A Tip about Tipping.
By Christopher Morabito, J.D. | August 3, 2008
If you sell the car on the block as you will most of the time, after the auctioneer says sold, it is customary to tip him/her. The industry custom is between $3 and $5 per car. It is, however, up to your discretion. An experienced auctioneer is capable of getting you an extra $200 to $300 per car, so be wise: tip $5 per car.
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Selling a vehicle off the auction block.
By Christopher Morabito, J.D. | August 3, 2008
Off the Block Sale
Any time you sell a vehicle at an auction in any other manner than the traditional bidding on the block, this is called an “off the block sale.”
This is the procedure for an “off the block sale” and also the problems that can occur. First, let me explain that an “off the block sale” can occur in one of two ways: (1) when you strike a deal to sell a car after it has hit the auction block and you “no saled” the car and a buyer approaches you; and (2) when someone approaches you to buy a car prior to the time it will run on the block, which I strongly recommend you do not do because, if buyers are trying to buy your car even before it “runs” it will do a “moonshot” (an extremely high price on the block). In either event, this is the procedure:
1. Take the buyer to the block on the lane it will run or did run on, and ask the clerk for the invoice that corresponds to your car. It will be the registration number the vehicle was assigned by the auction and on your vehicle. For example: “8-57″ would mean car number 57 in lane number 8.
Then the clerk will get the invoice and ask you what the selling price is. You will respond $4,700, for example, and the clerk will write in the amount. Then you and the buyer will both sign the invoice as buyer and seller and initial the price.
Problems: Each auction varies as to its policies on “off the block sales” but, in general, an off the block sale is not binding until both parties completely fulfill their obligations. Example: the buyer must pay for the car and the seller must turn in the title and “back up” papers (“back up” papers to be explained later.) Then, an only then, is the deal consummated and binding on both parties.
Therefore, either party can back out of an off the block sale without prior permission from the auction, so if you are the seller, beware! When you sell a car off the block, don’t think it is actually sold until the buyer pays for it.
So common sense would dictate that it is much better to sell the car on the block because that sale is totally binding on the buyer, subject only to arbitration if you sold it with a green light.
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The illegal practise of raising prices when bidding-”Shilling”.
By Christopher Morabito, J.D. | August 3, 2008
SHILLING
A note here about shilling. “Shilling” is the are of using a person that either works for you, or knows you, or you pay to bid on your vehicle. You may ask why would you want to bid on your own vehicle? The answer is very simple, it drives the price of the vehicle up. Many buyers think that this is not right. That it is playing dirty pool. But it isn’t because you are only driving up the price of your unit to where you are willing to sell it. Art galleries, estate sales, everywhere there is an auction, there is shilling. The reason why shilling is not unfair or underhanded is that the sellers are just trying to get the buyers to bid up to their bottom price that they wanted for the vehicle.
Here is how shilling works. As stated above, you, as the seller, use someone that you know to bid on your vehicle. You tell that person to bid up to your bottom line figure (for example, $7,500) then that person will do so and if there is someone else who continues to bid against your comrade past the point of your low, you will sell your vehicle for the amount of money you needed. If, however, the bidding stops before $7,500, then your man will be top bidder and you will still own the car. You should always inform the auctioneer that the “shill” is with you.
TIP: Have the shill wear an orange or yellow jacket or an easily identifiable hat so that you can simply say to the auctioneer, the person in the white hat over there is with me.
Any experienced auctioneer will know what you’re talking about, and try to make sure that the last bid doesn’t land on your shill.
Also, try to use a person that has shilled before because like anything else, “to shill” takes a certain amount of skill and a person with experience usually always does better than a neophyte.
Your best bet is to only use a shill to bid up to one pre-arranged price which is your lowest possible take on the vehicle. Sometimes dealers use shills to continue to bid to raise the price of the car, because professional shills do know how far to bid because they can tell by the nature of the bidding if his competitors will continue to out-bid him. After the bidding has stopped on your vehicle, the auctioneer will say “sold” if the price that you informed him that you would sell the vehicle for has been reached. He will not ask you for your permission to say sold, so make sure you meant it when you told the auctioneer that $5,000 will be enough to sell the vehicle, because he will “drop the hammer” and sell it before you stop him.
