9 Ways To Flip Cash Auction Vehicles - Session 2

Mar 4, 2016
8 min read

Welcome back to our 2nd session of the 9 different ways to flip cash auction vehicles. In our first blog we gave a summary of nine different concepts someone can utilize to make money buying low and selling for a profit. With step one buying vehicles at wholesale price then turn around and sale for fair retail price to the general public. If you haven’t read the details please click here so you can go back and look over this concept.

As promised in our last blog now it’s time to discuss our 2nd process. Buying wholesale vehicles from private dealer auctions, then take the vehicle to a public auction the next day for quick profit. In order to accomplish this goal you either need to have a wholesale or retail dealer’s license or you need to be affiliated with a company that would bring you in under their dealer license. The reason you need this setup is mainly due to your inventory selections would come from pure dealer’s auctions that are completely restricted to retail buyers and/or public buyers. Once you acquire the vehicle(s) you quickly take it to a public auction for resale. The concept is simple and it’s not an unknown process but what many don’t understand is how to make the process successful so money can be made without time being wasted.

I also must make a disclaimer: You have the ability to bring your inventory to a public sale without a title and still sale the inventory but remember without a title the auction house won’t release the check to you until you actually surrender the title. Yes I stated this is a quick profit situation and it’s true you can literally buy inventory at a dealer auction in the morning and quickly get it to a public sale the same day and sale for profit. Just remember though if you don’t have the title in hand you will need to wait for your money until you are able to give the public auction house what they need.

Before I begin explaining the process you 1st need to ask yourself what is your agenda for auction to auction flips.

1st case situation: You are attempting to make some quick money and it’s only a short term goal
2nd case situation: You plan on utilizing public auctions as a way to push off units that have known issues (not recommended if your overall plan is to make continuous profit)
3rd case situation: You want to establish yourself as a power seller and use public sales as solid income verse selling retail.

There might be a few other situations why individuals would take this option but I assure you everything will eventually lead back to the 3 scenarios I just mentioned.

I also want to take a brief moment to explain exactly what a power seller in our industry is:

It’s usually the larger dealerships that bring multiple inventory to a sale with 25 vehicles or higher. They have already established themselves at an auction and are well known by the public. In my humble opinion being a mid-level seller at a public auction would be a feasible goal that can be accomplished quickly if done correctly. If you are able to bring 5 to 7 vehicles each week that can be sold within one sale you are well on you way to becoming a power seller over time.

If you are new to this concept and you wanted to become an established seller at a public auction your first agenda is being known at the sale. When new sellers attempt to bring inventory the 1st issues one will run across is getting quality runs numbers so your vehicles get seen early in a sale while a good amount of money is still available from public buyers. Most new seller won’t have a large inventory which is usually 25 or more vehicles. So when you come with your smaller count these auctions usually give you higher run numbers which pushes you towards the end of the sale. The shortcut way of accomplishing a good run number is being associated with a power seller at the auction. It’s simply done by given a small portion of your sale’s proceeds to that individual if you are able to get the price you require. You may ask why you should pay extra fees to someone else. The simple answer is having the ability to utilize someone else credibility to sell your inventory and it would look like to the public buyers as if your inventory was that power seller lineup. The established power seller would represent your items and you reap the benefits of his or her reputation.

Here I must also make another disclaimer: I would recommend if you go this route that your inventory is in good shape even if the power seller name you want to use inventory isn’t at the same quality. Remember this person already put in the work of becoming known so they have the flexibility of brining in various level of quality that unfortunately you don’t have the luxury at the moment.

The other version of establishing credibility as a seller at a public sale is simply by your own merit’s which would be my suggestion if you plan on doing this process for a long period of time.

Even though the 1st option may give you the ability to sell your units. Paying extra fee’s constantly will eat up your overall profits and unfortunately you still are not accomplishing the main goal of standing out on your own as a quality seller.

So if your overall goal is to become a power seller over time going with this suggestion would be my highest recommendation.

When you head to your wholesale auction sources to acquire vehicles for quick flips at the public sale it’s my suggestion simply buy vehicles in high demand.

