Like most car enthusiasts we’ve spent many hours watching or experiencing car auctions. These events are part spectacle and carnival in their environment with flashing lights, barking auctioneers, and shining examples of automotive history, all in a party atmosphere. For many, the experience can be exhilarating or heartbreaking. Lifelong dreams become reality with the drop of the hammer and fortunes made simply by being in the right place at the right time if your checkbook is deep enough.
Auctions, especially the high-profile events, are entertainment for most. Watching hours of broadcast television as gleaming cars cross the block and lucky buyers and sellers exchange stories as well as titles. Wrapped up in these high-production, made-for-TV events are celebrity, charity, history and even fantasy. With so much to grab your attention you may forget that there is also the business of transaction. This is where it’s a good idea to be fully informed.
Imagine you’re in the market for your dream car. You head down to the local dealerships, walk the lots, browse the selections and decide it’s time to purchase. Now imagine that the local salesman hands you a document that you must sign in order to purchase stating “nothing he says may be true, including the model, the year, the condition, the color or even the make of the car you are buying.” The price, of course, is always correct. Would you still buy a car there? Not likely.
We’ve all seen the questionable car cross the block and marvel at the audacity of the consignor to manipulate facts about the car. A one-of-one, special orders, low-mileage, barn-find, etc. are popular claims. Many of which may encourage a buyer to spend well more than the car is actually worth if they aren’t fully informed.
The argument of course is “buyer beware” and “do your homework” before bidding. But what of the lack of verification? How can a car be represented in a way that isn’t accurate? The answer is all too simple: because it’s allowed.
The importance of doing your due diligence when purchasing anything should be automatic. Would you buy a house without an inspection? Do you compare dealerships, car reviews or cost when shopping for a daily driver? Would you buy a new car without a warranty or a classic without at least checking it out closely? Again, not likely.
Herein lies the auction catch. In a private sale, if an individual sells you a car that is found to be not what it was promised or advertised to be, then you have may have legal recourse. However, if you bought at auction, you may be out of luck. Here is why. Auctions usually will have terms in their contracts that expressly state that buyers should not rely on the consignor or auctioneers statements, whether on the block or in print about any claims or authenticity of a car with phrases such as:
“Bidder shall be responsible for becoming familiar with the auction process and shall seek additional information as may be necessary prior to placing a bid for the purchase of a lot.”
“Bidder/Purchaser understands and agrees that (company) is merely performing an auction service and is not responsible for the lot description”
“Bidder is required to register in accordance with (company) policies and procedures.”
These seemingly innocuous statements remove any reliance of fact, which is a requirement to prove deception intended for gain. Both the consignor and the auction house may now be free from legal claims because in your bidder’s contract you agreed not to rely on the car’s description simply by signing it. In short, the onus is on you to verify the facts.
While it is important to always be vigilant, buying at auction can be a great experience. As a whole, they are a legitimate and fun resource to buy and sell cars. Auctions also raise millions for charities, make for great television, and help set the market value for the car hobby. Like any high-stakes transaction, however, they can also create the ultimate buyer-beware scenario.
Seeking advice from experts, inspecting your possible purchases, and knowing the market value is paramount to a successful auction experience. While you’re doing that homework, don’t forget to read and understand exactly what you are signing before you start placing bids. You and your wallet will be pleased that you did.
So get out there and bid on your dream machine, just be sure you know what you are bidding on.