Auction Buyers Who Don't Pay

When you hold an auction and a bidder makes their intention known to buy an auction item, and then reneges on their purchase … what can be done about it?

It’s important that your company’s auction rules and policies are made clear to buyers as they enter the auction. Many auction companies have flyer-type rules printed as a handout that’s included in the buyer’s pack. Additionally, at the commencement of the auction and before inventory vehicles are presented, have your auctioneer make a verbal announcement to participants and remind them that when they’ve motioned to buy a vehicle, they’re agreeing to pay for and remove their purchases at the end of the auction.This is a common problem, but one you shouldn’t get too upset about … it’s one of those negative aspects of doing business. When buyers back out of their intended purchases, there are a few things that can be done.If your auction sign-up process requires a deposit of $100 or $200, keep their deposit and roll the car into the next auction, or, when the car returns to your inventory, let it be known it’s for sale to any other buyer with payment in hand. If a buyer backed out of the sale, immediately put it back into the auction action for a possibility to still sell it before the auction is over.Depending on your mindset, problem bidders may be banned from future auctions if they’ve backed out before. Don’t simply put someone out if they’ve successfully bid and removed their vehicles before. A simple verbal warning may be justified in a case like that.If a customer fails to pay, it’s fair to notify other area companies of the rogue buyers who have poor intentions.Limit the amount of time buyers can pick their vehicles up. If they don’t pay by 5 p.m. the day of the auction (or other pre-set time), let it be known that your company keeps the car and it goes back into the next auction or gets sold to someone else. In most cases, regular auction buyers make calls back to the tow company to see if any cars weren’t picked up. If cars are still around, sell ’em and limit your inventory.As an alternative to the headaches of on-site auctions, consider online auctions like TowLot.com or companies like IAA or Copart. Online auctions eliminate many of the common hassles associated with on-site auctions, especially where buyers are pre-screened.The overall concept is simple: If a buyer comes to your facility and is an active participant in the auction, all auction sales are final. When deposits are required up front, few vehicles are left behind.