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Tuesday, June 20, 2006

Selling your car in the 21st Century

This past weekend with everything else that has been going on I decided to sell my car. This was a tough decision because it was my first real car, well the first car that I paid for and owned. I thought that this would be the perfect time to write an article on how to sell your car on the Internet.

There are many places to sell your car; car magazines, dealerships, privately, newspapers, online, and the last place is probably the junkyard (for parts). The best way to recoup your investment on the car is to sell it privately, unless you're considering purchasing a new/used car from a dealer.

The #1 rule to remember throughout the process is that you can expect a good selling experience if you're straightforward and honest with prospective buyers. Lying about the condition of the car or other details will come back to haunt you, maybe not in this life but certainly in another. After all if your were in the buyer's position, you would want and expect to be treated fairly and honestly.

Step #1: Kelly is your new best friend.
Not the hot blonde who works in your office but the blue book. Nowadays blue book prices are posted on the Internet and finding your cars value is as easy as clicking some buttons. The online Kelly Blue Book can be found here but can also be purchased at a book store. People will often refer to the price listed in the book as the 'blue book' value. There are some important considerations taken when estimating the value of the car such as location, make/model/year, extra features, mileage, and mechanical/exterior/interior condition.

To get an good estimate of your car's value you need to be honest. Very often, people interested in buying a used car will lookup the Kelly Blue Book value so don't think you can cheat here to boost the value of the car (remember rule #1).

Another great index for the value of your car is the classified section of your local paper or auto-trader publication. These can often be picked up at grocery stores and auto parts stores. Look at the listings for your car or a car similar to it (year, vehicle type, mileage, condition, etc.). The sellers asking price should be similar to yours and if not there should be a good reason why not. Remember that potential buyers will likely find your car through these and other online ads. If your car which is in similar or worse condition that others and your are asking a higher price, what is there motivation for buying the car?

The most important aspect of this step is to do your research. An educated seller will convey to the buyer that you know what you're doing, building their confidence in you. Ultimately, an informed seller will lead to an informed buyer and should help you close the deal.

Step #2: Value is in the eyes of the beholder.
Determining how much to list and eventually sell your car for is a big factor in your success or failure. It is important that you do the research on what your car is worth because there are drawbacks to posting the car for too little or too much. Value is in the eyes of the beholder so don't base your price on feeling, back it up with solid research. Using research will help you when a potential buyer asks why you are selling the car for the listed price.

Obviously, posting your car for too little puts you in danger of not recouping your investment and destroying any equity you may have in the car. Also, posting a car for too little might make quality potential buyers seem skeptical about your car. At the same time, posting a car for too much can be very damaging to the amount of people who are interested in your car. Most people buying a car look at it as a major investment, after all even $5,000 is a lot of money to most people. Again, ask yourself what is a buyer's motivation to spend X amount of dollars on my car?

While many things such as Make/Model and mileage will determine the value of your car, the market has the final say as to what your car is worth. If there is no demand for your car, you might not be able to sell it for anything close to what its worth. Finally, you have to consider what type of car you are selling (luxury, economy, classic, recreational vehicle). Pricing on an economy car is much more critical than on a luxury or classic car.

This may sound wrong but people who have money to spend on a very nice car are going to be less concerned about price and more interested in quality and details so even if your price is a little high it might not hurt the sale. A graduate student like myself is more concerned with the price since we don't have nearly as much money to spend (the words tight income should come to mind). Finally, is you are selling a vintage or rare car, all rules are thrown out the window because your car essentially is the market. You might be able to find some information searching online forums and auction sites on what comparable cars have sold for. The best place to start in my opinion would be a simple Google search.

Step #3: Your new name is Mr. Clean.
Before you let any buyer within 20 feet of your car you need to make sure you can bounce a quarter off the floor mats and brush your teeth using the hood as a mirror. If you're not into cleaning, spend the cash to have the car washed and maybe even splurge for the wax. To get top dollar for the car, you need to present a top quality product.

