"Collector Car" sales commission

[1937hd45]

Ever wonder what and how sales commissions are arrived at on "Collector Cars"? Just wondering how they are arrived at, flat fee or a percentage of the final sale price?

[Guest ken bogren]

Yes I often wonder about that.

Are you going to share the facts with us?

Or were you just wondering if you were the only one wondering?

[NTX5467]

The "commissions" will vary with who's doing the selling. A broker, a normal auction house, or a "specialty" auction house. It can vary from a flat fee to a percentage of the ultimate sale price.

I believe in the Barrett-Jackson auction, they make money on the front side (from the seller for placing their car in the auction) and also on the back side (from the ultimate purchaser), which in a "No Reserve" auction (as the B-J auctions are) where the vehicles sells no matter what, "money happens". I suspect this is "industry standard", but I'm not sure of that.

Other auction houses will allow sellers to place a "Reserve price" on their vehicle, which means that if that amount isn't met, "No Sale". But if there is no reserve, it sells for what it'll bring, which generates appropriate commissions for the particular type of sale it might be. You can probably check the B-J, Leake, and other similar websites for more information.

Happy Holidays!

NTX5467

[1937hd45]

Thanks, I was thinking along the lines of a straight sale not an auction. If someone wanted you or me to sell their car would most people ask for a flat fee or a percentage of the sale price? What do "dealers" ask for? Is there more work to selling a $100,000 car than one for $20,000 ?

[knobless]

do it yourself and save.....

[alsancle]

do it yourself and save.....

Like anything else it depends on what you have for expertise and available time. I think some brokers add real value to selling a car while others not so much. The last two cars I sold I spend days putting together the descriptions and pictures so that when I finally went public with them I minimized my effort. Even then, there was still work in getting them sold. I happened to have the time to spend when I sold them but I could see where some people would not. Some people do a crappy job selling their cars and could probably use the services of a good broker.

Bob, can't answer your original question as I think it's totally dependent on the broker and what the particular services are they are providing in any given instance. I'm sure it's a bigger cut if they are putting the car in their air conditioned show room, then if they are just posting a thread on the AACA forum saying call me for details.

[Matt Harwood]

As a dealer, I think I can speak with some authority on this, and with Vintage Motor Cars, at least, every deal is different. We typically collect a straight percentage on sales, except on cars under $25,000 where it's a flat fee. Sometimes we will even see what the bottom line price a client wants for a car, and he will allow us to keep anything over that number. We also offer discounts for multiple listings. All cars require about the same amount of effort to advertise, but the selling is often far more challenging for expensive cars, since the clientele is more discriminating when purchasing, say, a $500,000 car than a $25,000 Model A. We also deal with folks from around the world, so we do have a French-speaking assistant and my Spanish isn't bad, which is a huge plus. The fact that we're a licensed dealer seems to give these foreign buyers a lot of confidence versus an individual sale, and I'd say that in 2011, foreign buyers made up as much as 60% of our buyers. For this reason, I'll answer my phone at 1:00 AM or at 9:00 AM on a Sunday morning--business doesn't stop, but this could definitely be an annoyance to a regular guy selling his car.

The value we provide, however, is an absence of the annoyances that any seller receives--picture collectors, tire kickers, guys who just want to drive a particular type of car, and people who are serious until it comes time to write the check. I probably spend 60-70% of my time dealing with non-serious people who are merely curious, as well as a fair helping of guys who want to be "players" and work a deal on an expensive car, but when it comes time to put money on the table, they vanish. I can usually smell these guys because the first thing they say is something like , "I'm definitely a serious buyer," or "I've bought dozens of cars like this." The real players don't need to advertise and don't care how serious I think they are, they just buy the car. We also handle paperwork, international shipping, and can act as an escrow service, so the only question our clients usually receive is, "Where do you want us to send the check?" They all feel that's worth what we charge.

Is there value? Our customers think so. Ranging from businessmen who don't have the time, to regular guys who just don't know where to start, they've all been pleased with the results. We're occasionally able to get more than market value for a car, but that's rare, although many clients seem to think we can somehow make their car worth 20% more just by putting it on our site. The truth is, people will pay 100% of market price for a piece of junk, but they won't pay 105% of market price for a perfect car. Most buyers do their homework and few are impulse buys, so price is still king.

