Copart and IAAI are the largest car auctions in the USA, where mostly damaged vehicles from insurance companies are listed. Effective participation in the auctions requires a dealer's license, which is why private individuals use brokers who bid on their behalf. Auctions are divided into two stages – the preliminary Pre-bid and the actual Live Bid – and various types: Pure Sale (unconditional sale), Minimum Bid (with a minimum price), and On Approval (with seller approval). In addition to the car price, numerous auction fees are added – including commissions, environmental fees, and handling charges. Failure to meet payment deadlines results in penalties – up to 15% of the vehicle's value and the possibility of account blocking, which is why brokers often require deposits and adherence to their own rules.
1. What Are Car Auctions in the USA?
Car auctions in the USA, such as Copart and IAAI, are the largest platforms where used and damaged vehicles are sold – primarily accident-damaged or those affected by natural disasters. Every week, hundreds of thousands of cars are listed, making these auctions very attractive places for importers worldwide. Most of the vehicles come from insurance companies.
2. Who Can Participate in the Auctions? Broker's License
Direct participation in auctions such as Copart or IAAI requires a dealer's license, which is only held by registered brokers. Only about 5% – 10% of vehicles are available for private individuals, which is why most clients use intermediary services (brokers). A broker acts on behalf of the client, enabling participation in the auction and often offering logistical support, customs clearance, and registration.
3. Auction Stages: Pre-bid and Live Bid
The bidding process is divided into two main stages:
- Pre-bid – This is the preliminary bidding stage, which lasts from the time the car is listed until the auction day. Users enter the maximum amount they are willing to pay. The system automatically outbids other offers but only up to the set limit.
- Live Auction – The actual live auction takes place online on a specified day and time. The highest offer from the pre-bid phase and other participants are included. The bidding typically lasts from a few seconds to several minutes for each car.
4. Types of Auctions: Pure Sale, Minimum Bid, On Approval
Auctions also differ in terms of the selling rules, depending on the seller's decision:
- Pure Sale – An unconditional sale. The highest bid wins, and the car is sold regardless of the bid amount.
- Minimum Bid – The seller sets a hidden minimum price. If the highest bid doesn't meet this price, the car may not be sold.
- On Approval – After the auction ends, the seller has time (up to 2 business days) to approve or reject the highest offer.
5. Auction Fees
In addition to the vehicle price, each auction involves additional fees:
- Buyer Fee (Copart / IAAI) – The basic auction house commission, which increases as the value of the car rises. The more expensive the vehicle, the higher the fee.
- Virtual Bid Fee (Copart) or Internet Bid Fee (IAAI) – Applied when participating in the auction online. It applies to both Pre-Bid and live bidding. The fee amount depends on the vehicle's price.
- Gate Fee (Copart) or Service Fee (IAAI) – A standard service fee applied to every purchase for preparing the car for pickup (e.g., placing the vehicle in the yard, forklift loading).
- Environmental Fee (Copart / IAAI) – A small environmental fee for vehicles that are inoperable. It covers, for example, the recycling of fluids.
- Title-Handling Fee (Copart / IAAI) – The fee for preparing and sending the vehicle's title document.
- Additionally, depending on the vehicle's location, there may be local fees.
6. Possible Penalties for Violating Auction Rules
Once the auction is won, the buyer has limited time to make the payment:
- Copart: The payment deadline is 3 business days, including the day of purchase. If payment is not made within 3 days, a late fee and storage charges will apply. If the vehicle is not fully paid for within 8 calendar days (including the day of purchase), it will be re-listed for sale. The re-listing fee is 10% of the final sale price, with a minimum of $600.
- IAAI: The payment deadline is 3-5 business days, depending on the auction location, including the day of purchase. If payment is not made within 3 days, a late fee and storage charges will apply. If the vehicle is not fully paid for within 7 calendar days (including the day of purchase), it will be re-listed for sale. The re-listing fee is 15% of the final sale price, with a minimum of $1000. However, it is important to note that IAAI has a strict approach towards clients who fail to make timely payments. If you fail to pay for the won vehicle twice, your account may be blocked or suspended, preventing further bids. In practice, this means that brokers purchasing cars on behalf of clients introduce additional rules or deposits to avoid irresponsible purchases.