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BUYING AT AN AUCTION (2)
Step-by-step
- Decide on a price range, type, make and model.
Determine your top-limit – and stick to it!
- Visit the dealers to see what this type of car
sells for, and determine the book value of the vehicle.
- Watch out for car auction ads where the car you're
after is advertised.
- Attend a few car auctions without your cheque
book or credit card, to get a feel for how matters
proceed.
- Visit the auction site a day or two beforehand,
with a mechanic, preferably, and where possible
ask to test-drive the car you are interested in.
- Keep in mind any possible reconditioning that
needs to be done.
- If the vehicle is to your satisfaction, organise
the refundable deposit (essentially your ticket
to take part in the auction) by means of a bank-guaranteed
cheque.
- Organise finance beforehand if possible. You can
also ask the “on-the-floor” finance marketers
at an auction for assistance or advice. Do NOT bid
on a car without arranging finance.
- Remember the lot number of the car you intend
buying, as this determines when the car will come
under the hammer. Once it's gone, it's gone.
- When the car is presented, make your interest
clear early on by being aggressive on the bidding.
Make eye contact with the auctioneer. You know where
you will stop, the other bidders don’t.
- Listen carefully to the terms of the auction,
whether commission is payable or not, VAT and any
other “hidden” costs.
- If you’re successful, arrange for payment
to take place, usually within a limit of 48 hours.
Internet auctions
These days, it is possible to bid over the Internet,
on websites such as bidorbuy.co.za for example. But
by comparison with the huge turnover generated by
vehicle auctions on international sites such as Ebay,
the Internet auction business is still quite small
in South Africa.
Internet auctions usually require the bidder to download
and install software to access the auction. An online
application form also needs to be filled in, and expect
to pay around R500 as a refundable deposit. This can
be done by either supplying your credit card details,
or transferring the necessary amount into the auctioneer's
bank account.
Cash or a bank guaranteed cheque will, in some instances,
also be accepted.
The vehicles on auction can usually be “examined”
by means of a picture or description on the website.
Some auction websites offer the facility to e-mail
the seller, allowing the buyer to make arrangements
to view the vehicle on sale, and usually the whole
selection of vehicles on auction can be viewed at
a single venue specified by the auctioneer.
When bidding on an Internet auction, remember that
it usually is different from real auctions in that
VAT is included in the bidding price. Watch out for
other “hidden” expenses though –
delivery of the vehicle, administration and documentation
costs, buyer's commission, etc. Again, the best advice
here would be to stay with the big players, for obvious
reasons.
Auction terminology
Absentee bid – allows a bidder to participate
without being present. A bidder submits an offer
prior to the auction.
Appraisal – The act or process of estimating
value.
Auction price – The price of an item
obtained on auction.
Auctioneer – Person engaged by a seller
to direct, conduct, or be responsible for a sale
. . . generally the person with the gavel.
Auction subject to confirmation/Reserve auction
– Where the seller reserves the right to establish
a reserve price, to accept or decline any and all
bids, or to withdraw the item from sale.
Bank letter of credit – A letter from
a bank certifying that a person is worthy of a given
level of credit. Often requested from prospective
bidders or buyers not paying with cash.
Bidder number – The number issued to
each person who registers at an auction.
Due diligence – Process of gathering
information about the condition and legal status
of assets to be sold.
Lot number – Each vehicle is given a
lot number. Remember the number of the vehicle that
you are interested in.
No reserve/Absolute auction – The item
is sold to the highest bidder with no limiting conditions
or amount.
Reserve – Minimum price that a seller
is willing to accept.
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