Flipping Cars from Auctions
Buying and selling used cars can be an incredibly lucrative business. This is one of those earning opportunities that does not require much capital and you can do it from your home itself. There have been people who have bought used cars for as less as $500 and spent a couple hundred more and then sold it for nearly ten times their total investment.
The trick is to know how to go about doing this in a way that offers maximum returns and gives you the least amount of headaches. There are some secrets that we will reveal today that can give you an incredible advantage when it comes to choosing the perfect used car to buy and to sell for maximum profits.
The different aspects that will ultimately help you make great progresses in a business that can eventually become your primary source of income have been explained below. Armed with these tricks, you can make a good deal of money by buying and selling used cars.
Wholesaling Cars: Where to Buy
Where you buy a used car from is crucial to the entire operation. If done right, you can get a great car for dirt cheap prices which with minimal investment in the form of time and money can be sold for a much higher rate without having to do any dubious marketing. The ideal source of a used car that you would want to sell should have cars that can be in great condition sold by people desperately wanting to get the cars off their hands. The best sources are as follows:
- Car auctions: This is your best shot at getting a great car at an almost unbelievable price. The reason behind this is that many times people attending the auctions do not either know the car’s true value or you could find a really fortunate deal. A common source of cars at these auctions are from people who had left it under a tree or in a garage and no longer find any use for it like people who have become quite old.
These cars might look beat up but the parts that matter like the engine might be in top shape. You must avoid the pitfall of going for the shiniest looking car as they can hide massive problems under the hood. We will let you know how to judge the true condition of a car without being bamboozled by its looks shortly.
- Online: There are plenty of people who sell their used cars online on websites like Craigslist and eBay and even these can be great sources of a really profitable car. Many people who take this route to sell their cars are usually looking to sell their car quickly and that leaves you with plenty of room for negotiations.
If you are fortunate enough, you can get a great deal. Another advantage of buying a used car this way is that you can take a good look at the car before making the purchase allowing you to rule out even minor issues with the car. Keep in mind that people selling cars online won’t make the flaws in their cars obvious and it is up to you to find the flaws and decide if it worth your troubles.
- Newspaper and community boards: These can also be great sources of cheap deals on great cars. Again, this is another opportunity that affords you the luxury of checking out the car before paying for it.
Most supermarkets will have a bulletin board that will often contain more than a few fliers for the sale of a car and some of these can be really dirt cheap but can be fixed up easily and then sold for a much higher rate.
Things to Avoid When Wholesaling
It is just as easy to end up with junk as it is to get a great used car. If you buy a car just because it is cheap but then find it very difficult to sell then the whole endeavor becomes a lost cause. You can also end up buying a car that costs too much to fix thereby reducing your profit margin or even forcing you to sell at a loss. Here are some common pitfalls to avoid.
- Avoid certain brands: People you will sell the cars to will have a lot of inhibitions and as such will not buy any used car no matter how good it is. You might be tempted to buy a car just because it is cheap or because it is in top condition but these alone should not be the deciding factors.
Some brands like Volvo, Chevrolet and Toyota have a good reputation and are easy to sell as compared to cars from Dodge or Chrysler. Just because the car you are looking at is in great shape doesn’t mean that it will be easy to sell if the brand has a reputation for being unreliable.
- Don’t go by the looks: A dirty car doesn’t always mean a bad car. Sometimes, they can be in really good shape and all they need is some cleaning and a topping off of the fluids in the engine. In the same way a shiny exterior might not always be a pointer of good health. There could be major faults in the engine or with the chassis that can be very expensive and in some cases impossible to be fixed.
- Avoid being sweet-talked into a bad deal: While it might not be the same level of marketing you would get at a dealer’s, many regular people will try to hype up certain features on the car like a fancy sound system or upholstery. Instead, be wise and look for minor defects in the car like a broken indicator or a non-functioning dial to get them to reduce the price.
This is because when it will be your turn to sell the car, the selling price can go down considerable depending on the presence of even minor defects. Value the car based on everything that is wrong with it instead of everything that is great about it. A stock car that is great to drive will fetch more money that an upgraded car with a crappy engine.
