highest bidder and seller have to go into an exclusive 2nd round of negotiations.
This means that a seller has placed a certain amount as a minimum amount to be met during the auction. Meeting this amount guarantees that the highest bidder will win the vehicle.
For example – if you are the highest bidder during the auction and the price at which the vehicle was won didn’t meet the seller’s reserve – the vehicle is considered sold on approval.
Most of the time the seller gives an offer closer to the seller’s reserve. You can also negotiate and agree on an offer favorable to both parties. If both the seller and you can’t come to an agreement, the seller can re-list the vehicle and send it back to the auction.
It is important to note that the Buy Now price of a vehicle automatically becomes the seller’s reserve if no buyer accepts it before the auction starts and the vehicle ends up in the live auctions.
On approval, is the seller wanting to give the final nod for a sale to be awarded to the highest bidder. There might not be a reserve involved. But Sellers do this as a way of ensuring that they dont accept too low a bid. On approval, however, does leave room for further negotiations between the seller and the highest bidder/buyer before the sale is awarded
- Pure Sale
A pure sale means that the highest bidder wins the vehicle outrightly, regardless of the amount of the highest bid. This means that if the highest bid during the auction for a vehicle is $1000 – the vehicle is released to you without hesitation. There is no seller’s reserve to meet or negotiations to carry out.
Also, the seller’s reserve can turn into a pure sale if the seller’s reserve price is met during the live auction.
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All sales are final and biding and all bids once placed cannot be taken back!
To avoid spending money not budgeted, it is advisable to speak with us before placing bids. We will access your vehicle, give you estimates, and advice you on the best deals that will save you money.
It is also important to reiterate that placing pre-bids makes the vehicle more expensive and is binding once made. If you’re having trouble navigating our platform or the Copart platform, please reach out to us. Our representatives are always available to assist you with the entire process.
If you want to get started with us, sign up for free and have access to our inventory of over 200k plus vehicles. You do not require a license to bid through us.