Can I buy and sell cars at auction for profit?

Yes you can and lots of car flippers and dealers do the successfully. But there is a lot to learn if you are going to be successful. Below we cover everything you need to know to get you started buying and selling cars at auction.

How do car auctions work

Auctions have long been the traditional place to sell modern and classic car and bikes. So it’s a question we get asked regularly as auctions can seem overwhelming and confusing at first. But once you’ve experienced a few they are actually a great way to buy cars.

Firstly there are two kinds of auctions, public and dealer auctions, and you can attend either in person or bid online. They both work in the same way but as the name would suggest the dealer auctions are only open to the motor trade. So for the purpose of this article we will focus on the open public auctions.

You will find a huge variety of vehicles at these sales, with price ranges to match. Auctions are used by private sellers, dealers, companies and even the government to sell vehicles. Typically they are well attended by all kinds of buyer form individuals looking to buy a bargain all the way up to franchised dealers.

To attend or bid at an auction you will need to register as a bidder, typically this takes place online prior to the auction. However small auction houses may require you to register in person. Once registered you will be allocated a bidders number. This number allows an auctioneer to track who has bought what. In the case of a physical auction you will be required to show this number if you are successful in buying a car.

Once registered you will need to view the auction catalogue or lot list. Again you may be given a physical piece of paper at a small auction, but in most cases you will view the catalogue online. These catalogues contain details of all the cars in the auction. Allowing you to sort through and shortlist which cars you may be interest in bidding on.

Most auction houses hold viewing days prior to an auction being held. It is absolutely imperative that you view and inspect a car prior to bidding, especially if you are bidding on cars at the lower end of the market. We cover how to inspect a car here – Inspecting a car you intend to flip. The auctions houses appraisals are usually compiled in a hurry and often miss major problems with cars. So viewing a car is an absolute must no matter your experience level.

Once you have decided on a selection of potential cars that fit your criteria. You need to research their values and write down your maximum bid, this maximum bid needs to take into account any taxes, admin or buyers fees that might be applicable. These additional fees are how an auction house makes its money and will be clearly stated in the catalogue or website. The reason for writing it down is so you don’t exceed this price in the heat of the moment. This is good practice no matter how experienced you are. Bidding can be quick and even the most experienced auction goer can be driven along on the momentum during an auction.

Once the auction has started cars are either displayed on a screen if they are in stationary sale or driven through the auction hall in the case of the bigger venues. This gives both the online and physical bidders time to see which car they are bidding on. Bidding normally starts at the lower estimate displayed in the catalogue, typically this is also the reserve. Bids are then taken and the highest bidder wins the lot.

If you are successful, payment may be either taken automatically from you account if you have been asked for payment detail at the point of registration, or you will need to pay a the counter or office. But again the term and conditions vary at each auction house so be sure to read the catalogue or website to avoid any unpleasant surprises.

Every auction has differing rules regarding collection. Some allow you to drive away in a vehicle before the sale is even complete others will require you to collect the car the next day or arrange an appointment. Some auction houses will deliver you the car for an additional fee. But again these terms, conditions and services vary.

The quality and condition of auction car can vary massively and most cars are sold without warranty or as seen. But in the case of a car being miss described you normally have case to receive your money back.

This applies when an auction house hasn’t listed a fault on the car or has unintentionally misled a bidder. In most cases this won’t be a problem as you would have done your homework and inspected the car carefully. However if you do experience a problem it’s worth checking the terms and conditions and filing a claim with the auction house.

Which auctions should I attend

The easy answer to this question is to visit the auctions with the cheapest cars. But in practise smaller local auctions are a good place to cut you teeth and build up confidence. These smaller auction houses often have much lower competition levels and are less overwhelming.

But bigger dedicated auctions offer a much bigger choice and you can almost always buy something to make money on. Bidding online is always and option and once you have built up confidence you can attend in person if you so desire.

Location can also be an issue and you need to take travel costs and potential delivery charges into consideration.

