The Government Surplus Vehicle Guide
At government surplus auctions, unwanted property is sold to save on storage and maintenance costs. These auctions are some of the best ways for individuals and businesses to get quality used vehicles at affordable prices.
You can typically buy government surplus or confiscated vehicles via sealed bid, live auction, or online auction. The purchasing process can vary depending on the rules used by each selling government agency.
To make the whole process of buying government surplus vehicles easier, read on to find everything you need to know before bidding in a government-sponsored auction.
Where Do Government Surplus Vehicles Come From?
Over time, the government may accumulate a large number of vehicles and must open any surplus or seized items for sale to the public. How often these sales occur depends on the size of government and the process for which they sell items. For example, if they do a live auction, they may accumulate vehicles for an auction day that might be held only once per year. Items for sale could be municipal vehicles that have been replaced and are no longer required; vehicles forfeited from criminal cases by the police; abandoned vehicles; or vehicles from tow lots that were never picked up by their owners.
Where and How Can You Buy Government Surplus Vehicles?
The way you approach government surplus auctions will affect your chances of winning. Always look for a reputable auction company. Read buyer reviews. Check if the site is considered reliable by a reputable institution, such as the National Institute of Governmental Purchasing (NIGP).
Scanning thousands of cars can be tiresome. Once you’ve picked the auction site, browse the site beforehand, choose your target vehicle, and research its prices over the last few months. This will help you determine a set price you’re willing to pay before the auction starts. It’s easy to get carried away with the excitement of the auction and bid more than you planned.
If possible, go for a test drive or get an inspection done.
When it comes to bidding strategies, keep the bidding to yourself to avoid drawing attention to the item, attracting other bidders, and possibly increasing the final sale price. Some savvy buyers often wait until the last minute to bid. Also, since most people bid in even amounts, you’re more likely to beat them by bidding in uneven amounts. Rather than bidding $500, bid $501.
Auctions let you avoid dealer markups or overly ambitious owners. You may also come across rare vehicles that are not easily found anywhere else at incredible prices. To ensure your auctioning experience is enjoyable, make sure you’re well prepared.
- Know the auction site. Since every site has different rules, do your homework: understand how the auction works as well as the terms and conditions.
- Know the seller. Identify who the seller is. Check their feedback rating.
- Know the vehicle you’re bidding on and its relative value. Determine whether the vehicle comes with a warranty and how to get follow-up service if you need it.
- Only bid on the vehicle you intend to buy. Establish your top price and stick with it. If you’ve won an auction, if possible, pay with a credit card as they offer more buyer protection.
If you run into a problem during your transaction, try to work it out directly with the seller or with the auction site.
Why Buy from an Online Auto Auction?
You can find decent-quality vehicles at much cheaper prices from online auto auctions. For business owners who need many “new” vehicles, this can save a lot of money. If you enjoy the thrill of the bidding process and have the time, confidence, and knowledge, buying vehicles from an online auto auction can also be a lot of fun.
Tips for Getting a Great Deal in an Online Auto Auction
- Use your common sense. Look at everything carefully and note down any signs of repairs. Also, be honest with yourself. If you don’t have the ability to deal with any potential challenges, don’t talk yourself into believing otherwise.
- Know the vehicle before you bid. Research its market price. Again, if you don’t know what it’s worth, don’t take the risk. Check the VIN (Vehicle Identification Number) from different places (if possible, both on and off the car) to make sure they match.
- Remember, nothing is as good as it looks. Some touchups and polishes are cheap. Don’t believe everything you see. Bid conservatively if you’re not sure.
- Observe other bidders. Watch their actions closely on all the vehicles up for auction. If no one else shares your enthusiasm for a particular vehicle, maybe there was something you missed.
What to Know When Buying
When you consider buying a car online, ask yourself the following questions:
- How can I tell if an auction site is reliable or a scam? Depending on the type of auction site, you may be able to find online reviews. Take a look at previously completed auctions and see who is using the auction website to sell items.
- What’s the vehicle’s history of ownership?
- How’s the body condition? Has the car been in any accidents? Is there any rust?
- How long has the car been on the market?
- Has the car had any recent repairs?
- What’s the vehicle’s mileage?
- How was the vehicle used? Take, for example, police cars. While they might not have high mileage, they are left running practically 24/7, especially in colder environments where the car transfers from one shift to the next.
- Is this car in good condition? You can obtain a full vehicle history report (VHR) by using the VIN from a company like Carfax.
For some sound advice on how to be best informed when you’re ready to buy, check out our list of questions to ask when talking with a seller.
VIN stands for Vehicle Identification Number. It’s the identifying code for any specific automobile. Each code is comprised of 17 characters (digits and letters) that is unique to the car and includes information about its manufacturer, model, and features. In other words, a VIN serves as a car’s fingerprint that can be used to track recalls, registrations, warranty claims, thefts, and insurance coverage.
VINs can be found both off and physically on the vehicle.
- Off the vehicle: Look at the vehicle title, registration card, insurance documents, owner’s manual, body shop repair records, police reports, and vehicle history report (VHR).
- On the vehicle: You can check the front of the engine block, front of the car frame, rear wheel well, inside the driver-side doorjamb, and driver-side doorpost.
Before you buy a used car, you’ll want to know as much about it as you can. Make sure you really dig into the history of the car and pay attention to any suspicious information. Here are the things you should look out for:
- Number of previous owners. A car with multiple past owners may not have had proper care.
- Previous locations. A vehicle’s past locations can cause some significant damage, such as extreme heat, flooding, or snow and icy road conditions.
- VIN number, make, model, style, and vehicle description. This can help you avoid various types of vehicle fraud, like VIN cloning.
- Reported damage and accidents the car was involved in.
