Unless you are a used car salesperson, selling a used car is like selling anything you no longer want or need, a chore. Buyers are typically limited on resources, wishing they could afford something better, and expecting to negotiate the price aggressively.
Somehow when buying a used car we all think we are the world’s best and most adroit negotiators. Similarly, private sellers seldom sell used cars and are primarily motivated to complete the negotiations quickly and move on to their new car. Neither buyer nor seller is very experienced. Both have a good idea of what they want and how far they are willing to go. So the opportunity for a quick negotiation is present.
To be prepared for the negotiation required in selling a used car, consider these five negotiating tips.
Typically buying or selling a used car is the perfect setting for a negotiation. Buyer and seller are both motivated. The power balance is about even with both parties having the ability to say no, the buyer having cash and the seller having the sole asset in question. The points of leverage may be inn time. If either party has a deadline, that weakens their position. The complexities of the transaction are limited to price, terms, and warranties, if any. The setting is ideal for a quick negotiation.
1. Define your objective. As a seller you will want to know what the least amount of cash is that you will accept. This is not your asking price. It should be about 80% of what you ask. You should also consider if you are able or willing to provide some seller financing for the right person. If so you may be able to get more for the car and make a little of the interest. Just make sure you are clear that title to the car won’t pass until the final payment is made and that you must be named as a co-insured on the buyer’s insurance.
2. Be prepared. The condition of a used car is always an issue. If you want to bring in top dollar, clean the car up, inside and out, and have it polished or detailed. Street appeal is especially important when trying to sell a car. Also have the maintenance records available so the buyer can see that you have maintained the car and that there have not been any major problems. It is also smart to have the VIN number and search completed to evidence the car has not been in a serious accident. By doing these things you are anticipating the questions of the buyer and reducing negotiating issues.
3. Don’t go first. Knowing that there will be a negotiation you have set your asking price higher than what you need to get. The buyer may try to get you to come off this price before making a bid. You don’t want to do this as strategically you have set a price to start the bidding. Stay firm on your price until the buyer has made an offer. Much as your price is high, their price should be low. It will not be their best price but the most they are willing to offer to get the negotiation started.
4. Don’t forget the terms. The terms of a deal can make the enable a buyer to offer more than if he had to pay cash. If you have reason to trust the buyer or want to make a little interest and maintain a certain price for the car you can offer to finance the purchase for the buyer. In a time where the bank will give you 1% or less on money in a savings account or CD you can easily charge 6% to 10% as a financing charge. By making payments a buyer may be able and willing to pay a little more. But make sure you are comfortable with the buyer servicing the debt before considering this strategy.
5. Be Observant. Watch the other person’s reaction during the negotiation. You can usually see signs when buyers are reaching their upper limits or are becoming uncomfortable at your pressure. Don’t over negotiate if the deal is acceptable.
As a seller it is important to recognize that there are many used cars on the market. Your buyer has a number of options. They can buy in the area or elsewhere on the internet. They are free to choose to go to the next seller if the negotiation becomes counter-productive. If you feel you have a legitimate buyer in hand and the price is acceptable, it is your job not to let him get away as he may find a better deal and not return.