Dealers often seek the protection that buying a vehicle under a green light at an auction can provide. As opposed to a purchase on a yellow or a red light which is an indication of problems, a green light for an auction vehicle generally means that it is free of title problems and serious conditions that can negatively affect its value. Dealers should be aware, however, that green light protections are only effective if a dealer quickly discovers a problem and advises the auction of it.
Auctions operate according to rules to which a dealer agrees when registering. These rules explain the various lights under which a car is sold and the complaint/arbitration process for a dealer who is dissatisfied with the represented condition of a vehicle. The rules do one thing that is critical for a dealer – they establish a very short period for bringing to the attention of the auction issues with the vehicle’s title or condition. That period varies based on the problem found, but it may range from as little as two days after receipt of the vehicle at the dealer’s place of business to 21 days after purchase. A request for assistance after the applicable time period has expired may well result in a refusal because it is untimely.
A dealer cannot assume that a vehicle it buys under a green light justified that designation. Look for problems immediately. If you do not discover problems, and you are confident that you can sell the vehicle to your customers as a sound used car, then do so. But if you find there is a problem, take action. What should you do?
Run a vehicle history report. If you haven’t done so already, run a vehicle history report when the vehicle hits your lot. As we have written repeatedly, vehicle history reports are not always accurate. There can be problems in a vehicle that are not reported. But if there are problems reported on the vehicle history report, that is something you must look into.
Look at the title history. Is there any notation or prior title-holder evident on the title to cause a concern? Also, in some states with online title processes dealers have access to the title history within the state. That may be of limited help if the vehicle comes from out of state, but one never knows if the vehicle has an in-state title history.
Inspect the vehicle. Look at it. Are there tell-tale signs of serious damage or evidence of flooding? Put the car up on a lift. Is there evidence of serious structural damage or significant work on the undercarriage?
If you find a problem, notify the auction immediately. Explain the problem. Provide any corroborating information. Request relief.