Unlike auction houses, however, which typically charge both a buyer's and seller's premium, we only work with the seller, the buyer will be charged no additional fees. Can you imagine if I conducted business like an auction with buyer premiums? "Yes, sir, the list price is $100,000, but it will cost you $110,000 to purchase it." We'd be out of business in a week!

For buyers we offer the confidence that the car is accurately and honestly represented--we have a lot more to lose than a private seller if we misrepresent a car, and I take that very seriously. Buying a car is always a trust issue, but as a dealer with a quality reputation (I hope!), buyers seem to have a little more confidence and are more willing to step up to the plate and make a buy.

The bottom line is that every deal is different because every client is different and we want to help them in any way we can. Nothing is non-negotiable and we understand that this is all about having fun, so I keep that in the front of my mind in everything I do. Your new old car shouldn't be a headache.

Just some thoughts from the other side, from a guy who has lived on both sides of the fence.

[Matt Harwood]

I should also mention that I have access to cars that aren't technically for sale. A great many of our sales never even get advertised, not even on our website, because they're private transactions. Someone might call and say, "I'm looking for a V16 Cadillac." I happen to know where one is, and I call the owner and maybe a deal happens. A great many of these deals happen behind the scenes, but usually only for high-end cars. Our network gives us this advantage that many private sellers and buyers wouldn't otherwise have access to.

[alsancle]

Thanks Matt, I think you did a good job of explaining the value a broker can add to a transaction. It is not just the annoyance factor but also all the logistics around moving the money one way and the car the other way.

However, I do laugh every time I see an ad posted on the forum here by a broker providing, no details, no pictures and a phone number. You know they don't even have the car in their possession and I'm not sure what value they a providing other than spam.

[Guest Jim_Edwards]

Thanks Matt, I think you did a good job of explaining the value a broker can add to a transaction. It is not just the annoyance factor but also all the logistics around moving the money one way and the car the other way.

However, I do laugh every time I see an ad posted on the forum here by a broker providing, no details, no pictures and a phone number. You know they don't even have the car in their possession and I'm not sure what value they a providing other than spam.

Anytime a broker matches a seller with a buyer they have performed a service for both. Spam postings? Yeah that happens so to speak. It's much like a real estate broker putting sold listings in an advertisement. They are shopping for new listings to sell and hope they'll get a new one from someone needing to sell. Possibly the best example of the practices of brokers of real estate and now automobiles can be found in the history of Coldwell-Banker Real Estate and the events following the San Francisco earthquake and fires.

[Steve_Mack_CT]

Well, the "old Yankee" in me is not a fan of commissions but our last purchase, trade and sale was done through a broker with excellent results.

A couple of other services include access to a buyer network one may not get by running their own ads - totally agree with A.J. that an ad without info and pics posted on this forum is not adding a lot of value, but access to an established website listing with many pictures and detail on the vehicle as well as an offer of guidance through the buying process and multiple advertising venues (I know Tom L. and probably Matt, use some avenues many of us would not even think to use) are a part of the service.

A reality check on price is also helpful at times with a trusted broker - and the broker is motivated to maximize the sales price. Our last sale involved a small profit after commission in a down market and I did - - nothing except accept payment and sign over the car. My Saturdays remained my own and after having sold a few collector cars, I don't miss dealing with the many dreamers and clowns before hearing from the one or two serious buyers that is a fact of life with these cars. My only disagreement with Matt is that I do believe in our case we were able to maximize our sell price a bit, perhaps in part because the car sold fairly quickly, Tom knew my bottom line and still did better than that by around $1,500 or so. Not bad. Also, for what its worth, I believe he worked as hard on our low teens Cutlass as he might on a pricier car. Smart, guess where I will go next time?

Absent a buyer waiting in the wings or a quick one shot ad on this forum, I would likely do this again if and when the time comes to sell.

Just like real estate agents - some of these folks work very hard and are worth the commission, others are happy to place an ad or two and take an order. You do need to do a little homework there. I would advise anyone thinking of selling to at least consider it.

[Restorer32]

Brokers often have access to overseas dealers who are reluctant to deal with private individuals.