In the UK a Used Car dealer can sell cars from Home, this is quite normal.
It depends on the local zoning laws where he lives. It is also very normal here in Ky for people to sell cars from their home. In Ky you can sell up to 4 cars per year without having a dealer's license.
It really does depend on the law. I believe it would be a good idea to work out of your home being a dealer, but you must go by the law. According to the law in PA you have to own a lot in order to sell cars. But I hope they change the law soon.
A car dealer doesn't necessarily have a lot to sell cars he/she just have to know all the details of the car, the location, the price, the contact person and the place where they could see or test drive it(this situation is best for hot cars). But it is best of course to have a lot or a show room to get customers what they need or what they want to know in the spot.
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