Gone are the days of the in-person auction. No longer can you arrive early at the auction, greeted by the cold, brisk, morning air blowing through the laneways, and actually see the cars you want to bid on.
No longer can you see if the vehicle actually drives down the lane!
As much as we may long for the past, change is inevitable and it’s important that we learn to adapt. The first step is to become a lot more careful about just relying on the disclosure you get from online auctions. Sometimes it’s what’s not being said that matters most.
We recently had a complaint from a buying dealer who was told the vehicle he was bidding on needed engine repairs; that was good. The auction disclosure did not say the vehicle did not run at all, and needed a flatbed to move it; that was bad. In fact, the disclosure went on to say the vehicle was otherwise “immaculate”! In another case, a selling dealer bought a vehicle declared as a “total loss” and when he sold it at auction he did not pass that disclosure on to the buyer. The buyer’s auction arbitration was denied because, the auction said, Carfax did not say it was a total loss.
Nowadays, dealers must rely on photos, videos, and text descriptions on their computer screen before the important decision to bid. This can lead to unpleasant surprises and shattered expectations if full disclosure is lacking. A dealer may bid on a vehicle, expecting a certain condition, only to be sold a completely different one. This dramatic change has come as an upset and a shock to many dealers. It has also caused an increase in the number of auction complaints received by the UCDA and OMVIC.
As a dealer, over the years, you have developed expertise. You know which makes are reliable, and can be easily turned around and sold for profit. You’ve also learned to spot when a deal is “too good to be true”. It’s important that, now more than ever, you put those skills to good use. In fact, it’s expected that you do.
While consumers who purchase vehicles from a registered dealer can make claims to the OMVIC Compensation Fund should a deal go side-ways, dealers do not have that protection. While most auctions offer an arbitration program, where dealers can submit their grievances, such programs can be described as “dicey” at best. You won’t know whether the arbitrator will rule in your favour until well after you have committed to the purchase and, as in the cases above, that answer is often “no” when they decide the disclosure was adequate.
If you see an “engine needs repair” or accident disclosure ask questions, do your own research, don’t try to guess. If the seller’s disclosures are not clear, and you’re in doubt, and you can’t get the answers you need, it may be better to pass. Don’t expect the auction to do this for you because they won’t, as you may learn to your dismay when you arbitrate.
When listing vehicles for auction, it’s important that you, yourself, remain crystal clear when it comes to disclosures. If you are selling a vehicle that clearly requires an engine replacement, list it as such. If the vehicle does not run, say so. If you buy something as a total loss, pass that fact on to the buyer. This is not a game. The car sales industry is a small world. Over the years, you will build a reputation up for yourself and that reputation will follow you throughout your career. No one wants to be known as the dealer that puts up junk vehicles for auction with poor disclosures.
In this brave new online world, dealers rely more than ever on full and frank disclosure and they are not getting it. In the example above, would it have been so hard to say “engine needs repair, vehicle does not run and drive”? Why did the auction not do the right thing as soon as proof was presented that the seller lied?
OMVIC is working on these problems because we have asked them to, but meanwhile, be suspicious, ask questions and do not make assumptions. Remember, between dealers and at auction, unlike when you sell to a consumer, it is still very much buyer beware.