Have you ever done your laundry and accidentally stumbled upon a couple dollars? This time I earned $1,000 and it wasn’t from doing laundry. Although this story does involve an explanation of how I did it, what’s most important to derive from this story is the lesson of determining price based on an objects value.
First off I love buying used cars. The entire thought process intrigues me. It intrigues me that I can buy a car for a fraction of the value that someone bought it for at the dealership. I’ve even bought cars at a price as cheap as $500 and they have lasted me years before they stopped passing smog. That’s a couple months worth of gas and my car is fully paid for, character included for FREE!
When I bought my house it ended up requiring a bit of work to get it to a clean livable condition. That also meant my car wouldn’t cut it when I needed to carry pieces of plywood, loads of tile, etc. So, I went out and started shopping for a truck. My first destination was craigslist. Usually there are plenty of deals and you can find the average price for a particular used vehicle that you want.
After scrolling through some adds and talking to a couple people I found a Ford Ranger 2.3L with 100k+ miles at a decent price point. I thought, “Perfect. It’ll last another 50-75 thousand miles and ill have a nice truck.” The guy was asking for a price of $1,200 and after some negotiation we settled on $1,000, we signed the paperwork and I was on my way. I kept looking on craigslist however to make sure I was getting a deal and stumbled upon another ranger that had a bigger 4.0 engine and was only $1,400! Thats a few thousand dollar upgrade if I were to buy it new! Soo.. I bought it.. But what am I going to do with two trucks? I guess I didn’t think that one through fully so I used the same pictures the other guy had taken and I listed it at a price of $2,200 and noted in the posting that it had low miles. It’s all about perspective, because to me the truck had plenty of life left in it.
All of a sudden I was receiving a flood of calls and sold it within 2 days. Price? We agreed on final price point of $2,000, which is $1,000 more than what I bought it for minus the registration and smog. I immediately went online and looked to see if it was illegal to do this regularly. It turns out that curbstoning or “flipping cars” is illegal in California. I, however, sold my truck at a higher price than I had bought it on complete accident. Oops!
What’s important to take away from this story is not that you can make money flipping cars, because as I mentioned above there are some legality issues with that process, it’s that I realized quickly the value of an item is all perceived in who is selling it. As famous Grant Cardone said in a speech, “If the value of an item exceeds the cost, then someone will buy it”