As in stocks and real estate, the trick to making money at auto auctions is to buy low, sell high. However, to successfully accomplish that, a new wheeler-dealer has to be willing to take on the mission like the job it will be, investing her money, but more importantly, her time.
Know the prices. Before you can bid at an auto auction, you need to have a solid grasp of the market: what automobiles bring what prices. The “blue book,” the most widely known resource for pricing new and used autos, is supplemented today by a host of Internet sites that can give you realistic pricing on cars of all makes and models. Refer to the websites below as a starting point.
Supplement the basics with research. Read, read, read. To fully understand the industry and the market you need to read auto magazines, the auto sales sections in newspapers and magazines specializing in auto sales such as Auto Hunter (website below in References).
Understand demand. Knowing what types of automobiles will sell best in your region will mean the difference between climbing profits and piling inventory. You do not want cars, you want money. One way to test the market is to check sales at area dealerships and auctions to see what is selling. Another important factor to consider is the economy. A basic knowledge of today’s news events will confirm that buying a gas-guzzling SUV, regardless of its bargain price, is a no-go.
Research the auctions. While many auto auctions are “dealer only,” there are plenty open to the general public. Attend a few auctions before you bid and learn the process. When you are ready to buy, you want to buy from a reputable auto auction firm with a good track record of satisfied bidders and buyers. Because auctions sell with an “as is” caveat, it is imperative that you deal with an auctioneer and an auction firm that is in the business to stay.
Attend the auction. Usually auctions begin with a viewing time before the actual sale. Go and check out the autos and find out all you can about the cars in which you’re interested. Ask questions of the auction firm, regarding title, mileage and the car’s history, but also jot down the vehicle identification number.
Run a check at home on the vehicles by entering their id numbers in an auto history forum such as carfax (website below). You do not want to buy or sell a lemon.
Bid on the cars you want. Do not overpay. Pay in full and bring the car to your home or your lot.
Price the car. The point is to make money, not hold inventory, so price it accordingly. Based on your own research, you should be able to sell the car and make a profit, which you can use to buy the next model up and increase your profit margin.
Market the car. In those same magazines that you used to research prices, you can now place your ads for your cars. Do not, however, neglect online websites such as eBay and Craigslist.
Be willing to negotiate.
Sell the car.
Turn your profit back into your new business and do it all over again.