- Filed auto repair and service records.
- Any suspicious markings.
You can obtain VHRs from Carfax or other private companies. For a reputable list of private VHR providers, check out the National Motor Vehicles Title Information System’s (NMVTIS) list of approved VHR providers.
Registrations and Forms
Whenever buying or selling a vehicle, you will need to transfer the title to its new owner. Before you buy, make sure the selling agency has a title to sign over to you or equivalent paperwork to prove the chain of ownership leading to you.
When buying a used car, you must not only submit a title transfer application, but depending on your state’s requirements, you might also have to provide an odometer reading, a VIN, and a Bill of Sale. If buying from the US government, you’ll need to get a Standard Form 97 (SF97) called “Certificate of Release of a Motor Vehicle.” This is a bill of sale that transfers ownership from the government to you.
A salvage title is a form of vehicle title branding which notes that the vehicle has sustained major damages or has been deemed a “total loss” by an insurance company that paid a claim on it. Salvaged vehicles can be rebuilt and inspected to be re-registered.
Depending on what state you’re in, you’ll have to jump through different hoops to get a legal title, registration, and insurance for a salvage vehicle. Furthermore, many car insurance companies may refuse to insure a car that has been listed as salvage or only provide liability insurance and exclude coverage related to the original damage to the car.
Follow the steps below to find the most reasonable coverage for your salvage vehicle:
- Get all the documentation you need to prove that your car is safe to drive according to your local state laws.
- Get the original repair estimate, if possible. Show proof that all the original damage has been adequately repaired when you talk to an insurer.
- Search for “salvage insurance” online. This will help narrow down a number of insurance companies that meet your needs. Not all insurance companies have the same restrictions. Some companies will insure vehicles that are actively being repaired or have been totaled out by other insurers.
- Opt for liability insurance only. Despite this “minimal coverage,” expect to pay higher premiums. Be sure to read the policy carefully and compare different options to get the best possible coverage.
How to Register a Salvage Vehicle
Here are the basic requirements for registering a salvage vehicle:
- A completed Application for Title or Registration (REG 343) signed by all current owners.
- Proof of ownership. This can be a Salvage Certificate, the Certificate of Title, or an Application for Duplicate or Paperless Title (REG 227) form.
- A Verification of Vehicle (REG 31) or CHP Certificate of Inspection (CHP 97C) form.
- Brake and light adjustment certificates for most vehicles.
- Registration fees, which may vary from state to state.
Hidden Costs of Salvage Vehicles
It’s difficult – but not impossible – to insure salvage vehicles. If you happen to get into an accident, the total loss payout you’ll receive will also be much lower (if there is any payout at all).
If you try to sell or trade your salvage vehicle, it’s harder to get a good deal. In fact, most franchise dealers won’t take a salvage-title vehicle as a trade-in. You can either sell it to an independent dealership or a private party. Often, it’s best to assume you’ll be the final owner of the vehicle until it can no longer run.
Registering a Restored Vehicle
The registration process for a restored vehicle varies depending on state laws as well as the reason the vehicle registration was suspended. In most cases, you’ll need to provide proof of insurance, a declaration page for the vehicle being restored, and a copy of the front and back of the certificate of title or bill of sale.
When a vehicle is considered “restored,” this usually means it was previously labeled as “salvage,” but then was repaired or restored to full working condition. In many cases, it’s possible to get full coverage on a restored vehicle, but only with some car insurance companies. In most states, to get a restored title back on the road, the car owner must go through the process of a mandatory state inspection.
There’s a sense of satisfaction when you can buy a classic car and return it to its former glory. However, there are important factors to take into consideration when choosing the car that you’ll spend time and money on restoring.
- Do your research carefully and choose a vehicle that will retain value. Don’t impulsively settle for a particular model. Some vehicles will never be valuable, no matter how carefully they’re restored.
- Be aware of rust damage. Rust is time consuming to repair. It may also require costly replacement of steel body panels.
- Make sure replacement parts are available. If you buy an uncommon model, there may be a shortage of replacement parts and used parts might be very expensive.
- Seek advice from an expert. Do you know someone who has more experience in auto restoration? Their advice will save you a lot of time and potential headache.
Reasons to Buy Salvage Auto Parts
Buying salvage auto parts is common when you have a damaged vehicle that is in need of repair. If you’re questioning whether you should buy salvage or used auto parts, consider the following advantages of salvage parts.
- Cost savings. Salvage parts tend to be significantly cheaper than new equivalent pieces.
- Good condition. Used auto parts can be just as good as new ones, even though they might have some wear and tear.
- Environmentally friendly. Reusing salvage auto parts allows you to save on the cost and resources involved in manufacturing and transporting a new part.
How to Restore a Car and Sell It for Profit
The prospect of buying and restoring a car in order to sell it for a profit is fascinating. However, if done wrong, it can cost you a fortune. Here’re a few tips on how to make money restoring and selling cars:
- Have a plan. Think about whether you can build the car the way you see it in your mind and whether you can restore it in a cost effective way to make a profit.
- Stay financially realistic. Don’t spend more on the restoration than your potential profit from selling the car.
- Be sure the car is in a certain level of condition and that it will have some resale value. You need to find the right car to start with – one you don’t need to spend too much money on to make it worthwhile. Otherwise, your investment won’t pay off.
Before you rush into a government surplus vehicle auction, identify your goal. Think carefully about what you’re doing and why. Do your homework. Know your state’s laws. Seek as much advice as possible because even though it’s easy to make an online purchase, there can be many potential problems and pitfalls.
Need help with buying a surplus vehicle from the government? Municibid is an online auction site where government agencies, schools, and other authorities sell used vehicles directly to the public. Check out our listings in your area by clicking here.