When the market is flooded with water-damaged cars, beware

You got a great deal on 2017 sport utility vehicle, amazed that the price was substantially lower than the same model on a different lot. 

Then a few months after buying it, you’re driving along and you smell something funky. Mildew? Or your lights begin flickering. Computer glitch? 

The answer is likely yes to both. Your new car may have been submerged in dirty water brought by a flood. That’s right, a flooded car that never made it to the scrapyard nor advertised and disclosed as having been damaged by water was sold to you.

How a flood-damaged vehicle can be sold, legitimately or illegally

After Hurricanes Harvey and Irma hit Texas and Florida, an estimated 650,000 vehicles were damaged. Those vehicles were on the streets as well as on dealer lots. 

Water wreaks havoc on a vehicle’s electronics, especially with the sophisticated technology in today’s vehicles. Water damages mechanical systems as well. Insurance companies write off many flooded vehicles as a total loss because of this. 

Cars that have been totaled are supposed to go to salvage auction to be sold to junkyards and vehicle rebuilders. But as has happened after previous hurricanes, some of those water-damaged cars made their way out of Texas and Florida to dealer lots. 

They aren’t supposed to come out of flooded areas with clear titles. They should either carry a “salvage title” or a “flood title.” A salvage title means the insurance company deemed the vehicle a total loss, whereas a flood title denotes having sat in water up to the engine compartment. 

Some of the cars can be rebuilt. But they still have a title that shows the record. 

Scammers, however, do what’s called “title washing” in an attempt get a clean title and hide the real history and problems. There’s a lot of wiggle room from state to state on title laws, according to Cars.com. Some states don’t require “branding” –  written off as a total loss – for cars over a certain age. So, scammers take the vehicles to states with loose title requirements. They may move the vehicles to another state to wash the titles more. 

The trade in flooded cars ebbs and flows with seasonal storms

As Cars.com notes, there is a lag in retitling a car. It may still appear to have a clear title, even though the front end is totally smashed or has been deemed a total loss after sitting in water. 

The illicit trade in these cars became such a problem after Hurricane Katrina in 2005 that the National Insurance Crime Bureau, a Chicago-based nonprofit that fights insurance fraud, set up VINCheck. It’s a free resource that allows consumers to check a car’s vehicle identification number in a database to see if it has been damaged or stolen. 

Checking the CarFax or AutoCheck reports on the will give the vehicle history as well. According to Cars.com, those reports may show a clear title for a vehicle even though it also shows major damage. The reason is the lag time in reporting title changes. 

The scammers know all this and play the system. And it doesn’t just happen through a dealer lot. Sometimes salespeople will advertise a car in classifieds as if it’s a private sale. That’s called “curbstoning.”

What you can do if you suspect a car may have spent time underwater

If you bought a car and believe you were scammed, you can sue. You can report it the state as well. 

But the biggest preventive measure starts with you. Do the research and investigate. 

Start with the basic adage of “If it’s too good to be true, then it probably is.” A vehicle priced substantially lower than market should immediately raise a red flag. We all want a good deal, but don’t be fooled.

When you walk on the lot or see a car in a private sale, ask a lot of questions. Inspect the car closely. 

Mud in a difficult to clean places – under the hood or trunk – is one sign that the car sat in water, according to Autotrader. Edmunds says new upholstery on a not so old vehicle would be another red flag along with heavy use of air freshener or cleaner. Turn on the air conditioner. A moldy smell blasting in your face would be another sign. 

Check the CarFax or AutoCheck reports and run the VIN through VINCheck. Walk away if you feel uncomfortable with what you’re discovering. For more reassurance, take the vehicle to a trusted mechanic. 

There are a lot of cars out there that have been damaged and flooded. Rebuilt ones may, in fact, be good cars if properly fixed. But be aware and ensure the car’s title reflects the car’s true past. 

Photo: Shutterstock, Houston 2017