Need to sell your car but disgusted with the thought of selling your car below wholesale value? In a recent article in AutoRemarketing, Tom Kontos, chief economist for KAR Auction Services, shared that last year there were 12.1 million cars sold privately. That number continues to rise year over year.
Are you one of the millions looking to sell privately this year? If the answer is yes and you want to make a successful run at it, you need to price your car like a pro. Come in too low, you leave money on the table or send a signal that you’ve got a problem vehicle. Price it too high, you turn off prospective buyers. One of the top reasons that people fail to sell a car on their own quickly enough is being unrealistic in their pricing strategy.
There is a lessen to be learned here from the pros. The top performing dealers in the country know that there is a science to pricing to achieve maximum profit and to sell quickly. With the right strategy you can get your car sold quickly.
Size up your vehicle relative to the market
Whether you have already listed or you’re about to list, take a look at comparable cars that are are currently listed for sale. Don’t just take a quick look at dealer and private party listing pricing and average out or take the max number. Read the listings. Look at the photos. Objectively look at where your car rates compared to others on the market.
Here are some of the things to pay close attention to:
- Mileage - relative to other similar vehicles, does your vehicle have lower miles, more miles or average?
- Trim - does your vehicle have the base level trim or a premium trim?
- Condition - what condition is my vehicle in? Is the vehicle clean and damage free? New tires? Also consider title? A salvage or rebuilt title will be a turnoff for most buyers.
- Color - is your vehicle an in demand color?
- Vehicle History - Poor vehicle history, such as a prior accident will lower the perceived value of your vehicle.
Rank your vehicle
As you go through the process of comparing your vehicle to others, imagine your vehicle being ranked in order of perceived worth. If your vehicle is accident free, that’s going to rank higher than one with an accident history. Your pricing rank should mirror how the vehicle ranks competitively minus any outliers.
When looking at dealer and private party comparables, understand that a consumer is less likely to pay you what they would pay a dealer. That’s probably why they are considering buying from a private party in the first place. Generally speaking a dealer has reconditioned the vehicle and can offer financing, warranties and handle payoffs and titles. Your apple to apple comparison needs to factor in these considerations. Unless you have a rare hot car, you probably don’t want to go head to head and list your car at dealer retail or above.
Understand the current supply and demand for your vehicle
Take a good look at how many similar cars are for sale to get a sense of the current supply. Are there a lot of similar vehicles for sale in your market? If you can, watch the movement in the market for a week or two. Are the other vehicles that are listed getting sold? If there are several cars just like yours that are still available after a few weeks, that could indicate low demand or that the pricing is too high. If they are selling quickly, you may have a hot car and can hold firmer on price.
Also, do some research to understand which model years are in most demand. Over the years, manufacturers adjust new car production based on market conditions. Take a look at the 1990 to 2018 graph from statista.com. When the economy declined in 2008, manufactures reduced the number of vehicles produced. Production of new cars didn’t pick up again until 2012. 5 or 6 years ago, franchise dealers were desperate for those cars. Fast forward, those cars are still in demand just for a different segment of the market. If you have a vehicle in good condition from a low production model year that can help you.
Think like a buyer
What do prospective buyer’s think about your vehicle? Read up on third party reviews of your year, make, and model. Does your car have a reputation for being reliable or a great value? Or, does your vehicle have a lackluster reputation? This information will give you another sense of demand in the market. Sometimes, you can have a vehicle that’s in great condition but considered unsellable in the current market because it’s just an unpopular car. In these cases, if you need to get out of the car, you may want to be more aggressive in your pricing strategy. If you car is a gem, you can probably hold a little firmer on price. So if your car was voted the most dependable compact CUV of 2014 by JD Power & Associates, by all means use that to your advantage. You may want to even put that in your listing.
Shop like a buyer
Imagine you are a prospective buyer of the car. You haven’t even seen your listing yet. Consider how a prospective shopper is going to find your listing. Is your prospective buyer likely shopping by model or by price? This can make a difference. Taking a page from the pros, one of the items that dealers care about is where and if they show up in someone’s search result. Price conscious consumers will often shop by price range or at least sort by price as they look through vehicles. If your pricing is high relative to comparables or crosses a search threshold, you might be filtering yourself from a prospective buyers search list. Consider this, if a prospective shopper’s max is $15,000 but you list at $15,100, your vehicle isn’t going to show up. If your competition is marketing the same vehicle for less than $15K, that’s a disadvantage. Conversely, if you are at $15,100 but are on the low end, you may have some room to bump up pricing so long as your not breaking the guideline on pricing by rank.
On the same topic of shopping like a buyer, consider what the buyer would consider as a reasonable alternative. This is where it’s important to not be too narrow in your thinking. An alternative may not just be other listings for that same year, make, and model. If your car is only 1 or 2 years old, you may also be competing against new cars. If you car isn’t moving, take a look to see if there are any OEM incentives you might be competing against. Do you have a common family or economy car where the buyer might consider competing models? Are there many of those currently for sale? For some vehicles, particularly below a certain price point, the shopper may be solely influenced on price where they are looking to get the most car for their dollars. In that case you want to look within your price band. If you have a more reliable car within a price band, that’s going to make your vehicle more attractive.
Watch the market
Unfortunately pricing your car is not a set it and forget it process. Most car dealers reevaluate their pricing daily. Why do they do that? It’s because they know that the market can change daily. On any given day, someone could be adding a brand new listing or doing a price drop on their current listing. Even if your car is priced attractively this week, an influx of similar vehicles could change that. This is particularly an issue for high volume cars. Also consider that if your car has been listed for weeks, the value may have also dropped based on depreciation. Vehicle values generally decrease month over month. The key here is to be vigilant to make sure that your pricing is still relevant and competitive throughout the process.
Figure out if you are in the right market at the right time
Do you have a car that’s a great car but you still can’t move it? Sometimes, it may be a great car but just not the right market. Some high end cars, speciality colors, or sport cars may not have enough local interest. When that’s the case, it may not be about pricing but getting more exposure. For speciality cars, eBay motors national listings is a great place to sell if you are willing to deal with out of state buyers.
Also consider whether or not it’s the right time in the market. If you have flexibility in when you sell, consider how timing might come into play. Selling a convertible in a cooler climate, you will probably get more interest in Spring then Fall. Even if someone wants your car, they probably don’t want to buy it and have it sit in the garage all winter. Do you live near a college town or major university and trying to sell a car for under $7K, you may find that there are more buyers in late August / early September when demand is higher and there are more prospective buyers.
The bottom line is that with the right advertising and pricing strategy you can successfully sell your own vehicle. Now that you are in know, get ready to price it like a pro.
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