Are you planning to start a construction business? Would you like to drive a Ford, Chevrolet, or Dodge for a fraction of its original cost? If your answer to both questions is a yes, then there’s only one thing you have to do: participate in a government auction.
How the Government Ends Up Auctioning Vehicles
The idea that the government participates in an auto auction may be hard to comprehend for you, but it’s actually been going on for years. Not only that, it’s a sensible or practical approach to earning profits and reducing costs. But how does the government have vehicles to auction?
Governments are known to enter into contracts for just about anything, including buying vehicles. These may be purchased as is or modified, as in the case of military vehicles, and used to perform the necessary services. For example, a Ford Escape is used by the police force for patrol, arrest, and a whole lot of other job-related activities.
Contracts are good for a number of years, which are usually based on the “shelf life” of these vehicles. This means that at some point, the existing vehicles they’re using would have to be changed and the government needs to buy new ones.
This isn’t a problem. The governments always set aside money for those things. The dilemma comes in when they have to deal with new and existing vehicles. By then, they create a surplus.
Surpluses are not generally bad, but they can be money draining in three ways: maintenance, inventory, and depreciation.
All vehicles under their care would have to be maintained, and although the costs may vary, they may end up to millions, considering the hundreds of vehicles they have to take care of. On the other hand, as physical assets, they make up the government inventory, and inventory costs something. After all, the government has to pay for the space needed to keep the unused cars or trucks. Inventory costs may also be indirect. Rather than maximizing the land for economic and government activities, it just sits there, idle.
Lastly, there’s depreciation. In accounting, depreciation is the recognition of the asset’s lifespan. In other words, it is not an indefinite product but instead goes through wear and tear as time goes by. Depreciation is an expense and thus lowers income. Further, the more depreciated the car or truck is, the lesser the value of the car in the market is. In other words, cars sold on the fifth year are more likely to generate profit than those sold only three years after.
Overall, for practicality’s sake, the government then decides to sell these vehicles. An auction is a great option since they can offer a lot of vehicles at one time. The more cars and trucks they can sell, the higher the chance they can earn more and clear their inventory or surplus quickly.
How Does the Government Sell Auctions?
The government has a department for that, and it’s called Government Services Administration (GSA). This independent agency does a wide variety of tasks such as providing transport to government employees or supply communications. But it’s also in charge of helping the government reduce their expenses or costs. And one of the methods is through auctions. In fact, it has its own auction site!
But why would it settle for only one website when it can take advantage of a vast network of auctioneers? GSA then enters into a contract with other auction organizers (now referred to as contractors), which then sell these government vehicles to different target markets.
Who Can Buy These Government Vehicles?
A government auction can have different types of target market. These include:
- Public, which means everyone is allowed to join! If you can go back to the GSA website, anyone can actually sign up, although because of the requirements needed, only those of legal age may be able to participate.
- Dealers only, which means only car dealers are allowed. Some individuals may try to participate in these types of auctions, believing they can get away with it. But the auctioneers will be looking for permits or any proof you’re a dealer before you can bid. Moreover, it’s expected since you’re a dealer, you may have to buy more than two vehicles.
Why Buy These Government Vehicles
Government vehicles tend to have an edge over those owned by private citizens or corporations:
- They are more likely to be well maintained. Remember, maintenance of these cars and trucks are part of their budget, which makes the process mandatory. Besides, since they are used to provide services to citizens, they have to be safe and functional 24 hours a day, 7 days a week. As further proof of how well maintained they are, many developing countries actually buy these vehicles, especially costly ones like jets or ships, from the United States.
- They are more likely new. Can you see government vehicles that are more than 10 years old? Probably not. It’s because they upgrade or change these vehicles on a regular basis.
- The government is not a money-making agency. While the government collects taxes and earns income in many ways, it doesn’t keep the money to itself. It is returned to the public through the different services they offer. Simply put, earning a profit isn’t really the forefront of their objectives, and this can work to your advantage. Minimum bid price may be lower, and increments during bidding may not go way up. In the end, you can buy a vehicle in mint condition for as much as half of its book value.
- There are so many vehicles to choose from. Can you imagine how many government vehicles are there in the country? It’s not unusual for the government to purchase hundreds of the same vehicle, which explains why big companies do consider the government as a priority client. Picture them “expiring” at the same time. It means you have hundreds of cars to pick! This is important as competition can sometimes become tough. A car may have more than three other bidders, for example. By having plenty of cars in an auction, your chances of getting one aka winning increases dramatically. Didn’t win the first one? Move on to the next!
