Salvage Cars: Know when to hold'em, know when to fold 'em, know when to walk away

For the past nearly 3 years I have been buying/selling some salvage cars as detailed in this thread and the subsequent threads linked to it.  In general, I've had a good run with some easy, modest profits, until now...  

One thing I admire about some GRMers is that they come on the board and detail their challenges and troubles.  i'm more the type to just show "the good story."  This one is not.  It is a loss story but I think it is an important side of flipping cars and gambling with salvage cars so here we go. 

Last month, Jan 5th, I went to my local IAA as I often do.  Of the dozen cars I looked at, 3 still held my attention after actually looking at them.  My focus on these cars was to be flips to sell in Feb-March to people now looking to spend tax return money.  The inspection day is Mondays and the bidding happens on-line on Tuesday.  I needed to be on the road all day Tues so I could not sit and watch the auction happen live.  I put in 3 modest pre-bids on all 3.  I was certain that the bids were low enough that I'd be lucky to get even one of them.  Yeah, I won all 3!!!  

So, the following day, I used my borrowed tow dolly to get them all.  Upon getting them home and sorting them just slightly I realized that one was great, one was good, and one was crap.  This is the story of the one that was crap.  

The Focus is great.  The Sonic is good.  It is the Equinox that is crap.  

I should add that it was originally the Equinox that I thought would be the big win.  The opposite became evident as soon as I was strapping the Equinox to the dolly.  This car was hit in the driver's front and fender.  I studied that area pretty good at inspection and I was okay with it.  What I did not study was the passenger side.  As I was strapping on the elevated dolly it was easy to see under the car and it was also easy to see daylight where the passenger side front engine cradle mount should be bolted to the frame rail.  

My guess is this area was rusty but that the side pushing impact then made a rusty connection become a rusty non-connection.  

So, this is a 2006 Equinox with just 66k miles.  It is being sold by State Farm.  They gave it a $5,500 pre accident value with $2,800 in damage estimate.  I thought for sure I could generate a $4,500 sale from this when done.  I had a pre-bid in for up to $975 and it took all of that $975 to buy it.  After fees that was $1368.  Before I bid, I had already sourced via car-part a same color Equinox, very local that had the body parts I needed.  I envisioned needing just $400 in parts.  I was shooing for $2k into the car with a $4.5k sale.  Not to be. 

I suppose these issues could be fixed but doing the work is beyond my personal capability.  If I "learned" how to do the work, I was going to have a lot of hours into that learning.  If I just flat out paid someone to do that work I was going to be out a lot of money (and time) and possibly still not clear a profit.  So, as in the thread title here, I decided to fold and just take the loss.  My biggest concern is that I really just didn't want my name associated with repairs to this vehicle

The very evening I brought the Equinox home, I posted up a CL ad.  I used just the pictures from the IAA auction and gave an honest assessment of, "recent auction purchase has more frame damage/rust than I am comfortable with for my family but you may feel differently."  I emphasized the 66k engine and the pristine leather interior.  Cut to the chase and 3 weeks later a guy drove in 3 hrs from Lansing, MI.  He was a flipper who expected to use this on two other cars; one which needed an engine.  I was happy to just see it go for a measly $600.  I thought just better to fold and loose the $768.  Also, that is a $768 loss with no effort on my part.  What I mean is I could have sunk a lot of hours and effort into this Equinox and still lost money.  

....know when to run.  

Photo dump:

Good choice, and a clear conscience.

Thanks for posting - the losing lessons are very important ones to learn from. But don't let it scare you away!

John Welsh said:

 

It is the Equinox that is crap

 

In the wise beyond her years words of Billie Eilish, "Duh".

In reply to Javelin :

Oh, I understand the misnomer of Nice Equinox.  Much like jumbo shrimp or military inteligence, etc.  

However this realy was a nice Equinox before damage.  Had the fix been what I thought it would be, this car would be gold to single moms and working parents with a couple G of tax return money.  Oh, well, at least that was my thinking. 

Here are some more photos taken in my driveway that I sent to the buyer.  It should be noted that I did nothing to clean this car.  Nothing other than take the aution numbers off the windows.  The car was this clean when I got it and the auction yards do nothing to clean them or make them presentable (more than enpty the glove box and remove easy items.)  

By our local rusty standards this one was clean but also by our local standards the rust is often hidden.  

