| In 2002 I had no money but needed a new car badly. I | | | | high enough to win the car. In recent years, certain |
| spent months researching car auctions and eventually | | | | auctions have become more popular with what I call |
| found a few in my area. I bought a 1997 Jeep | | | | the 'amateur buyer'. These are the people that bid |
| Cherokee with 90k miles for $4500. There was an | | | | more than the car is really worth. They win the car but |
| almost identical model on ebay with a starting bid of | | | | they take a perfectly good money making opportunity |
| $10k. Then I saw the opportunity to make some | | | | away from you in the process. |
| money from this venture... So a month later I bought a | | | | Typically, for a 'sealed bid' auction I start with the Kelley |
| 1999 Impala with 40k miles for $4,300 and sold it 2 | | | | Blue Book value to get a general idea of the price. |
| weeks later on Craigslist for $7,900. After that I was | | | | Keep in mind - this is really just a quick starting point. |
| hooked. Now I'm flipping over 10 cars a month for | | | | What you really want to know is what the dealers are |
| about $1500 profit each. | | | | paying for these vehicles. Dealers are paying a price |
| Of late I have been receiving numerous phone calls | | | | to make a profit - and that's what you want to be |
| and even emails from everyone wanting to know how | | | | paying...because that means you'll be making a decent |
| earn some extra money by buying and selling cars, so | | | | profit. |
| I've put together this guide on how to get started... | | | | How do you find this out? Call the loan department of |
| Just like any other business, making money buying and | | | | a local bank and ask for the Manheim Market Report |
| selling cars is not necessarily as easy as one would | | | | (MMR) price. Most banks have subscriptions to this |
| think and it cannot be explained through a phone call or | | | | data which will tell you the average prices that similar |
| even by an email. I could fill 1000 pages with tips, tricks | | | | vehicles have been selling for at auctions. |
| and methods for successfully buying at car auctions | | | | So for the 3 cars that I'm interested in I get the |
| and I some point I might...but for now I can offer some | | | | following MMR prices: |
| key points for getting started and answer some of the | | | | 2001 black Honda Accord EX with 37k miles: $7,630 |
| bigger questions out there. | | | | 2003 white Chevy Impala with 90k miles: $1,950 |
| I've bought a lot of the ebooks out there and they all | | | | 2003 grey Ford F-150 pickup with 67k: $4,100 |
| gave good tips on how to purchase at car auctions | | | | Now since the Honda Accord is such a popular model |
| but that was all. I was paying $19-$30 for a guide that | | | | and this one is not a 'public' vehicle and looks like it's |
| didn't actually list any of the auctions that I should be | | | | had some upgrades (ground effects) - this car will |
| buying at. So I started compiling a list of list of every | | | | probably receive bids in the $8000 range. A quick look |
| single car auction by state and agency...(on my site). | | | | at ebay motors, or craigslist tells me that at that price I |
| What made me to choose this business: | | | | won't be making a profit. I submit a bid of $7000 |
| The main and important reason I chose this business I | | | | anyway. |
| was looking for a way to generate sustainable | | | | The Impala looks like my best bet at making a profit. |
| passive income. There are so many fantastic deals at | | | | While it does have 90k miles on it, that's still under the |
| so many auctions but the vast majority of the | | | | important 100k threshold and because this is a 'public' |
| population will never know. | | | | vehicle it's likely in very good condition and will not be |
| I also know that car market is HUGE. Almost | | | | getting as much interest as the Honda Accord. And - |
| everyone who owns a car these days buys a | | | | there is always demand for Impalas believe it or not. |
| different car every 5 years or so. There is absolutely | | | | These are great 'functional' vehicles for people looking |
| no question on the size of the car market and demand | | | | for cheap - reliable transportation. I don't find any similar |
| for consumers. There is always demand for a good | | | | comps on Craigslist but a quick check on Ebay motors |
| deal on a good car - even if it's not one that you | | | | and shows several comps selling between 2.5k-4k. |
