The Tri State area is well known for offering a variety of car auction deals, regardless of what type of auction it is. In order to take advantage of these deals for yourself, it is important to understand several different strategies and the types of deals they are designed to provide. The best strategies for most people fall into one of three categories – Overall Value, Going Cheap, and Luxury.
Overall Value Strategy
The overall value strategy is exactly what it sounds like. People who use this strategy focus on gaining the most overall value from their auction deals. This means focusing not only the cost to place the winning bid, but also the total costs and total returns. While this strategy rarely positions bidders to focus on the cheapest possible cars, they also never overspend. The key to this strategy is to focus solely on the money aspect. As such, it isn’t great for people looking for a specific type of car – such a family vehicle, because those types of constraints arbitrarily limit the possible options.
The Tri State area has a growing number of auctions which feature mid-range cars. They will cost more than several thousand dollars, but they are worth a great deal more. The primary goal of this strategy is to break even by the time the car is resold by the bidder – normally several years later or more. By purchasing the car at well-below market value, the car can be resold at a later date for same amount it was purchased for.
A great example of this at a recent Tri State area car auction was a 2005 Chrysler 300. Here is a quick look at the overall value breakdown.
- This car had 150,000 miles, but was still estimated to be worth $9,567
- Similar Chryslers can often go between 200,000 and 275,000 miles before a major mileage related repair is needed – such as a new transmission
- The winning bidder only paid $1,550
In this case, the winning bidder paid nearly 85% less than the current market value of the Chrysler 300. Plus, the Chrysler 300 holds its value extremely well. There is no doubt the buyer could resell this car once it gets close to the 250,000 mile-mark (or sooner) and still recoup the entire $1,550 they paid for it – plus any additional expenses that crop up between now and then.
Restrained Value Strategy
The next strategy is almost exactly the same as the Overall Value strategy, with one important exception. Instead of solely focusing on the financial aspects, additional restraints are placed upon the type of car which will be targeted at the Tri State auto auctions. The most common type of people who use this strategy is families, people on a budget, and college students.
All three groups of people place some type of restriction on potential target vehicles. For example, someone hunting for a family car may only want to consider 4 door sedans. Budget conscious individuals may need to limit their target pool based upon a maximum bid limit such as $3000. College students may require small, economical cars or larger cars to help them travel across country to school.
At a recent Tri State auto auction, there was a 2005 Honda Civic Hybrid (4 door). This is the perfect car for families or college students because Civics are known for their reliability. Here is a closer look.
- 56,144 miles and only minor dents and scratches
- Valued at $7,000
- Winning bidder paid $3,450
While this didn’t provide the same overall value as the first example (savings of 85%), it is a great deal (more than 50% savings) and meets the requirements of being a family car or reliable car for a college student.
Luxury Vehicle Strategy
The final strategy is to focus solely on luxury vehicles. While you still want to get the highest overall value, you also want to limit your focus to luxury vehicles. This is a unique strategy because you will be bidding against an entirely different group of people. Everyone interested in the same cars you are also want luxury vehicles. People bidding on luxury vehicles must have a higher cap on their max bid because luxury vehicles inherently cost more.
Here is a recent example from a Tri State auto auction – 2006 BMW M5
There is no doubt the BMW M5 is an outstanding vehicle, even if it is a few years old. This vehicle featured
- Only 56,000 miles
- Only minor dents and scratches
- 5.0L, 10 cylinder engine
- Estimated market value of $45,025
- Winning bidder paid $15,500
As you can see, the winning bidder paid far more than either of two previous examples, but still got an excellent overall value on the deal. They paid about 25% of the total market value and brought home a fantastic luxury car.
The Tri State area offers car auction deals on a regular basis, but you must utilize an effective strategy in order to make a strategic, financially sound decision. While there are a variety of strategies available, using any one of these three already puts you ahead of most of your competition.