Every once in a while in my profession I’ll be standing in front of a class and from somewhere mysteriously golden words will roll off my tongue. In a Los Angeles class I taught approximately one year ago, we had discussed how the “best of the best” sell pre-owned cars. The “best of the best” being the private individual. A private individual sells a late model vehicle centered on its payoff amount or an older vehicle based on what they perceive it is worth. During the questions and answers session, the class asked me if I would develop a checklist for preparing pre-owned cars for a sale and a training exercise to get their sales staff to sell a pre-owned car like a private individual does. I looked at the class and out of nowhere I said: “OK, I’ll build you a ‘Storybook’.”
To build the “Storybook” I had to do some research. I had to find true, honest justification for teaching this process and find a proven method of building a “Storybook”. The next Saturday and Sunday mornings I cruised neighborhoods and parking lots at Wal-Mart, drug stores and grocery stores looking at vehicles for sale, especially those I thought were extremely overpriced. I noticed that the vast majority of vehicles had for sale signs posted on a window displaying the vehicle’s gas mileage, availability of service records, phone number, the price and OBO. I called these individuals and listened to their “pitches” about their vehicles. The pitches gave me plenty of material to build roles in training scenarios.
These private individuals were the most enthusiastic bunch of salespeople (not being professionals) selling a product that I have ever seen. When I asked them “What is your bottom line price?” They would tell me what I would and would not have to do to make the vehicle serviceable to justify their price, then only drop the price by few hundred dollars if they thought I wanted to buy it. I would thank them and call back four days later. I found that most vehicles had been sold for just a few hundred dollars below the original posted prices. My research to build the “Storybook” taught me that price does not sell a vehicle in our marketplace today.
We have become mentally trapped within a framework created by wholesalers to price older pre-owned cars based on what wholesalers think they are worth. Looking at how wholesalers price their older cars and what they sell for will give you an idea what independent dealers are getting for the cars that they buy from wholesalers. That’s why I have always advocated sealed bids.
In retail, we have gotten to a point where we no longer price a trade-in vehicle for what we think it is worth before we get a price for it from the internet. Please, I urge you, when you walk out to appraise a vehicle, establish what you think that vehicle is worth (wholesale and retail) before you go to the Internet. That Internet price comes from dealers who are in the same program you’re in and prices they have promoted for their products. It has no relative bearing on the vehicle you are trying to appraise. That car should be priced at what you think it is worth!
‘Til next month…