Buyer: “He’s asking $25,000 for the 1970 Corvette. I’ll offer him $20,000. I can’t go wrong at that price.”
Me: “Really? You told me that you haven’t seen the car, and you haven’t had it inspected. How do you even know that it exists? And if it does, how do you know he owns it?”
It seems that every time I list a car for sale on-line, a few weeks later I see it on other websites with different contact information and a significantly lower price. These listings are placed by scam artists hoping to find a sucker who will send the funds before they lose the “deal of a lifetime.” You might think that common sense would be the order of the day when buying a classic car, but nothing could be further from the truth. At the very least, make sure that the car exists, and that the seller has the right to transfer ownership. Do not negotiate at all until this has been established.
I negotiate purchases and sales of classic cars on a regular basis. I do not enjoy the negotiation process, but over the years I’ve become fairly adept at it by learning hard-earned lessons along the way.
The actual negotiation process is a matter of personal taste. This applies to both the buyer and the seller.
We’ve all seen sellers list the price of their car as “firm,” or “negotiable.” I’ve never understood why anyone would include this information in a listing. If your price is firm, how does it benefit you to convey this information to would-be buyers? All it does is discourage some potential buyers. Besides, is it really firm? Do you expect me to believe that if somebody offers you $24,500 for the car that you have listed for $30,000, that you’re going to summarily dismiss the offer? Might you change your mind if your car has been for sale for six months?
Conversely, as a seller, why include the word “negotiable?” You’ve just informed potential buyers that you have no expectation of getting your “asking price.” I have yet to meet a buyer who says “I know you’re negotiable, but I won’t pay you a penny less than your asking price.”
As a buyer, the art of negotiation is a little more difficult, and information is everything. I break the information down into two categories. First, information about the seller, such as how long they’ve had the car listed for sale, how badly they need to sell the car (financial reasons, lost storage, settle estate), and whether they are “firm” or “negotiable.” Next is information about the car itself. Perhaps you’ll inspect the car, or you’ll have an expert perform a pre-purchase inspection. Either way, you’ll know everything about the car, not the least of which is how badly you want it.
All of this information makes you an informed buyer, which is invaluable in your negotiations. Now you have something to negotiate with.
Let’s go back to our make-believe uninformed Corvette buyer as he calls the seller.
Uninformed buyer: “Hi. I saw your Corvette listed for $25,000. I’ll give you $20,000 for it.”
Seller: “But you haven’t seen the car. What are you basing your offer on? How do you know it’s not worth $25,000.”
Uninformed buyer: “Uhhhhh. Never mind.”
Or, it could go this way:
Informed buyer: “Hi. I know you’re asking $25,000 for the car, but my inspector found a few defects that are going to cost $3,000 to fix. I know the car has been listed for six months, and now with winter arriving it will be even more difficult to sell this Corvette. The storage unit must be costing you about $200 a month, and there’s also the insurance cost. You do have it insured, don’t you? We both know that things tend to break when they sit over the winter, which will further reduce the value of the car in the spring. I’ll pay you $20,000 right now. It’s a fair price for the car, and it gives me a small cushion in case some unexpected things come up.”
Which buyer - the uninformed or the informed - do you think will have a better chance of acquiring this car for $20,000? Keep in mind that the car has not changed at all. Only the negotiation tactic.
This raises the question of when to commit to the purchase of the car. Some of my customers feel that it’s best to have all of the information, including an inspection report, before expressing an interest, and making an offer on a car. The risk is that the car will be sold before they make their offer.
Other customers feel that the best tactic is to commit to the purchase by paying a deposit and drafting a contract “pending a satisfactory outcome of a pre-purchase inspection.” The risk is that they will lose the deposit. More often than not, the pre-purchase inspection report is used as a tool to re-negotiate the purchase price.
Either way, information is everything. Buying a classic car without it opens the door to all sorts of surprises. Do you like surprises?