| Many people go to public car auctions (the ones you | | | | area. I see they have an average sales price of |
| don't need a Dealer license for ... anyone can go) in | | | | around $3,500, but they have two or three times the |
| order to get a good deal on their next car. But the fact | | | | mileage. So, I'll target a resale price of $3,400 and my |
| is that these auctions provide serious income | | | | vehicle will jump off the page at prospective car |
| possibilities as well. | | | | buyers. It will likely sell in a day or two. But if it doesn't |
| While there are many older, higher mileage vehicles at | | | | sell in a week, I'll lower it to $2,900 and it will be gone. |
| these auctions that I personally am not particularly | | | | At these kinds of prices, a low-mileage vehicle like this |
| interested in, there's almost always some hidden | | | | will be irresistible to someone simply looking for cheap |
| "gems" as well that are ideal for reselling. Profits on | | | | transportation, or buying a vehicle for a child to get |
| these sorts of vehicles are usually in the $1,000 to | | | | them around college. And whether the profit is $1,500 |
| $3,000 range. | | | | or $2,000, it's not bad for a few hours of work. |
| But what do you look for in a vehicle to capitalize on | | | | Okay, let's maybe go over one more quick example, |
| this? Well, it's hard to explain exactly, but you'll know | | | | but without all the detail since the process would be |
| them when you see them as you preview the listings | | | | the same. |
| a few days before an auction. | | | | I go back to my auction data base (there's more |
| I either look for mid-priced vehicles with high demand | | | | information about data bases at the end of this article) |
| and a reputation for quality (perhaps something like a | | | | and I find another upcoming auction. I spot several |
| Toyota Corolla) with average or lower mileage. Or, I go | | | | excellent possibilities in the listings and then come |
| after vehicles that are nothing special as a make, but | | | | across some real standouts that are actually shouting |
| have very, very low mileage. | | | | at me. |
| I'll then target a buying price well below its trade-in | | | | There's four 2002 Pontiac Trans Ams. The mileage is |
| value (you'll be surprised how often you can be the | | | | on the higher side in the 74,000 to 94,000 range for |
| winning bidder at a price like this). This means I can | | | | each of them. But this is a "muscle car" with lots of |
| then resell it at or close to its trade-in value and this is | | | | enthusiasts. 2002 was the last production year and |
| a huge competitive advantage when it comes to | | | | buyers will travel from one state to another to buy |
| reselling. | | | | one. |
| Perhaps a step-by-step example would be useful here. | | | | Also very interesting is the fact that these are also |
| The first thing I do is go to my data base of auctions | | | | listed as "government vehicles". It's very unlikely that |
| and scout around at upcoming auctions in my area. For | | | | these were used by a local government agency. |
| example, I see one now that's coming up next week | | | | Instead, it's much more likely that these were "seized" |
| with about 150 vehicles. As I scan the list, I come | | | | by the state government from a Car Dealer who |
| across five 2000 Chevy Cavaliers. I really don't care | | | | went out of business still owing on sales tax. If I'm right |
| about Cavaliers one way or another, but the mileage | | | | about this, it's also very likely they've been |
| on them is outstanding. Four of them have between | | | | reconditioned and are in good shape as well. |
| 34,000 and 37,000 miles. And the fifth one has 40,000. | | | | So, any of these Trans Ams would make an excellent |
| For cheap, 7-year-old cars, this will be a huge selling | | | | resell candidate. I would then go through the same |
| point. | | | | pricing process to determine my "no-more-than" |
| The listing also tells me that these are "government | | | | purchase price and resale price. |
| vehicles". Well, that explains the mileage and now I'm | | | | If the actual bidding goes higher than I want to pay, I will |
| super interested. It's very likely that these were used | | | | simply walk away. I'll stay unemotional and will only |
| by a local government office for employees when | | | | purchase when there's a tremendous price advantage |
| they needed to go out into the field, which wasn't often | | | | built in from the get go. There's always other days, |
| in this case. The kicker is that government vehicles are | | | | other auctions and many opportunities to cherry-pick |
| usually extremely well maintained, so these are looking | | | | the offerings. |
| like prime examples of cars I can buy very cheaply | | | | One other issue is whether or not you need a Dealer's |
| and sell fast. | | | | license to resell vehicles. Each state has its own rules |
| The next step is to set a purchase price target, so I | | | | on how many vehicles you can sell before you need |
| need to get an accurate trade-in value. Sure I use | | | | to get a license. In Florida, for example, it's 3. In New |
| Kelley Blue Book, but this is really just a ballpark figure | | | | York it's 6. In Ohio it's 5 ... and so forth. And it is easy to |
| that is often off the mark. What I really want to find | | | | increase this by selling some in a spouse's name, a |
| out is what Dealers are paying for them at the Dealer | | | | father's name, a friend's name, a cousin's name, and on |
| auctions ... this is the real trade-in value. So I call the | | | | and on. The point is that you can do this for a while |
| loan department of a local bank and ask them for a | | | | before deciding on whether or not to get a license. |
| Manheim Market Report (MMR) price. Most banks | | | | Well, I hope this has helped you learn how to make |
| worth their salt subscribe to this data. They tell me | | | | money at your local public car auctions. Some people |
| prices for ones in average condition have been selling | | | | simply buy cheap cars for a few hundred dollars and |
| at these auctions for around $2,200. | | | | resell them ... and that's fine too. I just like taking a more |
| Now, the Cavaliers I'm interested in are way below | | | | studied approach myself which I find is the best way |
| average in mileage and would likely go for more than | | | | to lead to profitable and quick turnaround times. |
| this at a Dealer auction. But because these are at a | | | | Again, I can't tell you exactly which make or model to |
| "public" auction, where prices are often lower, I will | | | | look for. But I hope these examples help you identify a |
| target a purchase price of no more than $1,400. | | | | great candidate when you see it. |
| Next I go to to see the retail prices for these in my | | | | |