How to spend a lot on a donor car

Several folks have asked, “How on earth did you find, and buy, a MINI GP in Ohio?”

Some dumb luck, and some research, and learning a whole lot about the salvage auction business in a few short days.

I posted a primer on this at Motoring Alliance, and thought I’d share it here, for posterity.

Most insurance salvage auctions in the US are handled by IAAI
They sell primarily to licensed automotive businesses (dealers, wreckers, reconstructors, brokers, etc.). In some states, members of the public can purchase from them directly. You pay them $200/yr to register, just to be able to bid. They make their money on auction fees paid by the buyer, based on the total value of the auction. Figure about 15%.

IAAI has over 150 auction centers throughout the US. You can search their auctions on their website. They typically have several auctions happening every day. You can search by make, model (at a high level), location, etc. They list cars that are ready for auction, as well as cars that have been reported to them by insurance but for which titling, etc. has not yet completed. So some cars have an auction date, others don’t have a date set yet.

The search is not very sophisticated. They don’t recognize anything more specific than “2006 MINI Cooper”. From there, you have to browse all the cars to find what you’re looking for. It can take some research time. For each car, you can see pics and some very vague descriptions of the damage.

Something like this:

If you’re local to a car, you can go see it in person. But generally, you’re rolling the dice based on the damage you (think) you see in the photos. You can use the VIN to do a vehicle history search, if you want. But don’t expect to learn much of value from it.

For most people, the best option is to work with a broker. I worked with SalvageBid.com. For $250 per transaction, they will proxy bid on your behalf, and act as the middleman between you, IAAI, and transport companies. This enables you to bid on any car IAAI sells in the US, without any licensing issues.

You put down a security deposit with SalvageBid (on a credit card) for 10% of the maximum value you will bid (minimum $400). After 30 days of no bidding activity, if you’re all paid up with them on any auctions, they automatically refund the security deposit.

The auction process is kinda weird. Once an auction date is set, they open up a period called “pre-bidding”, that lasts until the day of the actual live auction. During this period, you can bid on the car, “eBay style”. While it looks like this is happening on SalvageBid’s site (and you’re doing your bids through them), they are actually submitting your maximum bid to IAAI’s system and this is where it’s being tracked. All brokers and IAAI registered bidders can bid during the pre-bid period. The actual price goes up as folks make competing bids, to each bidder’s maximum – just like eBay. You either win the pre-bid, or you get outbid.

At the end of the pre-bid, whatever the price is, becomes the opening bid of the live auction. Let’s say you put in $5000 as your maximum, and you won the pre-bid at $2500. Then that’s the opening bid. At the time of the auction, your car comes up and registered bidders on-site, at other iAAI sites, and online (not you… but the professionals and the IAAI direct registered bidders) can make competitive bids on the car, just like at a live auction. The proxy system will continue to bid on your behalf, up to your maximum bid. You can watch and hear this live auction on-line. They go very fast – about 30 seconds per car. They typically sell a hundred to several hundred cars at each auction site in each auction, over the course of 1-3 hours. It’s pretty addictive to watch.

So that’s how I won this car. Found it searching IAAI. I registered with SalvageBid and put down a security deposit sufficient for my maximum bid. I placed a bid during pre-bidding. Some other folks bid during pre-bidding, and ran the price up to a few thousand bucks. Then at the live auction, that was the starting price, and some other bidders ran the price up some more. But, ultimately, no one was willing to pay as much as I was. Win.

On top of the actual car price, you also pay IAAI’s auction fee and a documentation fee, plus SalvageBid’s $250 transaction fee. Plus shipping if the vehicle is not local. So it all adds up A LOT. The SalvageBid site has a calculator to help you anticipate the total “off the lot” price, as well as shipping costs, prior to you bidding.

The math on this car (spoiler: it’s A LOT for a wrecked MINI):

  • Winning bid: $4400
  • IAAI auction fee: $669
  • SalvageBid broker fee: $250
  • Documentation fee: $55
  • Shipping from Ohio to NC: $798
  • Wire transfer fee from my bank: $25
  • Total spent for a totaled GP: $6197

After you win, you have until the end of the next business day to pay, by WIRE TRANSFER ONLY.

SalvageBid was FANTASTIC to work with. Their systems and communication work very well. A live person traded a bunch of emails with me after I won to handle payment and shipping. The car was picked up in Ohio two days after the auction, and delivered the next day to my home in NC. SalvageBid arranged shipping. I had to do NOTHING other than be at home when the car arrived. The driver called me en route with an ETA.

There are other auction businesses out there (Copart is one), but most of the selection is available through IAAI and SalvageBid.

PS: Some will ask, calmly, “HOLY SH!T!!!! WHY ON EARTH WOULD YOU PAY THAT MUCH FOR A TOTALED MINI?!?!?! YOU CAN GET A SALVAGE MINI FOR LIKE $2000!!!!”

Not an unreasonable (screamed) question.

Because: (1) There will probably only be a couple, maybe a few, wrecked GPs sold in the US this year. (2) I’m pretty confident I can make up the difference in resale of valuable GP parts. (3) I had a very specific vision of what I wanted to do… and it was to use this car to transform my existing car into something that’s one-of-a-kind. If all I really wanted was a transmission swap, this was NOT the rational way to do it. But in the span of about 24 hours, I went from “I’m going to convert Blimey to manual” to “I’m can really build the GP Roadster I’ve been talking about for a year! And make the best use of a dead GP in the process.” It just seemed like the right thing to do.

Only later, after I traced the ownership history of this car, and spoke to both previous owners, did I understand how strongly something (fate? karma? John Cooper’s ghost?) was at play here, and had been for a LONG time. More on that, later.

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