How to Make $3000 a Month at Seized Car Auctions

In 2002 he had no money but he urgently needed a new car. I spent months researching auto auctions and eventually found some in my area. I bought a 1997 Jeep Cherokee with 90k miles on it for $4500. There was a nearly identical model on eBay with a starting bid of $10k. Then I saw an opportunity to make some money with this company… So a month later I bought a 1999 Impala with 40k miles for $4,300 and sold it 2 weeks later on Craigslist for $7,900. After that I was hooked. I am now buying 10 cars a month for about $1500 profit each.

Lately I have been receiving numerous phone calls and even emails from everyone who wants to know how to make some extra money buying and selling cars, so I have put together this guide on how to get started…

Just like any other business, making money buying and selling cars is not necessarily as easy as one might think and cannot be explained through a phone call or even email. I could fill 1000 pages with tips, tricks and methods for successful auto auction buying and at some point I might… but for now I can offer a few key points to get you started and answer some of the biggest questions out there.

I bought a lot of e-books and they all gave me great tips on buying at auto auctions, but that was about it. I was paying $19-$30 for a guide that didn’t actually list any auctions you should be buying from. So I started compiling a list of all auto auctions by state and agency… (on my site).

What made me choose this business:

The main and important reason why I chose this business was to look for a way to generate sustainable passive income. There are so many great deals at so many auctions, but the vast majority of the population will never know it.

I also know that the car market is HUGE. Almost everyone who owns a car these days buys a different car every 5 years or so. There is absolutely no question about the size of the car market and consumer demand. There is always demand for a good deal on a nice car, even if it’s not one you would drive, just remember, someone will pay for it. One good thing about a tough economy is that many people will be looking for someone who can offer them a good deal on a car.

The first step is to find an auction listing in your area. Many counties have police auctions every month. Note: Some of these auctions require a dealer’s license, so you’ll want to check ahead of time.

Once you find an auction, get a bid list of the vehicles up for auction. For example, at a recent auction in my area there were 3 cars that piqued my interest:

A black 2001 Honda Accord with a little over 37k miles.

A white 2003 Chevy Impala with 90,000 miles.

A gray 2003 Ford F-150 pickup with 67,000 miles on it.

All three of these cars are popular models with less than 100,000 miles and nice colors (I’m not crazy about the white Impala though, it’s actually a pretty popular color).

There is very little information other than the image. The Impala and F150 were probably government vehicles and the Honda was probably a seizure (in the photo it also looks like there were some ‘ground effects’ mods, probably a drug dealer).

The Impala has almost 100,000 miles on it, but the good news is that government vehicles are generally very well maintained, which should help them sell faster. These are all great examples of good cars to test drive and buy at auction.

Now, we have to figure out how much to bid on each of these. At this point it is worth discussing some of the different auction formats. Many government auctions are “sealed bid,” which means that you bid with other people without seeing what their bids are. So the highest bid wins. These auctions are more difficult for obvious reasons.

The other type of auction is what is known as the standard “Dutch auction” where bidding starts at a certain price and various bidders offer higher prices until the car is sold. Unfortunately, this auction is a “sealed offer” auction, so I’ll have to do my homework.

The trick with “sealed bid” auctions is that you have to bid that is low enough to make a profit but high enough to win the car. In recent years certain auctions have become more popular with what I call the ‘hobbyist buyer’. These are the people who bid more than the car is actually worth. They win the car, but in the process they take away a perfectly good opportunity to make money.

Typically for a “sealed offer” auction, I start with the Kelley Blue Book value to get a general idea of ​​the price. Please note that this is just a quick starting point. What you really want to know is how much dealers are paying for these vehicles. Distributors are paying a price to make a profit, and that’s what you want to pay…because that means you’ll make a decent profit.

How do you find this out? Call the loan department of a local bank and ask for the Manheim Market Report (MMR) price. Most banks have subscriptions to this data that will tell you the average prices similar vehicles have sold for at auction.

So for the 3 cars I’m interested in, I get the following MMR prices:

2001 Honda Accord EX black with 37k miles: $7,630

2003 white Chevy Impala with 90k miles: $1,950

Gray 2003 Ford F-150 pickup with 67k: $4,100

Now, since the Honda Accord is such a popular model and this is not a ‘public’ vehicle and looks like it has had some upgrades (ground effects), this car will probably get offers in the $8000 range. eBay motors, cars.com or craigslist tells me that at that price I will make no profit. I bid for $7000 anyway.

The Impala looks like my best bet for profit. While it has 90k miles on it, it’s still under the important 100k threshold and because this is a ‘public’ vehicle, it’s likely in very good condition and won’t get as much interest as the Honda Accord. And, there is always demand for Impalas, believe it or not. These are great ‘functional’ vehicles for people looking for affordable and reliable transportation. I can’t find any similar comparisons on Craigslist, but a quick check on eBay motors and autotrader.com shows several comparisons selling between 2.5k and 4k. This is great news. I put in an offer of $1500. If I can complete my bid and then sell it for 3k, I will have easily made $1,400 (there is a 6-10% buyers premium on all of these auctions).

The 2003 F-150 also seems like a decent source of money if I can get it at a good price. Autotrader and eBay show comps between 6k and 10k. I put a 4k bid on this one.

The good thing about “sealed bid” auctions is that I know the excitement won’t force me to bid more than I want. I have already determined my ideal purchase price and submitted the offer. Now all I have to do is wait and see if I get ‘lucky’.

One thing I didn’t check is the on-site inspection. The auction site should let you know if they know of any issues with the vehicle (ie transmission was replaced, etc.). Also, they usually set aside a day on a weekend to visit the cars and visually inspect them; You can’t start the engine or get inside, but you can look for any exterior indicators of damage. Also, the auction site will have the VIN number for each vehicle. Because the auction prices for these three are relatively low and the Impala and F150 are ‘government’ vehicles, I am waiving the inspection process. Note: I don’t recommend not doing your due diligence…especially when you’re just starting out. But, once you’re comfortable with the process and have bought and sold a few cars, you’ll know the level of due diligence that needs to be done.

One last question is whether or not you need a dealer license to resell these cars. The rules differ by state. For example, in Florida it is 3, in New York it is 6, in Ohio it is 5, etc. A lot of people get around this by selling something in the name of a spouse or sibling, parent, whatever.

The bottom line is that you can easily sell a dozen cars before being forced to get a dealer license, if at all.

Well I hope this has helped you learn a bit about making a few thousand bucks at your local auto auctions. For me, it started as a search for a new car and has now replaced my day job. All it takes is a little time and research.