How to Make Money Buying and Selling Carsby Contributor
Economists and businessmen alike often say that the greatest opportunities occur during a recessionary period in the economy, much like the one we are currently in. I hate to speak in such callous terms, but one person's misfortune can be another person's gain. When unemployment is on the rise and salaries are being "frozen" people will sell valuable items, like their cars, to help make ends meet. This is where people who can afford to take a little risk and have the disposal income available to buy these items do so, and then "flip" them for a profit. You may have heard success stories of people who have made a significant amount of money "flipping" cars, but keep in mind that this venture is not as easy as it sounds and you must be willing to tolerate some risk. "Flipping" cars has become just as popular as "flipping" houses so don't be surprised if you encounter some competition along the way, but like in any business competition is healthy.
Knowing that you can make money buying and selling cars is one thing, but knowing which cars to buy and where to buy them is the million dollar question. Buying a car from someone who posted an ad in the newspaper probably isn't the best place to start. When dealing with another individual, it is difficult to gauge what condition the car is in, and odds are the car has some sentimental value to its owner making it more difficult for you to get a good deal on it. The best place to start look is at government auctions. Believe it or not, the U.S. Government seizes thousands of cars each year through their agencies (IRS, DEA, FBI), and auction them off at significantly discounted prices. Due to certain laws pertaining to auctioning off property that is seized, the government has no choice but to offer these vehicles at up to 90% off the original value. They have a wide range of car models because of the different types of people whose cars get seized or repossessed. Most of these cars seized by the FBI and DEA aren't your average Honda or Toyota. Criminals and drug dealers like to own nice looking cars so for the most part these are high-end models like BMW, Mercedes, Lexus, Acura, and Infiniti, most of which get auctioned off for between $10,000-$20,0000. Since the IRS and other banks repossess cars from average individuals due to backed taxes or a defaulted loan, you can also find good deals on Honda's, Toyota's, and Nissan's if that's more in your price range. These cars tend to sell anywhere from $2,000-$10,000. Lastly, if you attend a live auction it is important that you bring a mechanic with you to inspect the car. After the auction is closed and you are the winning bidder, you get one hour to inspect the car to make sure it is good condition. After that one hour, you are on the hook, so to speak, for the auction price of the car. A great site to learn more information about government auctions and to find an auction near you is http://www.governmentauctions.org/.
Now that you know where to buy significantly discounted cars, it is time to learn where the best places are to sell these cars for a profit. Let me start by saying that one of the worst places you could go is to a dealership. Remember, dealerships are in the business of making money by selling cars. It's difficult to sell a car for a profit when you are trying to sell it to someone else who also wants to make a profit from it. This is why you need to act as the car dealer and sell the car to someone who actually wants to own it. One of the easiest and most common ways to do this is by placing an ad in the newspaper. By doing this you are attracting people who are interesting in buying the car for ownership and not people looking to resell it for a profit (remember my first piece of advice on where not to buy cars for a profit). While this may be the easiest and most simplistic way to sell a car, in this day and age it is not the most effective or most profitable.
When you place an ad in the newspaper, it not only costs you money, but you are only attracting interest from local buyers. For those of you who are not very adept at using a computer, the newspaper may be your best bet. However, for those of you willing to broaden your horizons and reach out to more people, well then the computer, and more specifically the Internet, is where you want to turn to. A great website that is very similar to the classified section of your newspaper is http://www.craigslist.org. This site allows people from all over the country to list items for free on their website. They can list anything from job openings, to apartments for rent, to cars for sale. Craigslist allows sellers to get exposure outside of just the seller's local area. While it is unlikely for people in California to purchase something from someone in Florida, it is still possible. Craigslist does not operate like an auction, but rather as a fixed price classified ads section of a newspaper that is available to everyone. Sellers can write their own descriptions as well as include photos of the item for sale. While using Craigslist seems like an effective way to "flip" cars, it is not as reputable or as effective as another online site.
This brings me to the best and most effective way to flip cars for a profit, and that is to use eBay Motors, the automotive arm of eBay Auctions. For those of you who are not familiar with eBay and how it works, I will give you an overview of eBay's features and exactly what they offer. EBay provides online marketplaces for the sale of goods and services in the United States and internationally. The marketplaces provide online commerce platforms that enable buyers and sellers to interact and trade with one another. EBay is similar to Craigslist in that it provides an online platform to sell products where the seller gives a description of the item for sale and also can provide pictures if they choose. The difference is eBay allows buyers and sellers to find each other more easily regardless of location. Also, eBay operates in an auction format which allows the buyers to determine the final sale price based on the demand for the product being sold. The seller is allowed to determine what the auction price starts at and the duration of the auction, buy the bidders determine the final sale price. EBay has great features such as the "Buy It Now" feature and reserve pricing. The "Buy it now" option allows the seller to set a price at which someone can buy the item being sold without having to bid on it. This price is usually set well above the starting bid price. The "reserve" price feature allows the seller to set a price target that the item must reach in order for it to be sold. Both of these features benefit the seller by making sure the items are sold on their terms and not someone else's.
What really allows people to sell cars on eBay and make a profit is that people who look to buy things on eBay are looking for deals they can't get anywhere else. This is why it is important to make sure you get as good a deal as possible by buying cars at government auctions. You can easily sell a car on eBay for $2,000-$4,000 more than what you paid for it at a government auction, and the person buying it on eBay will still think they are getting a deal. Once an item is sold, the seller sets the payment terms and shipping options. Since cars can not be shipped, the buyer and seller often set up a place and time to meet and finish the transaction. To be safe, always make sure it is a place you feel comfortable where there are other people around just in case you suspect something might go wrong. This is where positive feedback comes into play. If other people have had positive transactions with you in the past, it make the transaction go that much smoother and make your customers feel more comfortable doing business with you.
Before "jumping in with both feet," I suggest you take some time to become familiar with eBay and eBay motors by visiting their site http://www.ebay.com and doing some research. You may find that "flipping" cars isn't as easy as it sounds and may not be worth your time. Keep in mind that making money on your own is never easy, and if "flipping" cars was as easy and successful as it sounds then everyone would be doing it. If you do decide that this is something you wish to pursue, people who treat this like their own personal business are more successful than those who take this less seriously. Like any business, adaptability is very important. Being able to stay ahead by keeping yourself informed of any new information is very important. I would also recommend selling some lesser items on eBay first before you start selling cars. This will allow you to become familiar with how eBay works through smaller transactions and also help build up your positive feedback. The most influential aspect of your eBay business is your feedback. What other people say about you and the recommendations, or lack there of, that they provide can be very influential and affect the amount of business you receive. From personal experience, I can say that "flipping" cars can be a very rewarding way to make some additional income. The hunt for the "perfectly priced car" that allows you to make a significant profit is like searching for buried treasure. This hunt can be fun and rewarding, but it can also turn into an obsession. Remember, that having fun is very important and you should never get too high or too low just because you had some success or encountered some difficulties.
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