Another option that I researched and was highly considering was to take the Equinox back to IAA and have them auction it off on my behalf.  The  logic being that on the day I bought it for a $975 bid, someone else put in a $950 bid that triggered my $975.  The hope would be that maybe another run through the auction would bring that $950 again.  Maybe more, maybe less.  It's a gamble.  

I found that to put a car in the IAA auction is would cost me $100.  For that price they would run the car for 2 auctions.  That means that I could put a reserve on the price and have two week attempts to meet that reserve.  If I pulled the car out after that two weeks as unsold then it would be another $35 to have IAA pull the car out of the yard and load it on my trailer to take home.  

I was highly considering doing just this.  If it brought $950 - $100 = $850 recoup.  It could go less.  I could be $100 +$35 deeper in the hole.  If the $600 guy was going to fall through I was taking it to IAA but the $600 guy was and easy out with little risk and a quick exit.  

As for parting out.  My wife and neighbors but up with my "parking lot of cars" here at home but would not put up with "scrapped hulks" sitting out there missing the hatch and a door or two while up on blocks.  I am just not physically equipped for an operation of parting out cars.

In reply to John Welsh :

Thanks for posting this.  Sometimes it's best to cut losses and make it up elsewhere.

Been there John. I lost out huge when trying to revive a Mazda Protege5 that had a little fenderwell rust that, once explored, turned out to be absolutely crumbling rear suspension mounting points all around. By that time, I had already overpaid (1000 for the car) and sunk another near 2k into it in the hopes that it would be a great winter/backup utility ride.  Selling it for $500 which I then turned and spent on two new toilets was a low day.

That equinox looks legitimately like a winner. I'm shocked at the rusted through engine cradle mount on what looks to be a well-kept vehicle. You're an Ohioan as well correct? 

In reply to John Welsh :

You made the right call and walking away from this one and letting somebody else part it. It does seem clean but I have to say that around here they are almost all clean because the engine and or transmission failed so early on them.

I've been flipping cars for 15 years and I have to applaud your decision. Admitting that you messed up and eating the loss is the tough choice, but the right choice. Hopefully the profit from the other 2 will more than level-set you.

Sorry to hear that! It's sucks taking those losses but it's a risk we all take when flipping. Hopefully you make some profits on those other to cars to ease the pain of this one. 

Just out of curiosity, I know parting cars out is a pain in the butt; but, do you think you could have recouped some more of that money had you done that or was it just easier to offload the car onto someone else? 

I once bought a car to flip and the owner gave me a carfax print out for the car. Everything matched from the year, make, model, vin, etc. the car needed some minor maintenance and interior work but I figured I could make an easy $1-2k after all was said and done. 

I fix the car up and take it down to a local carmax as I do with most of the newer cars I flip just to get a bottom dollar if someone low balls me. Having that in your pocket always helps too if you need to dump it in a bind. 

Carmax employee comes back to tell me "dude the car is mint; but, do you know why that paint looks so good?" "Yea because I just finished detailing it....duh" "No it was in an accident 6 months ago with reported damage to the front and rear" 

I fight with the guy showing him the carfax that I had from the previous owner, upon further inspection the dude photoshopped his VIN onto a similar cars Carfax, printed it out and sold it off to me. I ended up finding a seller for the car a month later and only lost out about $500 and also paid a visit to the previous owner to discuss the matters. 

The sale of the Focus will get me back to zero and I'm selling it under market.  Its a 2007 w/ 75k and near perfect in every way but a crack in the plastic.  

The sale of the Sonic will put me well over.  The Sonic is a 2013 w/ 106k miles.  A low model with crank windows but still automatic, air, and remote locks. No cruise.  I goes for state inspection in two weeks.  It is done and all total I am $2,300 into it.  I hope to ask $4,500 and take no less than $3,500.  If I could be up $2k that would be great!  

Here is a sample of my local Sonic market:

'12 w/ 95 asking $4.9k

'12 w/94 asking $5k

'13 w/ 103 asking $4k

Equinox always has poor value....usually good for a quick flip...but only if there is nothing at all wrong with them...as soon as you start spending on them, you are in the hole....in my experience anyway...they can always be had very cheaply at auctions, people like them fine, they just don't hold value for whatever reason....I will buy and sell them in good running shape...but won't touch one if it needs something major done.

