IAAI auctions: death by fees!

[Elkins45]

I‘m looking at a beat up car on the IAAI site and thought about bidding, but once I started reading up on their fee structure I’m losing almost all my enthusiasm. First they charge $200 just to register as a bidder. Then they charge a buyers fee somewhere around 30% on a 1k auction. Then they tack on $79 for handling and a $10 ‘environmental charge.’ Oh, and if you want to bid online there’s another fee for that.

Let’s say I win an $800 car. I’m already in $200 to register as a buyer. Now add $250 +$89 and then $49 if I want to bid online. So my $800 car ends up costing me $1388 before I even get it home. Those guys must be raking in the cash right now.

 

[dishdude]

I‘m looking at a beat up car on the IAAI site and thought about bidding, but once I started reading up on their fee structure I’m losing almost all my enthusiasm. First they charge $200 just to register as a bidder. Then they charge a buyers fee somewhere around 30% on a 1k auction. Then they tack on $79 for handling and a $10 ‘environmental charge.’ Oh, and if you want to bid online there’s another fee for that.

Let’s say I win an $800 car. I’m already in $200 to register as a buyer. Now add $250 +$89 and then $49 if I want to bid online. So my $800 car ends up costing me $1388 before I even get it home. Those guys must be raking in the cash right now.

All that to buy garbage...

 

[Dinoburner]

Sounds like something PT Barnum was referring to.

 

[CKN]

All that to buy garbage...

99.5% of the vehicles on there are garbage. Agree!

 

[GON]

Of the two major auto auction firms in the USA, IAAI is more reasonable in fees and easier to deal with than Copart.

That $200 fee is an annual fee. If you buy one car or fifty cars annually, the $200 is the one-time price, like a COSTCO membership. Not saying that the fees are not high, they are very high. One note, here is a G8 going up for auction at IAAI in the next few days. It has been on a IAAI lot for 27 months. I have no idea if IAAI charges the insurance company rent, but if IAAI doesn't charge lot rent for Sellers, there are some cost exposures to the auction house.

 

[Rmay635703]

I‘m looking at a beat up car on the IAAI site and thought about bidding, but once I started reading up on their fee structure I’m losing almost all my enthusiasm. First they charge $200 just to register as a bidder. Then they charge a buyers fee somewhere around 30% on a 1k auction. Then they tack on $79 for handling and a $10 ‘environmental charge.’ Oh, and if you want to bid online there’s another fee for that.

Let’s say I win an $800 car. I’m already in $200 to register as a buyer. Now add $250 +$89 and then $49 if I want to bid online. So my $800 car ends up costing me $1388 before I even get it home. Those guys must be raking in the cash right now.

Sounds just like paying my monthly rent

 

[2010Civic]

Every buyer pays the fees. So the final bid should account for those fees.

 

[Lubener]

I can't imagine the money they are making even from those keeping their hands in their pocket but registered.

 

[Oro_O]

Let's be honest - IAAI is like everything else in life - you get out of it what you bring to the game. No free lunch. But if you know cars and what's what, it's a blast. I'm doing nothing now so I'll go into how to work it and you can figure out if you have the knowledge/skill/time/etc. to make it work. It's an auction, not a used-car lot so you can't honestly think it's a cheap way to get a daily driver when you roll off the lot.

I had extra time during Covid and I bought two cars from them; could have bought more and should have. As to fees, I just had a spread sheet and knew what my out-the-door would be before I bid. No secret there. I went and looked and kicked tires, ruled things out. On the two I actually bought, I didn't even bother with that - bought sight unseen as I could tell they would be worth it. Regarding fees, they DO actually have some decent over head so it's not all a scam. They are also very transparent. In my state, they also save you a lot of hassle if you are going to title it; they'll do all the title, registration, and paperwork and give you a 45 day temp permit for nothing more than basic DMV fees with no mark-up. This is a big hassle and time saver and a nice service for absolutely free. Their search engine has filters and you can save searches; you can just run them once and not waste a lot of time (the makes you want, miles you want, year range, title condition, reason for loss, etc.). You have to put a little time in to learn it, but it works.

