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What do those lights mean at a car auction? There is certainly no nationwide standard, but there is a pattern. Generally, most all buyers see at least the three colors: Red, Yellow & Green. Here we note what these colors generally mean:
Red indicates an “as-is” purchase without arbitration possibilities. In other words, “buyer-beware” and once you buy this car, there’s no return policy nor adjustments in price or terms after, “Sold!”
Yellow says that there are announcements (conditions) which are then not subject to arbitration. Other than the announcements, the car is sold with with all material issues covered by arbitration.
Green is good news for buyers: the car is being sold as a “ride and drive” with no known material defects. Arbitration is available for any major issues without conditions.
All the above colors deal primarily with the car’s condition (and sometimes including title issues.) Yet, some auctions separate the issue concerning if the title is present or not with a particular color.
Blue (sometimes white) suggests generally that the car is being sold without a title present at this time, but that title will be forthcoming. Any other color would indicate the title is present as well as the “condition” of the title.
Some auctions combine colors. For instance, these suggest:
What is arbitration? Generally speaking, the auction company acts as a neutral referee attempting to settle a buyer claim by contacting the seller. This arbitration is intended to arrive at a fair, equitable solution for both parties based upon how the car was represented at the auction.
What is a material (major) issue? Material issues are significant issues involving the car’s engine, transmission and/or other consequential mechanical, electrical, or cosmetic components. Immaterial issues are typically not eligible for arbitration.
Lastly, while these above color codes and their meanings are fairly standard, it’s important for any car buyer to review any car auction’s color codes and their particular meanings. These color codes substitute for — and/or stand as — representations which buyers and sellers are held to when the car is sold.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.