In football, 2 teams play against each other to decide who is the best in their division. However, there are instances when the coach of 1 team wants to challenge a ruling and throws a red flag on the field. When the challenge is made, the play is reviewed and officials determine if the call stands or is reversed. This is similar to Big Valley Auto Auction’s arbitration process.
Although Big Valley Auto Auction doesn’t give red flags for our dealers to throw on the lot, we have used the NAAA arbitration policy for nearly 2 decades to settle any disputes between our buyers and sellers.
In this article, you’re going to learn the definition of arbitration, how the process works, vehicles eligible for arbitration, and advice buyers and sellers should know before finding themselves in the situation of arbitration.
After reading this article, you’ll have the information needed to fully understand the process of arbitration at an auto auction.
What is Arbitration?
Arbitration is the process that allows a dealer to dispute an issue they have with a vehicle purchased at the auction. If you buy a vehicle and notice something is wrong, that the seller didn’t announce, you can file an arbitration.
However, any issues with your vehicle, such as the engine, sunroof or any non-structural issue, must cost at least $800.00 per issue. This means any single issue that costs $800.00, not multiple issues that add up to $800.00.
What is an Example of Arbitration?
An example of vehicle arbitration is when you buy a vehicle that has frame damage, but the seller did not announce this damage. You bought a vehicle that was listed with no issues, but ended up having damage. The seller did not make this clear, and you were unaware.
What is the Vehicle Arbitration Process?
When a coach challenges a play, the footage gets reviewed by officials and a decision is made. Just as football has their own process, there is a 3-step process Big Valley Auto Auction uses to settle vehicle arbitrations:
- Request Arbitration
- Return Vehicle for Inspection
- Resolution
Request Arbitration
The buyer fills out an arbitration request form, explaining the issue with the vehicle. Be as specific as possible when describing the issue, because the auction will only inspect what is mentioned in the form. This is similar to a coach throwing a flag on a play and requesting to have the play reviewed.
Return Vehicle for Inspection
Once your arbitration is submitted, you’ll need to bring the vehicle to the auto auction for inspection. The auction will make a determination on the validity of the arbitration claim. If the arbitration is valid, the vehicle will be returned to the seller and the seller will be charged an arbitration fee. If the arbitration is found to be invalid, the buyer will be charged the arbitration fee.
Resolution
After the referee and officials review the play, they’ll decide whether the challenge is valid or not. When the auto auction finds out the result of the arbitration, they will speak to the buyer and seller about a resolution. If the arbitration is valid, the seller can offer to fix the vehicle or negotiate the price to try to keep the sale together. However, the buyer is not required to purchase the vehicle.
Is There an Arbitration Fee?
If you file an arbitration and the auction finds nothing wrong with the vehicle, you will have to pay a $115.00 arbitration fee. If your arbitration is valid, you will only be reimbursed for the purchase price of the vehicle and transportation to your place of business.
What Vehicles Are Not Eligible for Arbitration?
Vehicles that do not qualify for arbitration are Red/Yellow light vehicles. These are vehicles that are announced with both a red and yellow light in the lane and are labeled “as is no arb”.
Can I Arbitrate More Than Once?
You can only file an arbitration once. This 1 arbitration allows you to arbitrate 3 issues. If your arbitration has already been settled, you cannot come back and arbitrate for another issue. Since you only get 1 chance, you’ll need to choose the 3 most important issues you want resolved.
Advice for Sellers
Honesty
The biggest piece of advice for sellers is to be completely honest about your vehicle’s condition. If there are any types of issues with your vehicle, make it clear. Purposely leaving out information can cause unnecessary issues that can easily be avoided by telling the truth.
To avoid arbitration, Big Valley Auto Auction provides condition reports and pre-sale inspections, so we can help you announce what needs to be mentioned.
Advice for Buyers
Post-Sale Inspections
It’s smart to request a Post-Sale Inspection (PSI) before leaving the auction to catch any mechanical issues your vehicle may have. If you don’t inspect your vehicle before leaving the lot, you cannot arbitrate after you leave. Once it’s off the lot, it’s yours. You can’t bring it back after.
There are other types of issues that can be arbitrated. However, you have 7 days to arbitrate. Sale day is Day 1, with the deadline being the following Wednesday at 5:00PM.
The following issues can be arbitrated:
- Frame damage
- Flood damage
- Mileage discrepancy
Do I Understand What Arbitration Means?
The perfect auto auction experience is going to the auction, purchasing the vehicle you want and taking it back to your lot with zero issues. However, unannounced issues can affect that experience. While arbitration isn’t an exciting process when purchasing a vehicle from an auto auction, being aware of the process is beneficial for buyers who find issues with their newly purchased vehicles.
Whether you are new to auto auctions or this is your first time filing an arbitration, you can use this article as a guide to help you navigate through the process.
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