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Can I Buy a Flooded Car and Then Fix it to Obtain a Title in Michigan?

Date: 08/24/2017 |Category: US States Rebuilt Title Rules

Michigan is the hub of the nation’s car industry, so it’s no wonder that the market is flooded with cars. Nevertheless, just as Detroit has struggled, so too have consumers planning to buy cars. Many look to used cars to score a deal. But some find that even the used market doesn’t offer what they need. Cars may be too expensive, may not include a specific hard to find car, or navigating the used car market might be too difficult.

That’s where flooded cars come in. Flooded cars have been significantly damaged by water, and declared a total loss by the insurance company. That doesn’t mean they’re beyond repair. It’s possible to buy a Michigan flooded car, then repair it to resell it at a profit. Here’s how to manage such a strategy.

Michigan Flooded Cars: A Primer

When you envision a flood, you might picture waves of water sweeping cars across the highway. Most floods don’t look like this. Even a few inches of water can destroy a car, particularly if the car sits in the water for more than a few minutes. But because it doesn’t take much water to ruin a car, many flooded cars look cosmetically OK. Some even appear perfect, particularly to the untrained eye.

This apparent perfection is where scams begin. Unscrupulous sellers may attempt to obscure a car’s flood history, passing it off as a normal used car, or even as a brand new vehicle. These cars may have damaged engines, rusted undercarriages, molded seats, or be completely unsafe to drive. It can also be difficult to refit flooded cars with appropriate parts. Some contain parts that are of much lower quality than the original parts, and you might not notice unless you’re a trained car expert. Never blindly trust the word of a seller. Investigate each and every car you plan to buy.

Flooded and Salvage Car Titles in Michigan

When a car is so damaged that repairs exceed 75% of the car’s total value, the car is dubbed a salvage vehicle. Salvage vehicles are subject to a unique set of regulations governing their purchase, sale, and trade. In Michigan, flooded cars belong to their own class of salvage vehicle, and are dubbed flood cars. This designation attaches to the title, making it easy for buyers to track a car’s flood history.

Flooded cars are marked with an orange title, and can’t be driven on the open road until they meet certain inspection criteria.

Can I Repair a Flooded Michigan Car and Get a New Title?

In Michigan, there are two classes of salvage cars: those with a salvage certificate, and those that have been rebuilt. Owners who rebuild a salvage car can pay a $100 fee to have their car inspected and certified safe for the road. However, Michigan does not allow a car to seek a new title once it has been branded a salvage or flood vehicle.

So why would you want to rebuild? If you can prove that the car is safe, and/or if you rebuild the car such that it’s cosmetically pristine, buyers may still be interested—but only if there’s something in it for them. In most cases, that means that a rebuilt salvage car will need to sell at a much lower price than a similar used car.

If you can’t do this, you may not be able to sell the car at all, unless it is a collector’s car, hard to find, or otherwise in high demand. Think like a buyer. Consider what’s in the sale for the buyer, and you’ll be much more likely to make a profit.

Tips for Buying, Selling, Repairing, and Profiting From Michigan Flooded Cars

Flooded cars may not be drivable and often have significant damage. That’s why they’re sold at such cheap prices. However, they’re not always cheap to repair. If you’re interested in getting involved in the flooded car market, you need to keep your eye on the cost of repairs and find the right balance between purchase, repair, and sale prices. Here are some strategies that can maximize your profits and minimizes your losses:

  • Apply for a dealer’s license so that you can attend dealer auctions, which offer better cars at lower prices.
  • Know what a fair price is for each car you intend to buy, and stick with it. Rigid adherence and attention to price prevent you from overspending.
  • Request a copy of the title on each and every car you buy, no matter how trustworthy the seller seems. Don’t get involved in a scam!
  • Never attempt to hide the fact that a car has been flooded. Doing so is illegal, and can land you in jail.
  • Know which cars are in demand in your area, and work to provide those to buyers.
  • Widen your market by shopping and selling online, so you can access more buyers and better cars.
  • Go to lots of events. This helps you learn about the industry, meet peers in the industry, and more accurately estimate car prices.
  • Maintain a list of cars you’re interested in buying, and continually update that list as the market changes.
  • Form a relationship with a mechanic you trust, who can inspect and repair cars, and let you know which cars are worth selling.
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