How To Buy Your Salvage Dream Car For Less!

"Bozi Tatarevic" (hoonable) 03/23/2015 at 09:55 • Filed to: REBUILT, SALVAGE

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Do you ever wonder where those salvage and rebuilt cars come from? Do you wonder how you can buy one for cheap? Most of these cars that pop up come from insurance companies and are sold through the two main salvage auction houses, Copart and Insurance Auto Auctions. I am a member of both and have purchased around 40 vehicles from them combined in the last few years. Who wouldn't want a project car like !!!error: Indecipherable SUB-paragraph formatting!!! ?

Get Registered

The first time you load up the pages for these auctions you may get giddy from seeing all of the cool cars that are out there that can be had for cheap but you have to do your research as you can get burned easily. In order to start bidding on vehicles at these auctions you will need to pay a registration fee of around $200 for both auction houses. At IAAI that gives you full bidding power. At Copart you will need to either pay a $400 deposit to unlock full bidding power or deposit 10% of the highest amount you want to bid to. Once you are registered as a public buyer you will be able to bid on vehicles but you have to watch carefully as to what you qualify for. Public buyers are only allowed to bid on vehicles marked public and these include salvage titled vehicles coming from insurance companies, repossessions, and clear titled vehicles from dealers that have been inspected. In most cases, clear titled vehicles coming from insurance companies and banks are dealer only.

Weed Out The Bad Apples

Once you start looking at vehicles there are a few you want to exclude right away if you plan to rebuild. Flood and fire drop off quickly as they are usually more trouble than it worth to buy the vehicle and repair it. Vehicles marked as frame damage and bio hazard are out for obvious reasons. Lastly, you do not want to buy a clear title vehicle that is coming from a dealer. Usually these vehicles have some underlying issues and the dealer has decided to dump it at the auction instead of selling it on their lot.

Calculate Your Max Spend

Once you have searched and come up with the vehicle you wish to buy, you should look at comparable vehicles on the regular market. My rule of thumb is to take 60% of the average value of a clear one and use that as the max cost. We will use my Cadillac STS as an example. At the time I was looking at it, I came up with an average price of $10500 so my max salvage value was $6300. Once you have your max price, you should take a look at what parts are needed to repair the car. In my case I estimated repair costs at $2500. Once I take the $2500 our of the $6300 value, I have $3800 to bid on it.

You can bid on the vehicles online or in person and if bidding in person you can usually get a $50 reduction in fees but it may not always be possible so I recommend at least going to the auction a few days before and checking the car out or if you are not able to go and are planning to bid online then you may look for a local inspector to go take a look at it before bidding. Now that you are ready to bid there are few more factors to consider. The first is transportation and in my case I usually account for $1.25 per mile to transport a vehicle. In the case of the Cadillac, it was 260 miles away so I accounted for $325 for transport fees. Taking that out of our $3800 we are down to $3475 to bid on the vehicle. Since I was bidding online, there was a $50 fee so we are down to $3425. That amount will need to split further as there are pull our fees and final value fees on the sale. These fees usually add up to $100 + around 10% of the final bid so we take another $100 out and we are down to $3325 and to calculate the rest I divide $3325 by 1.1 to get $3022.

Buy Your Vehicle

Now that we know that we are not going to bid higher than $3022 we can prepare for the auction. You can usually do a pre-bid for your highest amount but I recommend bidding live if possible as it usually will keep the price lower coming up to the auction. You should install the auction client beforehand and test and get ready to bid. Once you bid, you will be notified if you won the vehicle and of your final cost. In the case of the Cadillac my winning bid was $2700 and it ended up being $3119 after all of the fees. You can pay for the vehicle using a wire transfer or cashiers check. Once the vehicle is paid for, you need to either go pick it up or arrange for transport. If the vehicle is to be picked up by a third party, you will need to fill out the Power of Attorney for transport from the auction and let them know whether you want them to give the title to the driver picking up or mail it to you.

Get The Vehicle Inspected

Once the transport is paid for and the vehicle is delivered you will need to do a detailed inspection of all the parts you will need and start searching. You will also need to contact your local DMV for an inspection before beginning repairs. In NC, They fill out a document of what needs to be replaced and then require a call back once it is completed to verify that none of the parts are stolen and that and exhaust system is on the vehicle. Steve Lehto wrote a !!!error: Indecipherable SUB-paragraph formatting!!! on this process. Seeing the small amount of time that is focused on these inspections, the only way I ever buy rebuilt vehicles is if I rebuild them myself.

