Seized Cars May Not Be What You Think
There's a lot of information on the internet on seized cars that are subsequently sold at government car auctions. But it seems to me that a vast majority of this information is either incomplete, misleading or just plain marketing "hype".
You've probably seen it often and it goes something like, "Seized Cars... $100... 90% Off Retail!", or something along these lines. Assuming you're in the market for a nice used car, do you really think you can buy one at prices like this? You know what they say, "when it sounds too good to be true..."
I find the marketing hype unfortunate because I think most people, like me, are turned off by it. And because of this, many are actually missing out on some great cars at outstanding prices (more on pricing later).
Another factor that I believe also keeps car buyers away from government auctions is one of perception. I think that there's a somewhat general sense among the public that all these vehicles are beat up clunkers previously owned by drug addicts and criminals. But while I'm sure such vehicles exist, seized vehicles come from other sources as well. And not all vehicles at government auctions were seized in the first place.
Yes, there are seized clunkers at government car auctions. But there are very nice cars as well that many car buyers would likely be interested in.
Nice cars at these auctions can come from sources we don't really think about. For example, recently I was checking out the preview lists of several open-to-the-public car auctions here in Florida. Right off the bat I located four 2002 Pontiac Trans Ams that were listed as "government" vehicles. It turns out they were seized by the state from a car Dealership for back sales taxes.
These were nice, totally reconditioned vehicles that had been taken right off a Dealer lot and would be sold way below their book values. There were others as well but these particularly caught my attention because of the strong demand for these discontinued "muscle" cars.
I also noted an IRS auction coming up in Miami that included an incredible list of vehicles, including a Rolls Royce. This makes sense. The IRS goes after people who owe them lots of money and these people tend to have very nice cars.
A local government agency was also selling 5 Chevy Cavaliers. What stood out about these was that four of them had only 34,000 to 37,000 miles on them and the fourth one had 40,000. And government cars used by employees have a reputation for being very well maintained.
While I'm not a big Cavalier fan, I would target a purchase price of 60% to 75% of their trade-in values and be able to resell them at less than their trade-in values and still make a nice profit (and make some customers very happy at the same time ... a win/win for both sides).
And that's basically what you are looking for in terms of pricing at these auctions ... excellent discounts to retail prices in the 50% range. Sure there are old, high-mileage cars with mechanical and/or accident issues for $100, but they're not worth a whole lot more. Or, they need lots or work and investment.
I hope this helps clarify some of the misconceptions about seized cars. Like most things in life, there are the good, the bad and the ugly. And there are indeed good bargains on nice vehicles for those interested and willing to do some shopping.
Josh writes about how to locate car auctions in your particular area, making sure any vehicle you're interested in is, in fact, in good mechanical condition (even for the non-mechanic), what to expect from car auction websites and more, at "Seized Car Opportunities".
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