Don't stop here either, make sure to remove ALL of the clutter from the car. When I test drive your car I don't want to see your beanie baby collection or smell your gym bag. The buyer is trying to picture him/herself in your car and your junk doesn't help their imagination. This same logic is used when trying to sell a house and its done for a good reason. If you've lived under a rock all your life and have no clue how to clean your car don't worry there are some good resources on that here.

Step #4: Prepare your documents.
Now that your car is clean and ready to be shown there is just one more thing you must do before posting an ad: gather all the service/repair records. Once you have all of the documents gathered, make photocopies of them to give to prospective buyer (again, an informed buyer is a happy one). Also make sure that you pay off any parking tickets and keep the registration current.

One last thing is to contact your local Department of Motor Vehicles (DMV) and find out about any laws you must abide by or forms you must fill our before selling the car. For instance, in some states you are responsible for a smog certificate. Each state has a DMV website which you can access for more information about selling your car, go here to find your state's website.

Step #5: Advertisement = Sale
The next step in selling your car is to advertise it. People won't know about it if you don't tell them and placing ads is the best way to get the word out. Like in the movie Field of Dreams, "If you build it, they will come" well when selling a car, "If you advertise it, they will buy".

This is where it gets interesting because there are an endless number of places to post ads but we all have a limited amount of time. They key is to find out which places are best suited to your car. First off, you need to consider whether you want to sell your car locally. If this is the case then you don't need to bother with large papers or trade magazines. On the other hand, if you are willing to branch out or if you've got a specialty (rare, luxury, utility) vehicle then you'll get more bang for it by widening your buyer search.

For the sake of brevity I'm only going to cover online avenues of selling or advertising your car. Here are a list of some good sites to start on:

It may seem like a lot but there are even more than the few I have listed here. If you want to test the water and don't want to pay for an ad or fee, I'd suggest starting with the top 3 (Craigslist, Postaroo, Windows Expo). These three services allow people to post ads for free so you can test the response to your car before you make an investment in any fee-based service. Since I live in a small town, I have opted to use Craigslist because many people here use it.

If Craigslist doesn't work for me then I'll rethink my strategy and try again. I'll keep you guys updated on how these different services work for me.

There are other avenues such as online forums and bulletin boards, many of which have specific sections for your car. In these forums people talk about cars and interested buyers may look in them for people selling your Make/Model car. If you don't live in a big town and aren't interested in selling to people outside your area then you might not see success from these sites. Again this is an iterative process which you'll need to repeat until you've sold the car (or given up). Education is key and an informed seller will be able to sell their car faster.

Step #6 through 100: A few last notes ...
Finding a buyer is just the first step among many that you'll need to take among many when selling your car. Once you've got an interested buyer, start a dialogue about the car and make sure to let them know that you're available to answer any of their questions. This will let the buyer know that you are interested in helping them and that your actions or not purely self-serving.

If you do get an offer, always appear to mull it over even if it is more than you expected. And if you the offer ends up being insultingly low, don't counteroffer, simply explain to them that you cannot accept anything so low. When thinking of a price for my car, I also made sure to account for some bargaining and am keeping in mind what the lowest price I am willing to accept is. Having these numbers in your mind will allow you make a smarter decision when accepting offers. Remember that bargaining goes both ways and not to cede your ground too soon. The purpose is to come to a price that both of you are happy with.

If you are lucky enough to have sold you car, ONLY accept cash, a cashier's check, or a money order as payment. It is generally a bad idea to accept a personal check. Besides, a money order or bank check are very cheap. If the buyer is not willing to come to your terms you can rescind your offer. As long as you're being reasonable, they should have no problem paying you any of these ways.

Some last tips your should keep in mind are:

  • Check that the prospective buyer is insured during a test drive
  • Always ride along during the test drive (thieves steal cars this way)
  • As a good rule of thumb, I make a copy of their driver's license to keep in case of a problem during the test drive
  • Make sure to contact your state's DMV to notify them of transfer of ownership
  • Notify your insurance company once the car sells and have them remove it from your policy

I'll keep everyone posted about Craigslist and how they work for selling my car. As always your comments/suggestions are welcome!

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