The cell phone industry is booming, everyone I know these days has a smartphone. Just a few years ago, only a few of my friends, family, and coworkers had an iPhone. Not only does every US consumer have the newest technology in their pocket, they can’t wait to upgrade to an even newer phone. I remember when I would use a flip “dumbphone” until it broke.
Just like any other guy, I work a nine to five job. However, I wanted a second source of income on the side. In the last few years I started to take advantage of the cell phone industry’s growth and began researching arbitrage opportunities from buying and selling used cell phones. A friend recommended that I read an ebook called Cell Phone Resale back in 2011. This book gave me the motivation and resources to get started with making some extra cash flipping phones on the secondary market.
Just last month, I sold a total of 21 phones for an average profit of $77 per phone. I did all of this in the time I had after my day job and a few hours here and there on the weekends. That is a total of $1,617 in one month. That’s enough to pay my rent, utilities, phone bill, groceries, and car insurance.
The Secondhand Phone Market Is Thriving
There are millions of cell phones being sold on the secondhand phone market. This means that people just like you and I are selling their phones. As of today, there are a total of 176,316 cell phones listed for sale on eBay (September 26th). This is just one website and just one day, think about how many phones are being sold every month or every year all over the world.
Every time someone upgrades to a new cell phone, they are going to want to sell their old cell phone. And because so many people want the newest technology, there are constantly older cell phones going up for sale. That’s where I come in; I find the best phone deals, and then resell them for what they’re actually worth.
Remember, when you buy a phone directly from your cell phone service provider with a two year contract, you pay a subsidized price. So a new phone iPhone costs $199 from Verizon. However, if you are not eligible for a phone upgrade, you have to pay full price for the phone which can reach up to $700. Therefore, every person that breaks their iphone and doesn’t have insurance will have to pay full price for another one. It makes sense for someone in this situation to buy a used phone from you or I at a cheaper price.
How To Value Used Cell Phones
Before you start buying cell phones, it’s important you understand what they are worth. I use several tools to determine what every phone I buy is worth. First, start with a handy tool called Movaluate. Movaluate is a free used smart phone calculator. On the website, you can choose a specific phone model and the phone’s condition, and the tool will show you the current fair market price. The fair market price is the median price paid for this device, which is the statistically accurate representation of the average price that buyers have paid. You can also see a historical graph of how the exact phone’s value has fluctuated over the last few months.
The next tool to determine a phone’s value is eBay. You can search for a specific phone model on eBay, select auction listings, then sort by “time: ending soonest”. Look at the top few listings that have active bids to get an idea of what the phone is selling for. You can add a phone to your eBay watchlist and then check later to see the final price the auction ended at. If you calculate an average of a few of the recently ended auctions, you can determine a realistic price of what the phone is worth on the secondhand market.
You should always buy and resell used cell phones that have the highest profit margins. That means the newest and most popular phones will make you the most money. I usually sell iPhones because they are very trendy, but there is also a large Android community that offers a variety of popular phones. I completely avoid Windows phones because there isn’t enough demand at the moment. Keep up with industry news and phone review blogs to see which phones are most wanted. Also keep in mind that used cell phones depreciate as manufacturers introduce newer and better phones. The new iPhone 5s that was released by Apple a few weeks ago caused the value of last year’s iPhone 5 to slightly decrease.
Buy Your Phones On Craigslist
I buy all of my used cell phones on Craigslist for one main reason. I can negotiate with the seller on Craigslist. What I have learned over the past few years is how to haggle with Craigslist sellers through emails. Most people are going to list a price higher than what they expect to get. It’s important to make sure you don’t offend people with a low-ball offer and instead let them know you’re ready to meet them with cash if they agree to your offer.
The key to getting great deals on Craigslist is to live in an urban area. I live in Washington DC and I’m surrounded by several corners of DC, Northern Virginia, and Maryland. The dense population here creates are large supply of used cell phones. Since there are so many, I can afford to pass up on sellers who won’t come down on price. What I’ve noticed is that most people want to sell their phone ASAP, and because there are a thousand other people selling the same exact phone, it is more difficult for sellers to compete. Therefore, sellers must be more reasonable with their price.
Before I start searching for cell phones to buy, I’ll refer to my spreadsheet where I keep a list of the current phones that are currently the most popular. Start with a specific phone model and search for it locally on Craigslist. Check your spreadsheet to see what is fair value, aka what you can resell the phone for. My goal is to find phones that I can buy for $100 less than fair value. If I can buy a phone at more than a $100 discount, even better. After you search for your target phone, your results will include a list of phones for sale that are detailed, while others are less descriptive. For example, Some of the listings will include a thorough description and pictures revealing every angle of the phone. However, other phones for sale will simply have one sentence and no pictures.