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Get It Fixed And Running

Now you can dig in and start repairing your car. Once it is repaired you will call them DMV inspector back and get the final inspection. You will need to register your vehicle at this time and get insurance for it. A note of caution is that many insurance companies will only allow liability insurance for rebuilt vehicles. So how did I fare on my Cadillac? You can check out more about it !!!error: Indecipherable SUB-paragraph formatting!!! but in the end my total cost was $5700 which was well below my max cost of $6300 but you do have to be careful as you can lose many at times too and out of the 40 vehicles I have bought, 2 went right back to the auction as they had too many issues, 2 were sold at a loss and 3 were !!!error: Indecipherable SUB-paragraph formatting!!! . I kept a couple as !!!error: Indecipherable SUB-paragraph formatting!!! , one as a !!!error: Indecipherable SUB-paragraph formatting!!! and one as daily. The rest were resold for a profit.

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Bozi is the founder of !!!error: Indecipherable SUB-paragraph formatting!!! and creates articles on everything from engine swaps to late model car restorations. You can follow him on !!!error: Indecipherable SUB-paragraph formatting!!! and !!!error: Indecipherable SUB-paragraph formatting!!! or drop him a line at !!!error: Indecipherable SUB-paragraph formatting!!!

CCC (formerly CyclistCarCoexist) > Bozi Tatarevic 03/23/2015 at 10:22

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So I'm pretty sure this is a "no buy" situation right?

Bozi Tatarevic > CCC (formerly CyclistCarCoexist) 03/23/2015 at 10:30

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That is very much a "no buy" situation for rebuild purposes:

-Extensive suspension damage

-A pillar damaged

-Water intrusion from the snow

-First year car with expensive parts and no aftermarket options yet

-The Corvette part out places pumped up the bid price

-If I remember correctly, it sold for around $27k when it ran through and unless you are a big parts house, it will be hard to get that kind of money back out of it

And that's just from a quick look

E30Joe drives a Subaru > Bozi Tatarevic 03/23/2015 at 10:32

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Actually I do work at a dealer and some clear title vehicles that get sent to auction are simply sent there because we paid too much for them and cant sell them or know that it is easiest to just wholesale it.

Sometimes, however, it's because there is engine work or something that we don't want to do.

Bozi Tatarevic > CCC (formerly CyclistCarCoexist) 03/23/2015 at 10:35

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Even if you repaired it you would still be over $40k into it and have a rebuilt title so very little resale value. In comparison, clear ones in excellent condition are going for less than $60k at the regular auctions:

Bozi Tatarevic > E30Joe drives a Subaru 03/23/2015 at 10:38

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That may be the exception to the rule but most of the cars I see coming from dealers have some sort of underlying issue that they do not want to put their name on. Many times they will clean it up just a bit and get it to pass inspection and push it out to IAAI or Copart. Some of the better vehicles that dealers take as trade ins that aren't worthy of their lots are wholesaled out but those usually end up at Manheim or ADESA and are picked up and fixed up by another smaller car lot or a buy here pay here place.

jjhats > Bozi Tatarevic 03/23/2015 at 11:10

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I would never buy a salvage title unless it was a cheap throw away fun car like a Miata or e30 maybe a truck and never for more than $2500

Bozi Tatarevic > jjhats 03/23/2015 at 11:15

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I can see your train of thought and I limit myself to around $5000 on salvage vehicles that way even if I lose some money it is on a smaller scale

jjhats > Bozi Tatarevic 03/23/2015 at 11:22

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the thought of buying expensive luxury cars with "minor" work needed as travarish loves to promote is a dangerously stupid thing to do and he doesn't understand how salvage titles make everything harder from buying to insuring to registering to selling and not worth the low cost of entry

Twingo Tamer - About to descend into project car hell. > Bozi Tatarevic 03/23/2015 at 11:27

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They need to hire you alongside Tavarish to be the voice of reason haha.

SidewaysOnDirt still misses Bowie > Bozi Tatarevic 03/23/2015 at 11:48

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But, but... Tavarish said it's fine!

SidewaysOnDirt still misses Bowie > jjhats 03/23/2015 at 11:53

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I haven't bought anything from copart yet, but I don't know if I'd use one of these sites for a project car unless it was off-road only (ie - not registered - purely racecar), and even then I'd be a bit wary. I would consider buying a parts car from there to keep Charlie running, however. I can probably disassemble the suspension and take out everything I want a spare for in a day or two, then scrap the shell. Ahh, if only I had unlimited space.... I could have all of the control-arms, axles, and strut housing backups in the world.