One car I got was $1250, all titled and registered (Volvo XC70). I wrenched on it for a little bit and decided I didn't want to keep it, nice runner but not as cosmetically perfect as I could live with, and I hated the color. I put a few hundred into parts and time into tuning and cleaning, and sold it for about $5k; it was certainly worth my time. I was totally transparent on selling it, nothing hidden and all parties were very happy; the first people to look at it took it and it was no hassle. There were A LOT more cars I could have done the same with if I wanted to do that with my time; mainly I only wanted some deals for myself or family, not to flip. If I wanted to flip, I could make several grand a month with it easy for not that much time (but then I would need a dealer license at that volume). In fact looking at the IAAI auction site regularly, I saw cars routinely in the local CL a few weeks later for about 3x the auction price, and selling.

The one below was I think less than $1k tax/titled and it is a real keeper. I love it; I've put some time and good parts in it and it's a joy; I've had it 18 months now. It hums like a turbo-jet andI tossed it over a steep Cascade Range mountain today at about 80 and really enjoyed it.

BTW, if you buy at least one car from them in a year, it appears they will extend your membership another year. My $200/year became $100 when they just gave me a free year afterwards when I did not automatically renew.

I have well-less than $2k in this car and it would fetch $8k on the correct enthusiast websites; I'm not selling. Actually I have a Mitsu 16t turbo upgrade on the shelf for it, intake pipe, and a tuner to tweak it to 300hp/300 ft/lbs which I plan on all getting done before this winter - I'll just enjoy this car.

(Sorry the photo is a bit dark)

The engine bay cleaned up nicely. A lot of car for $1k out the door and on the road. I added the strut brace and a few tweaks and paint.

Volvo still has the original "engine grate" available and for pennies on the dollar from when new. It makes a fabulous sub-frame brace and the thing, for an XC, corners like a go-cart with very little roll. (I painted it "Swedish Racing Green" as it came galvanized).

Took a little work on the interior but it's very nice. This is an IAAI auction car, mind you.

It came with the ugly original 15" wheels but with brand-new Michelin Defender tires. I sold those for $500 (1/2 the price of the car) and then got a set of sexier 16" Ford wheels w/brand new Conti ProContact tires for $200. So the net cost of the car dropped a lot - to about $650 fully taxed/titled- with that simple trade. I was so pleased, I refinished the calipers and added stainless lines.

So summary, I'm a huge IAAI fan and I can go find a car to do this with pretty much each week if I want at the local IAAI auction. I had to do a bunch of little things to make it 100% like a radiator/heater core, fix some loose interior hardware/rattles, etc. but nothing you shouldn't expect to do on an auction car.

 

[Andrew1972]

It’s costs money to auction vehicles and profit. The fees are upfront . Try another place or scour FB or CL if you don’t want to pay them.

The fees are helpful because it filters the pool of buyers you compete against and keeps prices relatively same.

 

[atikovi]

Let’s say I win an $800 car. I’m already in $200 to register as a buyer. Now add $250 +$89 and then $49 if I want to bid online. So my $800 car ends up costing me $1388 before I even get it home. Those guys must be raking in the cash right now.

So if that $1388 purchase results in $5000 of parts sales for the junkyard or a $5000 rebuilt salvage car, what's the problem? You have pay to play. Just add up all the costs and fees, then bid accordingly. Sounds like you might not be cut out for buying from a salvage sale.

 

[Elkins45]

So if that $1388 purchase results in $5000 of parts sales for the junkyard or a $5000 rebuilt salvage car, what's the problem? You have pay to play. Just add up all the costs and fees, then bid accordingly. Sounds like you might not be cut out for buying from a salvage sale.

Sounds like you might not be cut out to make my financial decisions.

I didn’t say there was a “problem.” What I did was pointed out what a huge percentage they take over the bid price of the car, and how they do it in such a nickel and dime fashion. It would be much better if they simply did their buyers premium as a percentage of the bid price like every other auction I’ve ever attended.

