A Quick Anti-Lemon Guide
1. If you are new to this, don’t start bidding right away.
- Watch and study many of the popular rebuild channels on YouTube.
- Watch and study the bidding behavior of a live auction.
2. Create a spreadsheet.
- Start to track the prices of your target makes and models with varying levels of damage and mileage. Do past and current auctions. Try the Copart and IAAI websites, but sometimes they don’t do a good job at displaying the current or final bids, so instead try using https://bid.cars. Bid.Cars is an excellent third-party tool to track pricing estimates and details.
- Using the same websites, try to find the estimates for Actual Cash Value [ACV] and Estimated Repair Cost [ERC]. Use the formula of ACV – (Current Bid + ERC + Shipping) to roughly calculate the expected profit or loss. Right away this will start to show you when a lot becomes too hot and no longer sensible.
- Another good historical pricing tool is https://vehiclebid.info, this is a critical verification of the other websites’ estimates for what the projected final bid will be. Look for similar model year, trim, mechanical status, and damage.
3. Use the research experience to start being able to spot scams.
- Unfortunately this line of business is extraordinarily sheisty. Before sizing up the repair effort, first weed out the problematic listings. Here are some examples:
- Beware of the “quick flip”. Look for recent (1-2 years back) activity for that exact vehicle by VIN. One of the salvage hustles is to take a car that is banged up, do a quick and dirty brush up of the vehicle, and relist as fast as possible even if it was never recertified for road use. Brackets and panels are hand-bent inaccurately, paint job is rushed and will start to crack after 1 season, second-rate parts, you name it. The goal is to simply make the vehicle look more presentable to hopefully get a higher bid at the next auction that of course leaves a little room for profit. This is honestly worse, because now you don’t know what parts of the car you can trust and if you want it done right you’re going to have to basically disassemble everything all over again.
- Beware of “vandalism” or even “theft” titles. Sometimes the label “vandalism” is a cover for unknown mechanical issues no matter if the vehicle was maliciously damaged or not. Make sure “theft” titles are legally cleared and able to be rebadged in your state, but it may also be a cover for unknown issues.
- Beware of the location scalper. This might not end badly, but sometimes certain makes and models are in more demand in different regions. They might not even have possession of the vehicle at the new location before it’s relisted.
4. Use the research experience to start spotting hidden problems.
- Not only are some of the people unscrupulous but there are a lot of honest mistakes with the listings. Such as:
- Once you have narrowed down a few candidates, develop a vetting process and self-imposed rules to abide by. For instance, avoiding cars with collision damage to the engine bay. Only bidding on lots that have verified Run & Drive status, meaning you can listen to the engine and observe the instrument cluster for issues. I’ve seen promising lots that looked like everything would be minimal, the engine even sounded good for the short clip but after looking at the EDIC there was a critical warning for 0 PSI oil pressure. It could have been just a sensor issue, but look for disqualifiers like this.
- Another instance, a car was listed as Run & Drive on Copart with minor front damage and even the Carfax didn’t show more serious issues. It wasn’t until a few days in that I noticed the timing belt was missing from the engine. So it would have been literally impossible to validate the engine was running. This also raised the red flag of why that timing belt was removed in the first place. So I luckily pressed Copart for more answers and one of the yard managers kindly reached out to the seller on my behalf. As it turns out, the car was actually FLOOD damaged. Not only was it listed wrong, but they confirmed the engine was hydrolocked needing a full swap. A similar car was listed as Run & Drive, and while the engine sounded great, when I went in person and tried putting it in gear, there was no movement and just grinding sounds from the transmission tunnel. So again, this should have been listed only as Engine Start Program.
- The auctions don’t let you bring tools out on the yard to turn an engine over or even including a harmless OBD2 code reader. I get the reasoning. You didn’t hear this from me, but if you get a small Bluetooth variant and practice quickly reading and saving the codes to your phone app, you can then disseminate the results after you get home.