Bozi Tatarevic > SidewaysOnDirt still misses Bowie 03/23/2015 at 12:03

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You can find some good deals and make some good daily drivers as well. I bought a Civic hybrid for my wife with a bad battery pack and repaired and still came in under half the average price. It had no other damage so it was safe and easy to repair

SidewaysOnDirt still misses Bowie > Bozi Tatarevic 03/23/2015 at 12:11

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Oh yeah, the deals are out there, but like you said, you really need to know what you're doing and what to look for to avoid getting burned. You've done it dozens of times, but were you making a profit or breaking even off the bat? I'm genuinely curious. I don't think that even the average car-nut would be able to do this. By the way, don't take that as criticism. This is a great article with a ton of valuable information. As someone who has spent quite alot of time just browsing, I feel like I have a better idea for what I'm looking for even in a parts car.

Bozi Tatarevic > SidewaysOnDirt still misses Bowie 03/23/2015 at 12:17

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I made $1100 on the very first one I bought. It was a Ford Explorer that needed a fender, light, and hood. It was non-running and it went low. I lucked out and it was the fuel safety switch had shut off due to the accident. I reset the switch, picked up the parts for a couple hundred and sold it in a week. I made $200 on the next one. I lost money on the 3rd and 4th car. I bought 2 Jeep Cherokee's after that and made $3000 on them combined. Ended up parting out the next one and breaking even. And the rest followed a similar pattern. On average, I made good money on every 3 out of 5 cars.

SidewaysOnDirt still misses Bowie > Bozi Tatarevic 03/23/2015 at 12:21

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Cool, thanks! Why can't Tavarish be this honest with his wrecked car buying advice?

Jordan and the Slowrunner, Boomer Intensifies > Bozi Tatarevic 03/23/2015 at 12:39

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Made me think of this Reddit thread, and it goes along with your beater truck stance. http://www.reddit.com/r/Diesel/comme…

Aaron M - MasoFiST > Bozi Tatarevic 03/23/2015 at 13:20

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Exactly: there's a big difference between ending up on an IAA auction line and a Mannheim one. I worked as an auction buyer for a wholesaler/consigner, and some of the larger New England dealers would dump every trade they got into a Mannheim or Adesa line instead of going through recon work at all. This would be especially true for luxury brands; they had their hands full with lease returns/CPO and didn't want to deal with off-brand used cars.

The ones that ended up at IAA were, clear title or not, typically repos or what Steve Lang might call in "wholesale heaven", cars which spent weeks going through auction lines with no bites, because used dealers knew better. I looked at the IAA lines in MA but there was never a single car we felt comfortable putting on a customer's lot.

Bozi Tatarevic > Aaron M - MasoFiST 03/23/2015 at 13:27

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Yep, that is exactly what my experience has been

HFV has no HFV. But somehow has 2 motorcycles > Bozi Tatarevic 03/23/2015 at 13:31

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Is the profit including your labor?

HFV has no HFV. But somehow has 2 motorcycles > CCC (formerly CyclistCarCoexist) 03/23/2015 at 13:32

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if there is no chassis damage. There is defiantly some suspension damage but that doesn't mean the chassis around it is damaged. So...

Bozi Tatarevic > HFV has no HFV. But somehow has 2 motorcycles 03/23/2015 at 13:33

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Yep, I count $20 an hour for my approximate time and $100 for misc materials and supplies when calculating profit/loss

HFV has no HFV. But somehow has 2 motorcycles > Bozi Tatarevic 03/23/2015 at 13:34

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not bad.

Honest_Abe > Bozi Tatarevic 03/23/2015 at 13:48

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Great article! Just curious, does erepairables.com operate along the same lines as copart and IAAI? It seems like it is easier to find a car that can be bought by the public on erepairables, but I've also noticed the same car being listed across all three websites.

Bozi Tatarevic > Honest_Abe 03/23/2015 at 13:52

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erepairables.com and whole bunch of other companies like it are wholesale brokers who relist vehicles from IAAI and Copart. They are only agents and take a commission on top of the sale price from either place when they buy it for you. They are only handy if you do not have the proper license to buy a vehicle but they do. More info here under Licensed Brokers: https://www.iaai.com/Services/Buyer…

Honest_Abe > Bozi Tatarevic 03/23/2015 at 13:59

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Ah, that makes sense. Thanks!