You can, however, tell the auctioneer to leave the final decision of selling the car up to you, (as I said earlier, “reserving the right to you.”) by using this phrase: “I want as close to $5,000 as possible, but get “real money”. I’ll decide if I want to sell it.” This phrase will make the auctioneer get a real bidder on the vehicle for the first bid rather than making a fake bid himself to start the bidding. This way the top bid will be a real bid and, at the end of the bidding, you can decide whether or not to sell the vehicle. Once the bidding stops, you will either say “Sold” or “No sale.” If you say “No sale,” the auctioneer will usually say, “That won’t do it fellas, it takes more than that to buy a car like this.” Then usually one to three of the bidders asks the auctioneer what does it take to buy the vehicle and the auctioneer will turn to you and ask what you’ll sell the vehicle for. Then he will relay your answer to the crowd of buyers and either one or two of them will accept or make a counter offer or say “you’re nuts.” Don’t take it personally because statements like this are only meant to intimidate you into selling your vehicle cheaper.
The next thing that usually happens is that the auctioneer will tell those buyers hanging around, “Boys, talk to the man.” This means if any of the buyers are interested in the vehicle they should approach you.
In most cases, at least one buyer will approach you and ask, “What’s the best you can do on this car?” or “What do you need for the vehicle.” And you reply by giving him a figure. Try always when you’re in this situation to convince yourself either to sell the car and forget it, or don’t sell the car and just wait until next week’s sale. (DON’T GET MARRIED TO ANY CAR!) That’s car dealer’s talk for don’t keep a car for too long. If you have a car for a while and you can’t sell it for a profit, remind yourself that you won’t always make a profit on every car and sometimes it makes better business sense to sell a car short, perhaps even for a loss, and buy a new vehicle that will be profitable for you. Your success is not measured by every car but rather by your end-of-month profits.
A very important note here on how to handle this dealer approaching you. If he makes you an offer that is close to what you want for the car, immediately say “done deal” and bring him to the auction block to consummate what is called an “off the block sale”.
The reason why you want to accept his offer without too much haggling is because if you haggle too much, the buyer will probably say “Let me take a look at the car first and I’ll get back to you.” This is very hard to do (the dealer getting back to you) at an auction because there are usually between one and three thousand people at an auction, and the dealer will have to page you, and nine times out of ten, these type deals don’t go through.
Furthermore, the invoices from the auction block will be forwarded to the main office and those invoices are very hard to retrieve from the front office after your vehicle has run. You will be kicking yourself for not having just accepted the offer and signed the buyer up on the auction block when you had the chance. Always remember: don’t get “greedy,” when you have the buyer so close to the block, sell him the car, especially if you need the cash, sell the car even for a small loss. However, don’t ever wholesale a car for a big loss because you have the option to retail the car for a big profit.
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Caution: Don’t be Greedy when selling at an auction.
By Christopher Morabito, J.D. | August 3, 2008
Caution: Don’t Be Greedy!
Be sure that your “low figure” is the absolute lowest that you are willing to sell the car for, because most auctioneers take control and even if you decide to sell it to a bidder, that bid below your “low take” figure , the auctioneer will say “NO SALE,” and you may be very sorry because you need the money for other vehicles. Therefore, work with the auctioneer by telling hem that you reserve the right for yourself to say “No Sale!”
If in fact you thought a vehicle would definitely bring $5,000 but it brought only $4,500, which would represent a loss, but you need to sell the vehicle for cash flow purposes, then you should approach the highest bidder and ask if he would like to buy it for $5,000.
If he says no, then, say “meet me half way” that is, he will split the difference between $5,000 and $4,500 which is $250 and he will pay you $4,750. Be prepared for the buyer to offer you even less than $4,500. Maybe he’ll offer only $4,000 because when you approached him he knew you’re desperate to sell that vehicle. But hold your ground because if he bid up to $4,500, he probably would have gone further if there was a stronger bidder against him. Since the auctioneer said “No Sale,” he knows you had a higher price in mind. Approach the buyer with an attitude that he’d be stealing the car for “5G’s” (start to learn how to talk like a car dealer). However, be humble and don’t lose your cool.
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Getting the Vehicle Through the Block.
By Christopher Morabito, J.D. | August 3, 2008
Getting the Vehicle Through the Block
Once the vehicles are fully prepared to run through the auction block, you must make sure that they actually run. Although the auction is responsible for this, however, the auction does occasionally make mistakes, so it is your responsibility to make sure your vehicle runs. The auction helps you to accomplish this by putting television sets in each lane and rest area such as lobbies and cafeterias. The television sets tell you which number vehicle is running in each lane at the time you look at the TV. Therefore, all you need to know is the number of your vehicle and go to the correct lane when your vehicle is about to run. Usually, you should go to the lane at least five minutes before your vehicle is about to run to make sure your car is on line to come into the building.
