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Car repo auctions are an exciting prospect, especially for first-time buyers. In particular, the legions of young teens who have turned legal to drive over the last few years have heard from their friends about the amount of opportunities available at these repo car auctions. This is true; the number of vehicles that have been seized has risen quite a lot after the recession struck (late 2007 to the time of this writing, mid 2010).

All these vehicles that have been seized by collections agencies (on behalf of banks) must be resold, of course, and auctions are the most effective and efficient way of doing so. In particular, since the number of repossessed cars that have flooded the market is so large, prices have been deflated to a rather drastic extent. In other words, cheap cars are everywhere.

However, would-be first-time buyers should still be careful, as the picture is not entirely as rosy as it seems. In particular, according to the repo cars guide, it is important to note that these opportunities have become quite well-known, primarily due to word of mouth. This word of mouth publicity has attracted a large number of middlemen; that is, car dealers, who are basically arbitrageurs, meaning they seek to exploit and profit from the difference between the low prices they can obtain at these auctions, and the higher prices they can obtain from their customers later. These people are professional speculators who visit car auctions quite frequently – more frequently than anyone else, because they visit them out of professional interest, not simply as a hobby.

The presence of these professional buyers at car repo auctions somewhat reduces the opportunities afforded to the casual buyer, who finds his vote crowded out by the votes of professionals who are extremely comfortable with the auction-room climate. In this environment, it is very easy to make a mistake and accidentally overbid on a car – and since bids are legally binding, any purchases must be honoured by the casual buyer. This is a terrible situation to be in, as professional dealers have ways of tricking casual buyers into overbidding. The best thing you can do to avoid this is to keep one of these professional buyers with you at all times.