SPNKiX > Bozi Tatarevic 03/23/2015 at 14:06

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This is a good point. I think we tend to look at salvage vehicles on the title alone, but if it really isn't much of an investment, why not?

ceanderson920 > Bozi Tatarevic 03/23/2015 at 14:58

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I bought my car as a repairable back when I was in High School. It's actually the same car that I have now. My car is a 01 grand prix gt, when we bought it the car was hit in the rear so their was not any mechanical damage, it was all mostly cosmetic. The car itself had 37k miles and we paid 4300 for the car and than another 3k to get it fixed so totaled 7300. I thought it was pretty good since the NADA price was around 11k for the same car that was not involved in an accident. The way I looked at it was that I was going to drive it to the ground because realistically I am not going to get anything out of it in the resale market. The only problem that I have had with my car is that the trunk leaks, so if I have anything in the trunk it will be covered in dust and wet if it was raining. I'm not entirely sure if the majority dust is there from living on a gravel road or if the truck leaks horribly. I assume living on gravel has something to do with it but if the trunk was sealed up better I don't think the dust would be half as bad as it actually is. Overall I thought it was a good deal considering it was my first car but I don't think I will go down this road again until I am looking for a cheap car for a son or daughter.

Bozi Tatarevic > Twingo Tamer - About to descend into project car hell. 03/23/2015 at 16:03

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I am open to all ideas of car buying face off hehe

Tohru > Bozi Tatarevic 03/23/2015 at 18:05

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I bought my '88 Ram 50 through Copart Madison as a clear-title donation vehicle. It wouldn't idle, the entire exhaust from the downpipe back was in the bed, and I found out it had frame rust. Drove it for 8 months and 14k miles without it costing a dime outside of maintenance and fuel, then traded it for a Bonneville when it started deteriorating.

HammerheadFistpunch > Bozi Tatarevic 03/27/2015 at 16:42

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I can tell you from experience that EVERY single salvage car that my family has owned has been a major PITA. If you buy it pre-fixed and are confident in your own skills, then sure its a good deal. If someone else has fixed it (with expections for cases like McLaren and others) then HELLS NO!

maristgrad > CCC (formerly CyclistCarCoexist) 04/10/2015 at 23:34

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That car is a lawn decoration dude. If you dont want to get burned stick with cars that run and drive

Eagle Motorsports Baja 1000 Team > CCC (formerly CyclistCarCoexist) 04/11/2015 at 12:27

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It is waaaaaay too soon for me to already see that generation of Corvette sitting somewhere torn up

Machingadera > Bozi Tatarevic 04/11/2015 at 16:56

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This is awesome, thanks. I have always wondered and wanted to try!

LeadfootYT > Bozi Tatarevic 04/11/2015 at 17:12

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It's really great to read fun, detailed (and cautionary) car-flipping and car-building articles from someone realistic and knowledgeable. I'm sure a large audience would love to see these articles regularly on the front page, if anyone from the staff is reading...

Mary > HFV has no HFV. But somehow has 2 motorcycles 09/27/2016 at 09:17

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Great Article! A cousin of mine has done this before, and managed to get a car with only superficial damage. I’ve been doing some research of my own, and it basically seems to come down to 2 things;
Basically buying cars at an auction is fine, so long as you check on 2 questions. Most car auction transactions take part online now, so this is for those in mind.

Is the Auction Website Real?
While the vast majority of the sites out there will be real and have actual deals for you, some of the sites could be trying to get personal information or will actually have fake auctions, meaning you will never see your money again.
You need to check into the background and reputation of the auction house. How long have they been in business? Do they have good reviews and ratings? What have people complained about with the auction house? A little research will let you know whether you are dealing with a good site or not.

What’s Wrong With the Car?
Once you find some quality online car auction sites, you will then be able to start looking at the inventory they have on the auction block. This is one of the most important factors in getting a good deal. Depending on the type of auction, there will be a number of different types of vehicles available. Some will be new vehicles, used vehicles, and nearly new vehicles. Some of the vehicles will come with salvage titles, which are generally the cheapest option.

Reference: https://www.autoauctionmall.com/learning-center/white-paper-market-report-for-new-and-used-cars-in-the-us/

JPz > Bozi Tatarevic 05/18/2017 at 00:10

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Sorry to rehash a old thread, Bozi. Does this look fixable to you? I have 9k to spend my buddy does body work, I can change out the mechanical parts, the radiator looks healthy. listed as “started”, with mechanical probs, (broken belts I hope)  any-thoughts

thanks a bunch!

Bozi Tatarevic > JPz 05/22/2017 at 16:53

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Body does not look too bad but if it has mechanical listed, then there is something wrong with the motor or transmission.