I prefer to use both types of listings to my advantage. If I see a phone that is detailed with information and meets my price expectations, I will email the seller and let them know I can immediately meet with them to make the exchange. Remember, the seller is looking to sell the phone as quickly as possible to the first person that hands them cash. If the phone was well described, there will be several other interested buyers so be the first person to message the seller if the price is right.
When you find a listing for a phone that has a little to no description, this provides you the opportunity to talk down the price. Since there is less information presented by the seller, there will be less buyers. And with less buyers, maybe none, this gives you an advantage. I usually will start an email conversation with the seller, asking for pictures, if the phone works, and if there are any problems with it I should be aware of. If everything checks out, I will make an offer usually less than what the seller is asking for, and I will say I can pay “this much” and can pay cash and pick up the phone today. If the seller doesn’t have many other interested buyers, and wants to sell the phone fast, they will most likely agree to your offer. I usually offer $100 less than fair value price.
In your email conversation with the seller, you should ask for the cell phone’s ESN, IMEI, or MEID number, which is the phone’s serial number. You can use this number to check to see if the phone has been stolen. Also, when you meet the seller, inspect the phone. Check the physical condition of the phone for scratches or anything that is broken. Make sure the phone turns on and works. I always try to meet the seller at the local wireless store because they can checkout the phone for you. Most of the time if the seller is hiding something, they won’t want to meet at the store.
The Risks Of Craigslist
A Craigslist transaction involves a seller providing a cell phone in exchange for cash. After the transaction is complete, the phone now belongs to the buyer, and there is no return policy. Before handing over the cash, I always perform my due diligence in both the seller and the phone. I will do my best through email communication to obtain the seller’s name and phone number. If they are willing to give that information, I will call them to arrange a meeting spot to pick up the phone. If someone is not willing to give that information, I avoid doing business with them because I fear they may be selling a bad phone and don’t want a trail leading back to them. You can also search the seller’s email address and phone number on both Craigslist and Google. Look up the seller’s name on Facebook as well.
When arranging to meet to buy a phone, always suggest a public location such as a shopping mall, fast food chain, coffee shop, or a wireless service store. You will be carrying a large amount of cash so you don’t want to meet in the back of a dark alleyway. Always meet in person and don’t agree to wire the payment; pay in cash. Bring a friend or a roommate if you have one, especially if you’re meeting at night.
Selling Your Phone On Ebay
After you buy a phone on Craigslist, it’s time to flip it on eBay. I prefer to sell my phones on eBay because I can get the most money in the least amount of time. On Craigslist, sellers are limited to the local region so they are more willing to reduce their asking price. However, eBay is a worldwide platform that hosts buyers everywhere. It ‘s a simple concept, buy a phone in a smaller market and then resell it on a larger market for more money.
When selling your phone on eBay, it’s all about presentation. You will need to sign-up for an eBay seller account and a PayPal account so you can get paid. On eBay, buyers are only going to trust paying for a cell phone if the seller is reputable. Therefore, they are going to look for a seller with great feedback. Unfortunately, if you’ve never used eBay before, then you are going to have a difficult time because you won’t have any feedback history. If you want to build up your feedback you can start buying things on eBay which will result in sellers adding to your feedback score. Fortunately, most people have already used eBay so they already have a feedback score. As a buyer, wouldn’t you want to find a seller with a perfect feedback score?
So now that you have an eBay account and a great feedback score, it’s time to create a rockstar listing to sell the phone. The title should include the phone model details and the condition of the phone. In your description of the phone, you should write as much about the condition as possible. Don’t bother copying and pasting the phone specifications from the manufacturers website, eBay will take care of that for you.
The most important part is the visual. Take great pictures of every angle of the phone, with a great camera. You want to show every single scratch, buff, or imperfection. The higher the quality of the photo, the better the presentation is. A buyer is looking for great pictures of the phone they are going to buy. Remember, someone is about to pay several hundred dollars to buy a cell phone across the country from someone they have never met before.
Select the option to only sell to buyers in the United States. You don’t want to deal with overseas headaches. Stick to the US and your life will be easier. Additionally, in the description of your listing, add “All bidders must have over a 90% feedback score.” Just like buyers are looking for great sellers, you should also be looking for a great buyer.
When selling on eBay, you can choose to use an auction or the “Buy It Now” feature. I prefer to use the auction feature because when you use the Buy It Now feature, it may take longer to sell. Also, when you set a price for Buy It Now, it may be higher than the market is willing to pay. I start an auction, with the opening price at $0.01 and set it to end in 24 hours. While some people may prefer to set the auction to 7 days, I have found it doesn’t make a difference if you set it to 24 hours. Most people wait until the last few hours to bid anyways.