Here is my suggested list as of the writing of this article

Honda Models: 02 & up - Accord, Civic, CRV, 03 & up - Odyssey.

Toyota Model: 02 & up - Camry, Rav-4, Corolla: 99 & up - Sienna

Nissan Model: 03 & up - Altima, 04 & up Maxima: 02 & up - Quest

Chevy Model: 06 & up - Impala, 02 & up - Tahoe

Lexus Model: 99 & up - ES300

The list I provided above is a solid starting point to beginning your process of becoming a reputable seller. If you can get good wholesale prices and quality vehicles on any of these selections and send them over to a public sale over time you will begin having success. I also need to add don’t be tempted to send your garbage to these sales meaning vehicles you know have issues. Yes you might be able to slip by one or two but once the buying community knows you are bring vehicles that don’t run good and your real intention is trying to become a power seller this action will make it extremely difficult to accomplish your goal.

Even though I mentioned previously you can literally buy vehicles the same day and quickly turn around and sell at a public auction. In reality I say its best that you give at least a week between the initial buying process before you send to a public sale for a few reasons:

1st : It gives you time to hopefully get the titles needed in order to get your money once the vehicle sells.
2nd: You can take time to look over any minor flaws in your inventory and also having the time to clean your vehicles. Some public auctions may offer to clean your vehicles but they usually don’t do a good job.
3rd: It gives you time to acquire better run numbers if you are able to register early. You won’t get the power seller treatment but hopefully you can luck up and be able to run your inventory behind those sellers.
4th: You won’t have to rush to get your inventory to the sale. My recommendation is having your vehicles arrive the morning of the sale and have them lined up ready to be seen. Once the auction allows the public in your inventory is ready to be inspected. Public buyers won’t have the ability to test drive your vehicles but if they have enough time to look over you inventory in addition to it being clean your selections will surely stand out.
5th: Since you will be at the sale anyhow you could also utilize this as an opportunity to utilize your credentials in given buyers the opportunity to ride with you in your selections. Remember you are a dealer and/or broker; so even at a public auction you have the ability to test drive all vehicles so why not put a few of those public buyers in your selections and drive the vehicle on their behalf. This would greatly increase you profit margin.

Buying wholesale at dealer auctions and selling at public auctions is a good way to make income if done correctly. It’s also a good alternative if you are an individual who doesn’t really want to deal with traditional retail sales and customers. When you move your units to public auctions the money is already available and customers are coming to buy so the hard part has already been done for you.

Simply bring vehicles in high demand, make sure your inventory is clean, and make a real attempt of making sure your inventory is mechanically solid. Over time your inventory volume should increase, your lane assignment numbers should get better, and, the auctions will begin recommending incoming customers to your inventory once they also are aware you bring in quality vehicles.

Example of how the process works by the number. Dealer auction (Manheim, AL) vs Public auction (Birmingham Auto Auction).

When you view the public auction images first I need to advise to exclude the silver color 2004 Civic due to this vehicles has manual transmission which is a much different sale verse an automatic transmission vehicle. If you look at the other civics’ in the images of the public sale and view their sales prices verse Manheim which is an actual wholesale dealer auction you will see the difference in price comparison.

Imagine if you were able to attend the Manheim sale and purchase the 2005 Honda Civic for $2200 with 174K miles. How much do you think you could sale this same vehicle at the Birmingham public auction? Well if you want to go by history prices you will see the red 2004 Civic with 203K miles sold for $3250 at the public sale, and that model was a year older than the 05 Civic someone acquired at Manheim. This is a classic example of how the auction to auction flipping process works.

If this was my personal deal I would have taken the 05 Civic to the Birmingham public auction with a reserve price of $4000 and more than likely sold it without much issues based on previous sales prices at the Birmingham public auction location. This would have potentially been a $1500 to $1600 profit after paying your sales fee at the public auction. Not a bad deal when you take into account you didn't have to do much other than clean the vehicle and make sure it was in decent shape mechanically.

Wholesale Auction Prices: (Maheim Auto Auction in Birmingham AL)