Mr. Benson writes:
Hi Steve. One dealer to another, I’d like to know how you handle “special order” used cars.
My neighbor wants me to get his wife a 2010 or 2011 Escape. Cash purchase, so no problem there. There’s no shortage of these vehicles, but you know what happens if I buy him one at the auction, he can probably find one cheaper online that is in far worse shape and higher miles.
Given that I won’t take him to the auction with me…I’m thinking of asking him for a deposit upfront.
What do you think? How do you handle these? Thanks in advance.
Steve Responds:
I keep the rules simple and strict when it comes to buying a wholesale auction car for any individual.
1) 10% down upfront. No exceptions.
2) They agree on the car by first viewing it online through Manheim’s Online Vehicle Exchange (OVE), and then seeing it in person. ADESA, which competes with Manheim, is also a well-regarded chain that deserves a look.
3) Do NOT have them view a vehicle on the day of an auction. The auction environment is chaos in motion, and most inexperienced buyers will not be able to focus on a vehicle.
4) If the car is a good fit, I would follow up by ordering a post-sale inspection that guarantees the car’s mechanical and structural condition.
5) No refund of deposit if they renege on the deal.
This won’t result in a torrent of interested buyers and, personally, I would consider that a good thing.
I have bought cars for companies and individuals for well over a decade now. I can tell you that it’s far easier to buy a ‘workhorse’ for a company interested only in a specific type of vehicle than a ‘showhorse’ for a public buyer who often wants an exact model, color and features.
One other important detail: I stay away from anything over five years old and prefer to stick to higher-dollar purchases. The average price I charge is $500, which is reasonable given that most used-car purchases in this range are typically sold anywhere between 7% and 25% of the average wholesale price.
Good luck!
This is interesting. A fellow I work with has had a longtime connection with a guy somewhere in the southeast who seems to do this sort of thing regularly. Most recently, about 10 years ago my friend was looking for a Volvo C70 convertible. The dealer would attend auctions, and would let Rick know if any were listed. Rick was insistent on a 5 speed, but negotiable on color. Rick would stay by a phone on auction day. The guy would call, describe the car, and if Rick was interested, would bid.
The guy then delivered it to Indianapolis and took a check for the aucution price, an agreed markup and delivery fee. A relative of Rick’s had once bought one that had issues, and the guy took it back, re-auctioned it, and bought them another. I would imagine this only works for people you know
The reason to stay with vehicles 5 yrs old and younger is availability. Especially in the 1-3 year old range, you don’t have to look far to find off lease/fleet vehicles. The greater the selection, the better the chance of finding a good one.
Condition reports are sometimes inaccurate, too; many dealers do have cars shipped, but I prefer to see them in person before committing. I have to spend my $15000 before I can make my $500, so the car better be right.
The reason to stay with vehicles 5 yrs old and younger is availability. Especially in the 1-3 year old range, you don’t have to look far to find off lease/fleet vehicles. The greater the selection, the better the chance of finding a good one.
Condition reports are sometimes inaccurate, too; many dealers do have cars shipped, but I prefer to see them in person before committing. I have to spend my $15000 before I can make my $500, so the car better be right.
My brother did this for a while but you couldn’t be so selective, or shouldn’t be so selective when describing a desired vehicle.
The onus of giving a dealer a deposit for a particular kind of vehicle could force him into focusing so fully on fulfilling your particular desire, other valuable considerations when buying a used car become secondary – and that’s not good.
It may take months for the availability of an excellent used car that meets the specifics of a used car buyer’s conditions. During that time, the specifics could be met with less than excellent vehicles.
Only you know your priorities regarding any vehicle. New vehicles come with an assumption that being new means being an excellent copy of that vehicle. Used vehicles do not come with those assumptions and any dealer not making that clear to anyone making those demands is apt to create an unsatisfied customer.
As a matter of fact, depending on the vehicle desired, a dealer’s chance of satisfying a depositor’s demands in these cases is low. Any buyer willing to put down a deposit on a particular used vehicle, would have expectations higher than that of any typical used car buyer.
You ain’t Jay Leno with the cash and time to fix any problems that come up on your desired used car.
I’m way too picky,to ever buy a car though the auction. I know lots of dealers,and they have all offered. Its just not for me.
There was a time when a mans word,or a handshake was good enough. Today, it takes a no refundable deposit. Cash sorts the men, from the boys. The reason that guys like Steve ask for it, is no doubt from past experience.
I have done this in the past for people looking for a specific classic or special-interest vehicle. Since my time is valuable (to me, anyway), I charged $1000 deposit against the eventual 8% plus expenses fee. The various difficulties in finding, appraising, evaluating, brokering and shipping these cars can be daunting to anyone and certainly worth a professionals fee. We have all seen the differences between opinions on vehicular condition. I actually had one man tell me he thought 212,000 miles constituted “low” mileage. His rationale – it was 20 years old, therefore only went 10k per year. Reminded me of the cliched “highway miles” and “ran when parked”. As my Father once said – “you cannot pay too little for a bad car nor too much for a good one”. Funny how he got smarter the older I got.