- Don’t start too big: Don’t go buying every car in sight. Try to make the first couple of cars really count. Make a decent amount of money and get the hang of things before expanding. If you make a mistake buying one car, it can be rectified but if you make the same mistake buying 10 cars, it can be almost impossible to recover.
Ways to Figure Out the Drive-ability of the Car or Truck
Ultimately, the amount of profit you make will boil down to how low you can go when buying and how high you can go when selling. This is basic economics and to achieve maximum profit you have to make sure that the car can be sold quickly without requiring too much of your time or money. What follows are some guidelines that will help you figure out if a car is worth investing in or if it is better to wait for another one.
- Do a visual inspection: This will give you a good idea of how well the car has been looked after. If there are plenty of scratches and dings, then the car has had a rough life. Some cars might look bad but will clean up nicely. A gentle wipe with a wet piece of cloth will help you understand the true health of the car. Also look for leaks, as they can be a real headache to fix.
- Take it out for a drive: Once you are satisfied with the looks of the car, it is important to find out exactly how good it is. This is also a great way of determining the heath of a car if you do not have the necessary know-how to do so from just a visual inspection.
See how responsive the car is. If it is twitchy or if the accelerator doesn’t respond well, then it means that the engine has plenty of wear. Another area to pay particular attention is the transmission. Check to see how smooth the transition is from neutral to drive and the same way from reverse to drive. If the car seems to fight this transition, then it is best not to buy the car as the gearbox is another component that is expensive to repair.
Then, look for play in the steering. All used cars will have some play. That is how cars work, but if the car doesn’t respond when turning the steering by a considerable margin, then it is again best to ditch it.
Finally, get out of the car and ask someone to rev the engines halfway and observe. If thick oily smoke comes out of the exhaust, then it means that the engine is too worn out. Listen to the engine as well. If there are rattling or screeching noises, then they are great indicators of an engine in really bad shape. - Check the faults: Every used car will come with some defect or the other. Your job is to decide if they are worth repairing. Things like a flat tire, a dirty interior or exterior, low oil levels, low water level, etc. can be easily fixed. On the other hand, an unresponsive gearbox, leaking pipes, rust in the floor of the car, worn out piston rings can all be terribly expensive to fix and not worth the effort.
- Find out the reason for the sale: If you think the car is being sold at a rate that is too cheap and you cannot find any obvious or glaring defects, then talk to owner and find out their reason for selling. Some would no longer be needing the car and want to get rid of it as soon as possible. Others might not like the color or something trivial like that.
As long as you are able to glean an earnest answer and it isn’t anything huge, you can make the purchase. There will be people who will lie through their teeth, but it is quite easy to understand when the car is being oversold. - Check the current market value of the used car: Know what a used version of the make and model in question goes for. That will give you a great idea of what price the car can fetch when you sell it and thus will decide your profit margin. When you are the one doing the buying, try to negotiate a price that is as low as possible compared to this market value.
Buying and selling used cars can be a rewarding business opportunity if done right. Hopefully, everything that we have mentioned above will help you make the right calls.
Wholesaling / Car Flipping FAQ
What are the best cars to flip for a profit?
Honestly, the best car to flip for profit is the one that you can get the best price on from an auction or a private seller. Try to focus on cars with automatic transmissions and also it’s hard to go wrong with almost any Honda or Toyota as far as demand goes.
Where should I sell the cars that I buy?
Often, wholesalers will just resell the cars they buy at cheap prices at the same auction or will take them to another auction where they think they can bring more money. You may also use online car selling platforms, and of course, the classic: side of the road with a sign. Get creative.
Do I need an auction license in order to buy and sell at auctions?
Auctions that are open to the public do not require you to be a licensed dealer or have an auction license. Alternatively, you may be able to contact a dealer who will bid at a dealer-only auction on your behalf.
If you’re going to make money wholesaling cars, you need to learn how to buy at a public car auction. Flipping used cars comes easier with time as you learn the market and can intuitively assign a value to a vehicle at the auction right away after looking it over.
See Also:
What to Look For When Buying a Used Car or Truck
Last updated on January 23rd, 2025 at 03:39 am