They won’t even let you into the lot to look at a car unless you’ve spent the $212 to register, so they already have your money before you even know if a car is worth bidding on. Even Costco lets you look around the store before you pay the membership fee.

 

[atikovi]

Yes the fees at the salvage auctions suck in comparison to regular auctions, but you know what they are ahead of time. They have all those listed separately to confuse buyers who don't consider them in the heat of bidding. I've made my own price chart showing the total costs for a sale price with all the fees added that I can look at while bidding so I don't overspend.

 

[Elkins45]

Yes the fees at the salvage auctions suck in comparison to regular auctions, but you know what they are ahead of time. They have all those listed separately to confuse buyers who don't consider them in the heat of bidding. I've made my own price chart showing the total costs for a sale price with all the fees added that I can look at while bidding so I don't overspend.

View attachment 117214

Do you buy a lot of cars at auction? Are you a rebuilder?

 

[GON]

I‘m looking at a beat up car on the IAAI site and thought about bidding, but once I started reading up on their fee structure I’m losing almost all my enthusiasm. First they charge $200 just to register as a bidder. Then they charge a buyers fee somewhere around 30% on a 1k auction. Then they tack on $79 for handling and a $10 ‘environmental charge.’ Oh, and if you want to bid online there’s another fee for that.

Let’s say I win an $800 car. I’m already in $200 to register as a buyer. Now add $250 +$89 and then $49 if I want to bid online. So my $800 car ends up costing me $1388 before I even get it home. Those guys must be raking in the cash right now.

E45,

Buying a vehicle at IAAI or Copart is a lot of work. A lot of trial and error involved. For a one time buyer, there is definitely a lot of time invested. I think some criteria to identify if the vehicle you are looking at is a match to purchase at salvage auction is very beneficial. Of note, I am a paid fee buyer at both iaai and Copart, and have been for over seven years.

Some of the criteria includes how critical the vehicle is to you. Is the vehicle unique and hard to find? Is the vehicle in your area, and going hundreds or thousands of miles to buy a like vehicle a hardship? Know that Copart and iaai primary buyers are not individual buyers. The salvage auction loves individual buyers, but only for the reasons individual buyers typically don't have discipline in their bids, and will pay well over the value of the car on many cases.

Are you a subject matter expert in the make and model you are looking at? That is also a critical question. If you focus on a certain model regularly, you increase the odds of making a educated bid and purchase.

My recommendation, unless the vehicle you are watching is something that will really solve a critical need, move on, unless you plan to purchase more vehicles at salvage auction. It is very hard for someone new to the salvage game to come out ahead on their first ever purchase.

As far as inspection, you will need a safety vest, and can only inspect on a certain day, typically the day before the auction.

As a side note, using broker to buy for one at a salvage auction is almost always a loosing strategy.

Good luck!

 

[atikovi]

Do you buy a lot of cars at auction? Are you a rebuilder?

A dozen or two a year but maybe 3 or 4 from salvage auctions.

 

[Oro_O]

Yes the fees at the salvage auctions suck in comparison to regular auctions, but you know what they are ahead of time. They have all those listed separately to confuse buyers who don't consider them in the heat of bidding. I've made my own price chart showing the total costs for a sale price with all the fees added that I can look at while bidding so I don't overspend.

IAAI has a simple button now - and it's prominent and been there a year+ - you can hit that says "final cost estimator" or something that will give you all that within a reasonable error.

I know it's a bit to take in for the 1st time user (I know you are not), but if you do your homework it's reasonably transparent. The other thing is, if you are poking around on the bottom end of the spectrum (sub $2k cars, as I have done), the fees as a % are high. And this is fair as their costs per car are relatively flat. Towing, storing, sorting, documenting, listing, etc., etc. That is pretty flat whether it's an $800 beater or a $20k wrecked Jag. No real difference in their handling costs. Go up the price scale, and the fees as a % drop considerably.

 

[eljefino]

Thanks for posting this rabbit hole!