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Does it Make Sense to Buy a Salvage Car at a Dealer Auction, Fix it Up, and Sell it for a Profit?

Date: 03/21/2017 |Category: Buyer Tips, Car Auctions, Salvage Cars

You can get amazing deals on buying salvage cars for sale at online auctions and from private dealers. Buying salvage car for sell can give you big profit. These cars, which start at about 5% below market value and go down from there, are often stunningly cheap. The reason is simple: a salvage car is one that an insurer has deemed a total loss. That means it’s not worth the insurer’s while to fix up the wrecked cars for sell after it’s been damaged in a flood, car accident, or storm.

Oftentimes, the damage is merely superficial. But sometimes the damage is structural, undermining the frame of the car, the engine’s integrity, or even the ability of the car to ever be restored. You won’t know where your salvage vehicle falls on this continuum unless and until you get an accurate vehicle history report.

If you’re lucky enough to get a restorable car, you might just be lucky enough to be able to sell it at a profit. Here’s what you need to know about the process.

The Perils of Selling a Salvage Car

With only a limited number of exceptions, a salvage car will always be labeled a salvage car. That’s going to drive down its value no matter how beautiful it is or how much work you put into it. So when you purchase a salvage vehicle with an eye toward selling it, don’t look to the general market to get a feel for how much you can expect. You must instead adjust your expectations downward based on the going value of most salvage cars. If you buy a salvage car with the intention of selling, you may run into some difficulties. Those include:

  • Making less on the sale than you hope
  • Spending more on the refurbishment than you make on the sale
  • Not being able to sell the car at all (vehicle is junk)
  • Learning that the car is stolen, or that its full history was obscured by the original seller

The Crime of Title Washing

If you’re struggling to sell a restored salvage vehicle, you might be tempted to find a way to obscure its status as a salvage car—particularly if you’ve put a lot of work into the car and you know it’s safe to drive. That impulse is understandable, but it’s not one you should indulge.

Obscuring a car’s status as a salvage vehicle is a crime known as title washing. You can go to jail for it, or face costly lawsuits. One of the most common strategies for title washing is to drive the car to another state and register it there, thereby hiding the car’s history. Such an undertaking might feel harmless, but it’s illegal, immoral, and highly risky to both you and the buyer. Just don’t do it.

When Does it Make Sense to Sell a Salvage Vehicle?

So is a salvage vehicle a worthy investment? Should you take the plunge on that tempting car on an auction site? And how much work should you put into a salvage car? A salvage car may be a good investment if:

  • You have access to a car history report that shows the damage is only superficial.
  • The car is a high-value vintage car, a car that is no longer available in the market, or an otherwise sought-after vehicle that may sell for a high value even as a salvage title.
  • You can afford to fix any damage to the car, and for far less than the amount for which the car will sell.
  • You have already identified an interested buyer.
  • You have access to a mechanic you trust, who can offer you a complete and comprehensive inspection of the vehicle.
  • Your state allows title rebuilding.

Racing Cars: A Potential Exception?

Selling a salvage car is always somewhat risky. The market can change on a dime, and a once-valuable car may become less valuable thanks to market forces outside of your control. There’s one potential exception to this phenomenon: cars sold for uses other than on the open road, such as race cars. Cars used at local race tracks don’t necessarily need to be road ready. They need only have engines that help them go fast. Every racetrack has its own requirements for vehicles, but some will accept cars with extensive damage. Others require a very sturdy frame, and many fall somewhere in the middle of this balancing test.

Race car drivers know that their cars may be beaten up. Some even enjoy knocking their cars around and endlessly fixing, refixing, and rebuilding them. So if you’re willing to sell a car to race drivers, you may be able to turn a tidy profit — possibly without even fixing up it after car wreck.

Title Rebuilding

In some states, rebuilding the car’s title may be an option. Known as title refurbishment, the process allows you to seek a refurbished title if you repair damage to the car. The car will be marked as having a refurbished title, which hints at its history as a salvage vehicle. However, a car with a refurbished title is preferable to a salvage vehicle, since a car only becomes eligible for title refurbishment when serious damage is repaired. For more information on title refurbishment in your state, you will need to consult local laws and follow the process for a refurbished title to the letter.

See our Vehicle AuctionsCar Auctions and Education Centre.

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