How to Join a Government Auction
There are many ways to learn about and participate these government auctions:
- Keep tabs on the official GSA website. If you can’t subscribe, then bookmark it. Signing up is easy and free, although it may ask for your credit information in case you decide to buy any of the items on the list.
- Use search engines. Do whatever it is you always do when you want to look for something: trust the mighty Google to do the searching. Type “GSA auctions,” “government surplus auctions,” or “military auctions,” to name a few, and you’ll see quite an extensive list of auctions happening around the country.
- Subscribe to an auction listing. This, by far, is one of the best ways to join or look for a government auction:
- You have access to not just a few but hundreds of auctions around the country. In fact, websites such as Gov-auctions.org already have thousands of auctions listed.
- Look for hundreds of auctions in a jiffy. In less than an hour, you may have already found dozens of auction sites or auctioneers.
- Get the details you need to ensure you can bid. The information may include the name of the auction, type of auction, status of the auction, location, date, time, inspection schedule, contact person, the kinds of vehicles available for auction, map of the auction location, complete address, photos of the vehicles, etc.
- Get the list of auctions anytime and anywhere. Many of these listings don’t require any downloading or a third-party app like a PDF. Just log in to your account anytime and anywhere.
Auction listings are not free, but the charges are usually minimal, and you can choose your fees depending on how long you wish to access the subscription.
How to Bid at Government Auctions
Bidding is more than competing against other bidders. It’s also about being smart and confident with the process and how you do things. Without these two, you will easily lose in bid and money.
- Use your auction listing.
There are a lot of auctions out there. Use that to your advantage by not settling for the first auction you know. Consider five or more, preferably those that are within your state or as close to you as possible. Auctioneers are not responsible for transporting the vehicle after you win the bid. Having one near you makes transport easy.
To hasten your search, subscribe to an auction listing. When selecting your auctions, consider the following:
- Date and time
- Types of government cars and military vehicles sold
- Minimum bid price
- Kind of auction (e.g., online, live, etc.)
- Status of the auction (it’s best to choose one that is yet to happen)
- Auction process
- Reputation of the auctioneer
These factors can be helpful in narrowing your auction choices. As a beginner, it’s ideal to participate one auction at a time to give you enough time to learn and be confident in the process.
- Find out the inspection schedule.
Once you’ve already chosen your auction, you have to determine the date of the inspection. This is usually scheduled at least a day before the actual auction. What happens during this time? The auction house opens its doors to potential bidders, and you’re allowed to check the quality of the vehicle.
This is extremely important since all the cars are sold in an “as is” basis, which means when you buy it, you also purchase its dents, scratches, and other minor or serious defects. Granted, military and government vehicles are well maintained, but some of them can still have kinks.
No one is stopping you from buying a poorly conditioned vehicle, but remember, you may be on the losing end. It’s difficult to secure insurance, more so sell it in the market later. Further, your repair costs may be more than the final bid price. Lastly, and perhaps the most important of all, you may be putting yourself and your passengers at a great risk.
During the inspection, you can bring along a handy checklist or guide, which is available anywhere online, or, better yet, tag an auto mechanic along. Find one that specializes in the vehicle you’re eyeing. These people can already perform an inspection quickly as they know what to look for like the back of their hand.
Choose at least 5 vehicles you want to bid on, so in case the mechanic gives one car a thumbs-down, you can proceed to the next.
- Know the vehicle’s resale value.
One of the biggest mistakes bidders, especially beginners, make is to join and bid without a clear idea of how much they’re willing to pay. This is dangerous as it’s too easy to get caught up in the moment. In your goal to beat your competition, you are unaware you’re bidding so much for an unworthy vehicle. Worse, your final bid price is something you cannot afford.
Note that once you win the bid, the car and everything that comes along with it, including the price, are your responsibility. Normally, you don’t have to pay the full price on the same day, but you may have to make a deposit, which is a percentage of your bid price. You may also need to spend for additional bidding charges or fees.
Knowing the resale value of the vehicle protects your finances and helps you control your bids and emotion. You can use the figures to give yourself a price range, which you should never breach as much as possible.
Owning a government or military vehicle is a privilege. It’s like having a piece of history with you, as these vehicles have been used for the good of your fellow countrymen. Participating and winning at GSA or government auctions give you such opportunity. Don’t waste it.