When people think about flipping cars, they generally assume that money is made at the sell.
Anyone can sell a car. You probably have. Your friends have. You grandma has probably sold more cars than you have even owned.
Does this mean grandma made money doing so. Probably not.
Money is ALWAYS made at the BUY.
Buying a car at the right price is the key to success in buying and selling cars for profit. If you pay too much for vehicles, you will waste your time making little or no money.
So, what constitutes a “good deal”?
They are many sources for determining the value of a vehicle. Kelley Blue Book, NADA, and Black Book (dealer only) are among the most well known.
I prefer to use Kelley Blue Book (kbb.com). After looking up the Kelley Blue Book value, I then compare that value with what sellers are asking for their cars. I use Craigslist.org for my comparison prices, although I sometimes use Cars.com and Autotrader.com.
When using Kelley Blue Book, you will notice they list three distinct values: Private Party, Trade-In, and Retail.
The trade-in value is what you could expect for a dealer to give you for your car if you traded it in at a dealership (mind blowing, I know). This value is also what a dealer generally pays for a car at auction.
Private party value is what a private seller should expect their vehicle to be worth when selling to another private seller.
Retail value is irrelevant to a car flipper. This is what a dealer may ask for a car that is in pristine condition.
In order to profitably flip cars, you need to buy as close to trade-in value as possible. You then price it at or around the private party value, taking into account what similar vehicles are already listed at.
For example. You see a 2003 Ford Taurus SES with 135,000 miles on Craigslist for $2100. Kelley Blue Book trade-in is is $1932 and private party is $3199. However, you notice that the going rate on Craigslist for that vehicle is about $3000.
Does this information affect what you want to pay for it?
I try to buy cars with a profit margin of at least $1500 so I would want to be in that Taurus for around $1500. I would then price it at $3500, which would still leave room for a seller to negotiate me down.
Focus on the buy and the sell will be much more profitable.
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