Wednesday, 29 December 2010

How To Price Your Auction Car

So, you've decided which car you want, where to go to find it, what to look for when you see it, and how to bid on it when the time comes, but how do you decide how much you should pay for it?
Well, this can be a surprisingly difficult exercise! As I've already mentioned, most trade buyers at a car auction will be valuing the cars factoring in reconditioning costs and profit margin, and this is something that a private buyer will also need to understand to some degree.
Firstly, forget about any publications. I know, every other car auction tips website will bang on about Glass' Guide, CAP, or even worse - Parker's Guide. The key here is in the names - a guide is just that - a guide! If you could access all three of the most popular books, and cross-checked them for values, you would find huge differences. There are many reasons for this, which I won't bore you with, suffice to say that they are useless to a private individual.
Indeed, when selling cars to other dealers, I have noticed how many are moving away from the guides altogether. What they do instead is work off the retail price they believe they can make and adjust for their margin and any recon costs.
And this is exactly what a private buyer should be doing! Again, research pays off. Look on the car auction website to see which vehicles will be going through. If you are thinking of buying a later vehicle, search for that car on dealer websites, independent dealer websites, and private sales. Bear in mind, the varying levels of preparation these cars will have undergone, and what warranty cover you might get. Good places to do this are Autotrader,and This is because you will find main dealers, specialists, and private sellers all in one place.
Don't forget, you will need to price check like-for-like. Colour, mileage and specification all carry a premium, so if you buy a green car with cloth for £1000 less than you saw a black one with all the options for, have you really had a bargain? Also, bear in mind that you should be able to negotiate at least a little with a dealer, so factor in a bit of discount.

Once you have established an idea of the retail price, you need to estimate how much you would have to pay to get a car to the standard you require. For example, if you were looking for a vehicle of the standard you could expect from a manufacturer approved used car programme, you would need to have an idea of how much a warranty would cost, or how much you would have to spend to remedy a major problem if you didn't have a warranty. Of course, most cars under three years old would have the balance of the manufacturer's warranty, but there can be exceptions, not always obvious!
For example, even though a car in the auction may have full service history, if it hasn't been done to the manufacturer's specifications, or at the right intervals, the warranty can be invalidated. Don't assume that because a car has been leased, and the terms of a lease dictate that the vehicle is maintained that it will have been. Even if it has, if the service book is missing, it is extremely difficult to track down the history.
When you have determined your budget, you then need to go through your checks on the actual cars at the auction, and estimate any work that needs doing to get it to the standard you require.
Finally, you must deduct your buyer's fee, and you will have a maximum figure that you should bid up to.
Finally, go and observe before you buy. You will be able to see if the car you are after consistently achieves a particular price, and this will give you an accurate car auction price guide. Chances are that in the current market, you will probably end up going back to a dealer, but whichever way you buy, at least you can be confident you really got the best deal.

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