After your phone sells, you should receive a PayPal payment from the buyer. Hopefully everything went smoothly up until this point. Now you will have to ship the phone to the seller. I always keep boxes around the house so I can reuse them to ship out my phones. If you don’t have a box you can buy one from any parcel store. Package the phone in the box and use bubble wrap. You don’t want the phone to be damaged in transit. These boxes get thrown around a lot in the truck so the more protection the better. Inside the box you will want to put some sort of receipt. This is simply to remind the buyer about the phone’s auction ID and details. Both eBay and PayPal offer printable receipts in the account settings.
When you bring your phone to USPS, UPS, or FedEx you want to buy three additional services in addition to the standard shipping. Make sure to buy shipment tracking, insurance, and signature upon delivery. You want to cover all you grounds so if something happens to the phone you won’t lose your money.
Every Business Needs A Spreadsheet
If you’re going to be buying and selling multiple cell phones, I highly recommend you create a spreadsheet to stay organized. The more information you keep record of, the easier it will make your life. I use a spreadsheet to track every phone I buy on Craigslist, it’s status of being sold, and how much money each phone profits. You can also keep a tab to keep record of which phones are most popular and have the highest demand paired with their estimated fair market prices. You’ll need to constantly update the fair market prices to keep them up to date.
From Start To Finish
So as an example, here is a complete flip I made a few weeks ago. I searched on Craigslist for a Black iPhone 5 16GB. I found one for sale for Verizon. The seller was located five minutes down the road from me. He only listed a brief description of the phone without any pictures and requested $350. I emailed the seller, asked for some pictures, the ESN #, asked if anything was wrong with the phone, and requested his phone number so I could call him about it. In the email I also noted that I live in the area and could possibly pick it up later in the afternoon. The seller got back to me with the information and two pictures he took from his wife’s phone. Everything looked good so I called the seller, offered him $315, and arranged to meet him at a Verizon Wireless store that was close to both of us. When we got there I looked at it, all the ports looked good, I tested the charger and the camera. There were some minor scratches but they were barely noticeable. I said everything looked good and asked a Verizon employee to add the phone to one of my extra lines and he did this at no charge. I gave the seller the cash, the deal was done, and we went our separate ways.
When I got home, I logged into the Verizon wireless website and unlinked the phone from my extra phone number. I was only able to do the extra step of having the Verizon employee link the phone to my account because I already have Verizon service. If it had been an AT&T phone and we met at the AT&T store, I would have simply asked an employee to verify that the phone could be activated. I made sure all the old user’s data was deleted from the phone and it was restored to the default settings.
Next, I logged into eBay and uploaded some high quality pictures I took with another phone I have. I started the listing at $0.01 and set it to expire in 24 hours. The next day my auction ended with 26 bids at a final price of $403.50. I immediately received the PayPal payment from the buyer, who was located in New York. The following day I packed the phone up and brought it to UPS to be shipped out. By the next week the seller had received the phone and had left me great feedback on eBay.
I paid $315 for this iPhone and resold it on eBay for $403.50. That is a profit of $88.50. However, after eBay and PayPal fees the profits were slightly less. This was a great deal and a perfect example of how to make money buying and selling used cell phones.
Why Doesn’t Everyone Do This?
Simply put, not everyone realizes the potential of this plan. Even now that I’ve told you about the potential, as you can see, it still can be a lot of hard work. I am constantly searching on Craigslist looking for good deals, while trying to negotiate prices and meetups at the same time. You may also have to drive around quite a bit between picking up phones from Craigslist sellers and trips to the post office to send off phones to their new home. If you don’t live in a populated area, this may not work for you. If you don’t have an established feedback rating, you may not have as high of profits. However, if you are willing to deal with all these challenges, you can make some great side income, or possibility a full-time salary.
Cell Phone Resale Review
As I mentioned earlier in the post, most of my knowledge was obtained from an ebook. If you are thinking about getting into this business I recommend you read Cell Phone Resale. When I bought the book, I have to admit, I was a little surprised. I am normally very suspicious of these “how to” books because they often contain regurgitated facts you can find anywhere the web for free. This book is different. I had no idea it would be this detailed. It’s 50 pages long and is an easy read. The book only costs $37, which can be made back in just one phone sale if you’re serious about giving this a try. The author gives real stories based upon his experiences and makes the book a must read if you are buying and selling cell phones.
This book goes a bit more in-depth than my post and covers everything from start to finish: where to start, what phones to buy, where to maximize profits (both buying and selling), what online accounts can assist you, how to take advantage of social networking, how to make sure a phone is fully functional, differences in wireless networks (i.e. CDMA vs. GSM), push the sale, along with tons of tips, tricks, and so much more! The book comes with a 10 videos you can watch on your computer to help you get your business started. The book also teaches about networking, social media, how to buy and sell with sources other than Craigslist and eBay, advertising, trading phones, building a phone website, and how to respond to specific Craigslist emails.
When you think about making cash buying and reselling phones, you’re creating the same exact business as Gazelle. Gazelle buys phones from people at a cheaper price and then resells them on eBay.