Which cars should I buy

If you are just starting out, its best to focus on small cars with low running and insurance costs. The sort of car that would appeal to a first time driver, senior driver or someone looking for good reliable transport. This type of car is usually easy to appraise. But if you do make some mistakes you also shouldn’t get any big bills. These kinds of cars are generally also fast selling and easy to value.

The ideal car flip should be a:

• ​​Small cars with low running and insurance costs
• Retailing between two & three thousand pounds, with a £1000 margin
• In either Grey, Black, Blue or Silver
• In the appropriate trim level and interior colour
• It should have a manual gearbox
• It should be Petrol powered
• Having covered under 80,000 miles
• Have full service history
• ​With no major bodywork or mechanical issues​​
• and be HPI clear

Models from the likes of ​Toyota, Ford, Fiat, Renault, Suzuki, Hyundai, Kia and Smart. Three door cars are to be avoided unless they are cheap. My experience teaches me that three door cars can be significantly harder to sell as the majority of buyers are looking for five door models.

Most part time car flippers are operating at the £2- 3,000 price point, working on a £1000 margin. So you need to be looking for cars that can retail at £1995 and owe you no more than £800 – £1000, or £2995 with a stand in price of £1500 – £1750. Leaving a little movement to get a deal done and still maintain margin. 

​You will make a little more on some deals and a little less on others, but most seem to average £1000 per deal over the course of a year. You might start buying cars at £500 and trying to get £1000 retail. But most successful long term flippers operate in the two to three thousand pound price point.This being the fastest moving part of the market, allowing for great profits and a fast turn over if you get it right.

I would also stick mostly to traditional colours. You can do well flipping less common and vibrant colours, but if you are inexperienced they are best avoided for now.

If you want to learn more about which cars to flip checkout out article, Which cars should you buy to flip to lean more.

How to add value

This is an important step when flipping cars and adding value to your car can be done simply by giving it a good clean. But there are lots of other things that can put more money in your pocket. From simple smart dent removals or adding a set of alloy wheels. We cover the main ways to add value to a car in this article – 16 ways to increase your cars value.

But at the very least you should give a car a full valet before you attempt to sell it. This even includes cars you are intending to sell for only a small amount. If you aren’t familiar with how to valet a car we have written about that here – Car valeting a step by step guide.

Where should I sell the cars I’ve bought

You can of course resell the car in an auction. You can even flip the car in the same auction you bought it from, but in most cases it’s important that you have added some value as explained above. This tactic also only usually works at larger auction houses.

Auction houses charge commission to both sellers and buyer so you will need to take this into account when setting a reserve. Transport and other costs such as admin charges can also eat into profits and sometimes a car won’t sell leading to further transport costs. So you may want to consider selling a car privately instead.

Our favourite place to sell cars is via Facebook. With local facebook groups and Facebook Marketplace, representing a huge opportunity. Facebook is free to join and there are no fees for selling either, allowing you to avoid auction fees and increase your profits.

We have based a whole business around selling cars on Facebook, I also know lots of other people that make money sell other goods using the platform. The site is dead simple to use and handling the enquires is a doddle. If you put in a bit of effort it can be really successful and its a great car selling opportunity.

But if you find its not for you I maybe you should consider Gumtree, is a bit of a sleeper in the car flipping world. It may not be the most obvious option. But the platform is well thought out and easy to use it’s also mostly free to private sellers.

Other options are national or specialist websites such as Autotrader, Pistonheads or cars and classics. Local newspaper classifieds still work if you still have an established local publication.

We cover the topic of where’s best to sell a car in detail here – The best way to advertise and market a car.

Auction buying tips

Conclusion

Auctions can be a great place to buy and flip cars. But you need to do your homework and research each car before you bid. You must check the terms and conditions as they can vary massively as do the associated costs. It’s also important that you keep your nerve and remember not to get into a bidding war and bid above your pre set maximum bid.

Selling cars at auction and be very successful but in most cases you will achieve more selling a car privately. Private sales can be more hassle and are often time consuming, but the profits often compensate for these inconveniences. The exception to this is if you are selling a classic car or a car with a very rare spec or ultra low mileage. Auction fever can kick in and can yield great rewards for the seller!