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Cheap cars: Going once…
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July 7, 1999: 8:38 a.m. ET
Auto auctions can yield bargains if you know what you're doing
By Staff Writer Nicole Jacoby
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NEW YORK (CNNfn) - It's an urban legend classic: high-end Italian sports cars seized from criminals by government officials and resold at public auctions for a pittance.
Unfortunately, it's a myth that has spun out of control.
While government auctions can offer respectable savings, would-be car buyers are unlikely to find the rock-bottom prices propagated by spin doctors.
"Don't believe the hype about super savings," said Don Campbell, an auction veteran and author of the "Government Auction Guide." "You're going to see savings, but you're not going to get (anything) for free."
Separating fact from fiction
But there may be some truth in the folklore.
In some cases, cars sold at government auctions have been confiscated from drug traffickers and other criminals by law enforcement officials following dramatic high-speed chases.
But more likely, the vehicles were seized by the Internal Revenue Service from citizens who have failed to pay their taxes.
And in most cases, the cars are simply government surplus: cars that are overstocked, no longer needed or have been updated.
Ironically, it's the seized cars that tend to be "the best deals" in terms of price, said Buddy Doyle, long-time auction attendee and executive director of the Government Auction Page. That's because agencies selling these vehicles are simply unloading excessive stock from which they have no real need to profit.
However, these cars may not always be in the best condition.
"If (law enforcement officials) found dope in the gas tank, they may sell the car without a tank," Doyle said. However, he concedes, government auctioneers tend to be up front about any faults or problems a car may have.
Unlike seized cars, surplus vehicles tend to be extremely well-maintained, as government agencies typically turn over cars every three years.
"(The government) takes better care of its cars than anyone else," Doyle said.
And their cost, though far from scrimpy, can be very reasonable. Both Doyle and Campbell estimate consumers can expect to save about 20 percent off wholesale car prices at public auctions.
Prices won't fall much below that because government agencies set confidential sale minimums before putting items up for auction. If the final bid for a given car falls short of the minimum, the agency may or may not decide to sell the vehicle, depending on its other sales that day or the general need to shed vehicles.
No exotic cars
Another myth surrounding car auctions is the chance of obtaining an exotic government vehicle. Would-be bidders attending government auctions in the hopes of landing a Hummer or other similarly "edgy" military vehicle are out of luck.
The Department of Transportation has deemed Humvees and the M-151 series of vehicles commonly referred to as Jeeps unsafe for public use and they are not sold at auctions.
Non-government auctions
In addition to the government, many independent companies run car auctions.
While some of these commercial auctioneers may sell government vehicles, much of their stock stems from banks and other creditors who have repossessed vehicles from consumers who have defaulted on their loan payments. They may also sell used-car trade-ins.
But commercial auctions rarely yield as good deals as government auctions, says Doyle.
"This is stuff off the street," he said. "So it's kind of a gamble unless you really know what you are doing."
Getting started
If you've never bought anything at an auction, you should engage in a few rehearsals before indulging in any real bidding.
"Go get some practice, see how people bid, interact with the people who are in charge and ask questions," Campbell said.
Many first-time bidders get overexcited and end up paying too much for a given vehicle.
"You have to learn to go with the flow," said Campbell. "Sometimes you get caught in the moment and you get emotionally involved. Without thinking, you overbid."
To avoid overpaying, do some research ahead of time regarding the value of the vehicle. Auctioneers often list prospective sales items in advance, so you can compare listed cars to value estimates online at Kelly Blue Book or other Web sites.
Know in advance what you are willing to pay for a vehicle to avoid getting swept up by "gambling fever," says Doyle.
"People get totally lost in this. They see something they want and they bid anything," he said.
Would-be buyers should also closely inspect any items they plan to bid on in the open sessions offered before the auction begins. These evaluation sessions are usually offered the morning of the auction and sometimes several days in advance as well. While consumers are rarely allowed to test drive vehicles, they can usually start the car and take a look at the transmission.
Details, details
Before setting off for an auction, you may have to register and will likely be required to show some form of identification. In most cases, you will be given a bidding number that you will have to show the auctioneer upon making a bid.
In almost all cases, cars are sold "as is" and must be paid in full before they can be removed from the auction site. The title or certificate of ownership will be transferred to you upon full payment.
Cashier's checks and post office money orders tend to be preferred, though cash is usually acceptable and some private auctions will accept credit cards.
Scam alert
While auctions can yield good deals, there are potential pitfalls.
Flyers posted on college campuses and sent in the mail often advertise auctions promising high-end sports cars for as little as $300. The ads usually include a toll-free number which allegedly lists current auction offers.
These advertisements are rarely legitimate and often are the work of companies marketing fraudulent auction guides, according to the Federal Trade Commission. These companies may charge between $50 and $70 for a guide that provides information you can likely obtain for free or at low cost elsewhere. Usually, the guides simply list the names and locations of auto auctions.
If you are determined to respond to an auction ad, be sure to get the name of the company and check it out with consumer protection officials in your state. Remember that even if no complaints against the company have been filed does not mean the company is legitimate. Problems may not have been reported yet or the company may be operating under several names.
In addition, be sure to get a written copy of the companies' return policy, since complicated conditions may be attached, and pay by credit card so you can withhold payment if necessary.
Finding an auction near you
Most government agencies that sponsor auctions provide information about upcoming events on their Web sites. The U.S. General Services Administration, for instance, which Doyle contends has some of the best car auctions around, has data online regarding upcoming auctions.
Many agencies also provide mailing lists with the names of people who want to be notified about upcoming sales. In these cases, agencies may charge a subscription fee to maintain the list and cover the costs of postage.
Upcoming auctions are also regularly advertised in the classified or business sections of national or local newspapers. And sometimes notices are posted at post offices, town halls and other local and federal government buildings.
You also can use a paid service, such as the ones offered by the Government Auction Page or the Government Auction Guide, which provide a wide range of auction schedules and other related information and advice for a subscription fee ranging anywhere from $15 to $80. 
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