| would drive, just remember, someone will pay for it. | | | | This is great news. I put in a bid of $1,500. If I can get |
| One good thing about a tough economy is that a lot of | | | | my bid filled and then sell it for 3k then I've made an |
| people will be looking someone who can give them a | | | | easy $1,400 (There's a buyers premium of between |
| good deal on a car. | | | | 6%-10% at all these auctions). |
| The first step is to find a list of auctions in your area. A | | | | The 2003 F-150 also looks like a decent money-maker |
| lot of counties have police auctions every month. Note | | | | if I can get it for a good price. Autotrader and Ebay |
| - some of these auctions require a dealer's license so | | | | show comps between 6k-10k. I put in a bid of 4k for |
| you'll want to check for that ahead of time. | | | | this one. |
| Once you find an auction, get a bid-list of the vehicles | | | | The one good thing about 'sealed bid' auctions is that I |
| up for auction. For example, at a recent auction in my | | | | know emotion won't force me to bid more than I want |
| area there were 3 cars that got my interest: | | | | to. I've already determined my ideal acquisition price |
| A 2001 black Honda Accord with a little over 37k miles | | | | and submitted the bid. Now all I have to do is wait and |
| on it. | | | | see if I get 'lucky'. |
| A 2003 white Chevy Impala with 90k miles on it. | | | | One thing I didn't go over is on site inspection. The |
| A 2003 grey Ford F-150 pickup with 67k miles on it. | | | | auction site is required to tell you if they know of any |
| All three of these cars are popular models with under | | | | problems with the vehicle (i.e. transmission was |
| 100k miles and good colors (although I'm not crazy | | | | replaced, etc.). Also, they generally set aside a day on |
| about the white Impala, it's actually a fairly popular | | | | a weekend to visit the cars and visually inspect them - |
| color). | | | | you can't turn on the engine or get inside but you can |
| There's very little info other than the picture. The | | | | look for any exterior indicators of damage. Also, the |
| Impala and the F150 were likely government vehicles | | | | auction site will have each vehicles VIN number. |
| and the Honda was probably a seizure (in the photo it | | | | Because the auction prices for these three are |
| also looks like there were some 'ground effects' | | | | relatively low and the Impala and F150 are |
| modifications - probably a drug dealer). | | | | 'government' vehicles, I'm forgoing the inspection |
| The Impala has almost 100k miles on it but the good | | | | process. Note: I don't recommend doing no due |
| news is that government vehicles are generally very | | | | diligence...especially when you're getting started. But, |
| well maintained which should help them sell quicker. | | | | once you're comfortable with the process and have |
| These are all prime examples of good cars to try and | | | | bought and sold a few cars you'll know the level of |
| buy at auction. | | | | due diligence that should be done. |
| Now, we need to figure out how much to bid on each | | | | One last issue is whether or not you need a Dealer's |
| of these. At this point it's worth it to discuss some of | | | | license to resell these cars. The rules differ by state. |
| the different auction formats. Many government | | | | For example, in Florida it's 3,in New York it's 6, in Ohio |
| auctions are 'sealed bid' which means you submit a bid | | | | it's 5, etc. A lot of people get around this by selling |
| along with other people without seeing what their bids | | | | some in a spouse's name or a brother's, parent's, |
| are. Then, the highest bid wins. These auctions are | | | | whatever. |
| tougher for obvious reasons. | | | | The bottom line is you can easily sell a dozen or so |
| The other type of auction are what's known as the | | | | cars before you're forced to get a dealer's license, if |
| standard 'dutch auction' in which the bid starts out at a | | | | at all. |
| certain price and various bidders offer higher prices | | | | Well, hopefully this has helped learn a little bit about |
| until the car is sold. Unfortunately, this auction is a | | | | how to make a few thousand dollars at your local car |
| 'sealed bid' auction so I'll have to really do my | | | | auctions. For me it started as a search for a new car |
| homework. | | | | and now it's replaced my day job. All it takes is a little |
| The trick with 'sealed bid' auctions is that you have to | | | | time and research. |
| submit a bid that's low enough to make a profit but | | | | |