This is easy to accomplish if your have one to three cars at a sale. However, once you start running fifteen to twenty cars at an auction, you need a system. Most, it not all, car dealers always make a list of their cars for each sale. You should use the same checklist as described earlier in this chapter when we discussed the registering process. Use the same format as the sample given and remember to bring it with you on sale day!
Even if you decide not to make a list when you register your vehicles, please remember to make one when you are selling them at the auctions. Even a person with the best memory can forget one car, if he is selling ten, and to miss selling one vehicle, could cause a ten thousand dollar shortage in your cash flow for the week, in addition to a $1,000 loss of profit.
Therefore, the following list format is suggested.
Vehicle
Lane
Number
Cost
Low Take
‘84 Toy Corolla (White)
8
98
1,200
2,000
‘89 Taurus (Red)
5
127
5,000
6,000
‘92 Explorer (Tan)
12
224
12,800
15,000
‘80 Citation (Blue)
1
17
100
500
‘85 maxima (Rose
8
171
3,000
4,850
‘88 S10 P/U
14
50
2,100
4,000
You can make such a list on any type of paper, index card or whatever you find comfortable. Simply cross off the vehicles as they are sold. This will make your day run smoothly and efficiently.
In the event your vehicle does not run, due to some error (yours or the auctions), don’t panic. The remedy is this: Go directly to where the car was parked. If it is still there, go to “operations” and ask the operations manager to call the lane leader to make the car run. Generally, your car will run only a few minutes later. If, however, too much time has elapsed between when the car was supposed to run and when you went to “operations,” you may have to wait until the end of the sale for your car to run. What is too much time? It depends on the auction and the circumstances of why it didn’t run in the first place. But, generally, fifteen or twenty minutes is too late to run immediately. You will catch any auction mistake immediately, and you car will run right away, as long as you stay on top of things.
When your vehicle does run, walk up to the auction block when the dealer whose car ran before you comes down off the auction block. Greet the auctioneer, then inform him of the following things:
1. Green light car
2. Title is here
3. Options
4. How much you want for the car
Lights: As outlined earlier in this chapter, all auctions use some kind of light system. As a seller, you must remember to tell the auctioneer if the car is to be sold “Green light” - that is, “arbitratable” or “Yellow light” - that is caution for a particular reason, “Red light” - that is the car is being sold “as is” and “Blue light” - the car is being sold “title attached.”
Title: When you are selling a car “title attached,” you must make sure you do three thing:
1. Tell the auctioneer the vehicle is title attached
2. Tell the auctioneer to announce that the title will be available very soon
3. Make sure that the “Blue light” (or title attached) box is on the invoice is checked in ink
Here is where major headaches can occur. The invoice is filled out by the clerk on the block and since no one is infallible, the clerk can make a mistake. Therefore, always make sure to check that all the boxes on the invoice that should be checked, are checked. For example, make sure that the Green, Yellow, and Red boxes are marked correctly and, most importantly, make sure that the Blue box is checked as stated above.
If the Blue box is not checked by the clerk, even though you announced that your vehicle is title attached, the seller can later get out of the deal. Many a car dealer has been waiting for his check at an auction only to later find out that the buyer did not pay for the vehicle, because of such an error. The buyer will allege that he did not pay for the vehicle because when he went to pay for the car, you didn’t hand in the title and he then found out it was title attached. Actually he really wants “out” of the deal for some other reason and knows full well that it was a title attached deal, since you had already had a whole conversation with the buyer as to when you would get the title to the auction. An experienced car dealer has many ways to get out of buying a car that he doesn’t want after he has won the bid. THIS IS ONE WAY - DON’T LET IT HAPPEN TO YOU!
Options: After you inform the auctioneer of all of the car’s conditions, you should also inform him of any special options or characteristics that the car has that you may want him to announce, such as extra low mileage or dual air bags. Auctioneers always use public address (PA) systems to address the buyers, so always whisper into the auctioneer’s ear, otherwise your voice will carry over the PA system.
Price: After you have told the auctioneer the conditions and options, you must tell him the minimum amount of money that it will take to sell your car. Of course, no one ever knows exactly how high the bidding will go, however, you must give the auctioneer a ballpark figure as to how much you expect to get for your vehicle. You must tell the auctioneer the lowest amount of money that you would be willing to sell the vehicle for, so that he may start the bidding accordingly. Most auctioneers will ask you, “How much you want for the vehicle?” and will not take an ambiguous or vague answer from you because he cannot do his job. So, be prepared with a “low take” figure for the auctioneer.
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