Rusty Equinox ugh.  My mother has a 2011 with 30k km or 20k miles.  Rust on all doors, several places on hatch, rockers and all fenders.  Now I'm afraid to look underneath.  Pathetic... 

I see lots of them with body rust. No bueno GM.

Man, that Equinox looks so clean in the photos. No wonder you took the chance. Sorry it didn't pay off this time. I feel like I would have done the same. It's hard to believe something that looks so nice could be hiding such a major flaw.

In reply to dculberson :

Ya know, Ive run some different theories.  I wonder if the broken mounting point was a result of handling?  Tow damage or fork lift yard damage?  Now, this does not negate the fact that the mounting point was already rusty and already weakened.  It just seems funny that State Farm listed the car with $2,800 worth of damage on a $5,500 pre accident value.  Those numbers seem to be in line with the minor damage (bumper cover, fender, control arm, tire.)  They do not seem to be inline with the need for frame rail replacement. 

Oh well, may have been a blessing to let the rough handling expose the weakness.  Better than finding out about the weakness on the road or in an impact.   

"it was originally the Equinox that I thought would be the big win.  The opposite became evident"

That's how everyone that buys an Equinox feels

GCrites80s said:

"it was originally the Equinox that I thought would be the big win.  The opposite became evident"

 

That's how everyone that buys an Equinox feels

It is tied with the Nissan Versa for "Almost brand new rental car that is absolutely horrifying at highway speeds/who in their right mind would pay more than $1000 for this piece of E36 M3" for me.

We now return to 'The Salvage Diaries"....

...In this episode:

As of yesterday, the Sonic has gone through its state inspection and now wears a Rebuilt Title so its ready to sell.  Just tonight, I got an ad up on CL.  

2013 Chevy Sonic 106k miles - $4500

Digging in further to the words of the ad:

• Timing belt replaced in May '19 @ 100k miles
  • That's what the sticker on the car says and the old belt is in the trunk
• New, 65k warranty, 4 matching tires, purchased in April '19, driven about 10k miles.
  • Yes, this Sonic needed 4 tires size 195/65/15.  My Prius takes 185/65/15 (close enough.)  I run winter tires on the Prius so these 4 summer tires that I bought last spring were sitting in my garage.  I mounted them up for the Sonic.  I've then bought NEW summer tires for my Prius. 
• Battery replaced Jan '19
  • That's what the sticker on the battery says.
• Recent alignment
  • As well as a control arm and a right side CV/axle.  Seems the Sonic had hit a curb in the past but maybe the somewhat distant past.  In the trunk was a worn-to-the-cords spare tire as well as a bent rim w/ blown tire.  When I got the car the current RF tire was badly worn too.  One broken hubcap was in the trunk, since replaced via ebay.  New, JY sourced, spare now in the trunk. 

When I bought the Sonic the RF corner of the bumper cover had pulled away from the fender w/ a little fender wrinkle too.  At my regular tire shop, one of the guys has some bodywork experience so for $100 he massaged the front fender and reattached the bumper.  He also spray painted all the steel wheels with some fresh coats of rattle can semi gloss black to hide the surface rust developing (typical of this climate.)  For $60, a good detail in and out. 

Fender at purchase:  

Bent wheel:

The fender is good but not perfect and the scuffed black plastic remains

At auction, this car was listed as "does not start" but "keys present".  The battery was super dead but even more so, the "miles to empty" gauge just read "Lo".  When do you stop driving a stolen car?  

Those 2 gallons barely moved the needle.  

In reply to John Welsh :

I think the bigger question here is:  Who steals a Sonic?

Nice work, though, bringing it back from an undeserved near-death.

Earlier in this thread, I commented that of the 3 cars I bought in the same day, the Equinox was bad.  The Sonic was good and the Ford Focus was great.  Here is the story of the Focus.  

2007 Ford Focus SES (loaded model but not SVT including 16 wheels, fog lights, heated seats, disk changer)

Only 75k miles.  Ownership leads back to an older lady in a pleasant middle class neighborhood in Sylvania, OH (Toledo suburb.)

4 very good, matching tires and generally a well cared for, clean car.   State Farm listed it as a $4,900 car needing $4,200 worth of repair.  The point of contact was the rear bumper.  From the outward appearance, the plastic bumper is scuffed and has a side corner crack. 

