The shortage of new vehicles continues to drive up demand for used vehicles. Which makes filling your used car lot more challenging than ever.
In fact, tight supply has driven auction prices up 22% over last year. So, dealerships are looking anywhere and everywhere for deals. If you weren’t buying vehicles directly from owners in the past, you probably are now.
One key to success is to make your store visible to those considering selling their cars. If they don’t know that you’re looking to buy their vehicle, you won’t have the chance to purchase it.
It’s also import to make sure you change out of your selling hat to your buying hat. It can be a challenge for some.
On this Just the Fax podcast, CARFAX expert Bob Grill warned not to treat the purchase like a sale as it’s likely to drive away a potential seller. His advice is to select a team member best suited to handle the buying process.
Here are some other tips for connecting with private party sellers and closing the deal.
Be Prepared to Make a Pre-Offer
Before you start approaching private party sellers, you should have a process ready. Be prepared to provide a pre-offer as quickly as possible.
To determine the right purchase price, use the CARFAX History-Based Value. Every used car has its own story. Its value will vary on many factors unique to that car and the market its being sold in, far beyond the market-based pricing you might find elsewhere. Knowing that story, and having the VIN-specific value from CARFAX, will be helpful in any used car negotiation.
Set yourself up to receive their requests, whether it comes through email, online messaging or a function on your website. Of course, you want to be sure that they’re directed to the correct team member. You might have a friend or two run through it as a test to ensure the process works smoothly.
With your pre-offer process in place, here are some ways to connect with prospective sellers.
Your Service Drive as a Used Car Source
Some customers coming through your service department may consider selling you their car. But you have to find them first.
Some dealers are doing this by promoting their fast, free, no-obligation appraisals in customer areas. Another tactic is to spiff service writers to identify prospects. Before you talk to the customer, pull a CARFAX Vehicle History Report and check with the service department about the mechanical condition of the car.
Once you’re talking with the car owner, you can walk them through how your offer was determined, and show them those items that add or decrease the car’s value. Presenting your bid with the appraisal details is likely to make the seller more confident with your offer.
Look to Purchase Off-Lease Vehicles
With trade-in values at current levels, the customer payoff on a lease could be less than the vehicle’s trade-in value. According to Forbes, this can be a positive for both the lessee and the dealership.
In their example, a customer has a payoff of $20,000 with a trade-in value of $22,000. The dealership pays off the lease and gives the customer a $2,000 credit toward another car. The dealership can then retail the off-lease vehicle. Both sides are happy!
Use Your Social Media as a Source for Sellers
Many dealers have fine-tuned their social media accounts to drive buyers to their lot.
Some may consider using their Facebook, Instagram and Twitter feeds to offer a free pre-offer based on photos sellers provide.
Respond to them quickly — work to get their pre-offer back in 30 minutes or less. Make the pre-offer good for ten days or 1,000 miles. Explain they’ll get a check when they turn in the car. Try to remove any negatives the seller might imagine.
After they’ve accepted the pre-offer, conduct the appraisal at their home or work and invite the seller to be part of the process. Walk them through your visual inspection and explain what affects vehicle value. Keep that CARFAX Vehicle History Report handy.
In the same podcast mentioned earlier, Bob Grill explains the importance of keeping the potential seller part of the process. “Keep the customer involved in the appraisal process. Let the customer actually sell you their vehicle. When they help appraise the vehicle they take part ownership of that number.”
If you can’t agree on a price, you could also offer to sell their car on consignment, and collect a percentage of the selling price to cover inspections, photography, online posting and managing the paperwork.
Consider Online Search Services
Scanning private party used car classifieds for leads is time-consuming. Online used vehicle acquisition services like VETTX will search for you and send the seller your message. When the seller responds, the service sends their text or voice message back to you so you can connect directly.
To get the ball rolling, quickly send the respondents your pre-offer. Once they accept, move them through your standard appraisal process.
Another Alternative — Online Buying Services
If you’re desperately low on used cars or have a customer requesting a specific model and trim, you can turn to a used car buying service. These outfits are heavy advertisers and generate a volume of used cars they purchase and resell.
While the cost of buying a vehicle through one of these services is higher than a direct private party sale, you may want to have it available if you’re in a tight spot for inventory.
Contact us to learn more about how CARFAX can help you acquire the right inventory at the right price, no matter the source.
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