Scuffs:

Side, corner crack and just a slight misalignment of the plastic. Notice the drill hole I added to the end of the crack.  This old fiberglass trick will then stop the crack from spreading.  

This slight misalignment is due to the fact that behind the bumper cover, the metal bar has been bent forward.  Bent forward enough to push on the trunk floor pan a little.  Said another way, an intended crumple zone has been crumpled a little.  This was the damning factor.  If you do real trunk floor replacement then, yeah, high dollar repair.  

Here is a trunk pic. Notice the floor ripple on the passenger side.  However, the spare tire still fits as expected and the floor covers flat. 

After a detail job, she looks great:

Mechanically, this car needed nothing and passed the state inspection with no parts needed.  Drives exactly like a well maintained, 75k mile Ford Focus.   It's headed off to be the first car of a high schooler. 

This green Focus is very similar to the gray Focus that I bought last year and put 25k miles on before selling for more than I paid for it.  I paid a little more for this  75k mile, well equipped version, yet selling it for only slightly more than what I sold that 150k mile gray Focus last year.  

Minor update on the Sonic.  

To put in a new cabin filter, I had to remove the glove box.  Behind the glove box was an oil change receipt from Feb 2017 and 49.7k miles.  On the receipt was the owners name and cell number.  She answered when I called!  

Nice older lady who bought the car in 2014 w/ 12k miles (sounds indicative of a former rental car.)  She stated that she loved the car and mimicked some of the things I knew like timing belt change but needed tires.  She gave me the name of the guy who ultimately stole the car and that he is in prison.  She said she came out of her apt on an August morning and the car was gone.  

I stated that the car only came with one key and she offered that she would look to see if she has another.  

She seemed happy that the car was saved and is now in the hands of someone taking care of it.  I ask what she was driving now.  She said she still owed $5k on the Sonic when it was stolen and the insurance paid it off.  She has since bought a Chevy Cruise.  

This is the first weekend that I have the Sonic on CL & FB.  I have had two real conversations about the car, one less sincere inquiry which quickly went to "whats the lowest you will take" and 2 scammy texts resulting in, "will you send me a vin report from scammy Vin report.com?"   

No one has actually come to see the car yet.  I really thought it would be gone before the weekend ended.  

The Equinox rust thing is new to me but I will look at that from now on as I write a lot of those. They were really popular. I guess they still are.

When I saw 'Equinox' I suspected you got burned by frame rail damage (collision, not rust) as those things collapse in all sorts of funny ways when they get it. Front end hits will often break the transmission case if I remember correctly. That chassis is truly a throw away and I total a LOT of them.

I sold the Sonic today!

Is consumer confidence increasing or is used car supply dwindling?  

I first put the Sonic up for $4,500 on March 3rd.  I knew I had it priced high.  My goal was to keep at that price for 2 weeks and then reduce asking price by $200 every two weeks after that.  On the first weekend I turned down an offer via a text conversation for $3,750 because I didn't want to go that low, that quickly.  By the following weekend Corona and state shut down was a thing.  From there on out nothing serious came about.  A combination of complete silence only broken by an occasional text offer of $1,500 or "payments."  I then dropped to $4,300 for two week and then went right to $3,999 on April 5th, a month later.  

Still weeks of nothing as Corona was all that was talked about.  Then, this past weekend, 20 days after price drop to $3,999, I had:

• Saturday morning showing.  Teen daughter really wants a Jeep.
• Saturday evening showing.  Liked but seemed to have others to look at too.
• Sunday morning showing. Cold and rainy; generally crappy day for car shopping. Liked and said they wanted it but had to go to bank for money next day.  Car would be for teen daughter.
• Sunday Noon showing.  Liked but had a truck to look at also (and teen son really wanted a truck.)  

By the end of Sunday night I had both Sunday people telling me they wanted the car.  I got paid by the Sunday morning people today at 3:00

Monday morning I had another person asking if they could come see the car.  

$1,300 profit...the long way.  

The latest media talk is that State Re-opening is beginning next week.  I think this has people seeing some light at the end of the tunnel which has increased shopping.  I noticed that the family that bought the car have not had any interruption in their work.  He is at a Black and Decker Factory which is still running a normal schedule.  The Mrs works in grocery.  The teen daughter works at McD and probably gets all the hours she wants.