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I can relate to this but it involved the selling of a house.
About 10 years ago I was selling a 5 year old custom built house that was in as perfect condition as you can get. Got an independent appraisal in addition to that of the listing realtor, took the average and had it listed at that price. No sooner was the house listed; I got an offer for 42K under the listing price. The realtor wanted to know what my counter offer would be. I told her that the offer was so insulting that I wasn’t going to counter offer. She said sellers shouldn’t take offers personally and, while she agreed the offer was, in her words “ridiculous”, I should counter offer and I said again I didn’t want to but she said to go along with the game and counter offer. So, I said take $100 off the listing price, that ought to make her go away and it did.
Five days later I sold it for almost 98% of the listing price. So, I can certainly understand how an “absurd” offer can sour a deal immediately.
I don’t play games and that’s why I won’t put up with anybody else’s nor do I think anyone should.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
If you don't mind me asking what was the listing price?
Five days later I sold it for almost 98% of the listing price.
In a decent market with a good appraisal that is typical.
Just a little note of interest about 10 - 15 years ago my sister sold her house (large real nice house in a great location) and also got an independent appraisal with the agents appraisal. The highest offer they got was somewhere in the area of 80% of the listing price. Turns out that both appraisals were way to high.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
the cold shoulder as well as the non serious, misinformed
buyer treatment............
That is more personal than I would like to get here but rest assured it wasn’t anywhere close to 2.1M, which as you know at 2% is the 42K she wanted me to discount my house. If I were selling a 2.1M house I would not have been insulted with her offer and would have jumped all over it and told everybody I knew that I sold my house in 6 hours.
In a decent market with a good appraisal that is typical.
Exactly, which is why I was expecting to get something around 98% of the listing price because that was about the going rate in that neighborhood and since both the independent appraiser and the realtor said that is what I should expect to get, that’s what I wanted until the market said otherwise. Fortunately for me they were right.
Although I made a handsome profit on that house in 5 years, I didn’t make any more (percentage wise) than what my neighbors would have made.
Off this subject but how is the tax biz for you right now? My brother is also in the biz and he says he can barely keep up.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
My brothers and an uncle are accountants as well and they're swamped. They always have been this time of year. I'm in computers and I joke with them that Turbo Tax is going to make them obsolete.
Not sure how personal that is since house sales are publically published data, but thats your perogative.
$42K on a $800K house really isn't a lot (about 5%) so depending on the house price $42 can or cannot be doable. A custom made home around here can go for that much depending on the area.
Off this subject but how is the tax biz for you right now? My brother is also in the biz and he says he can barely keep up.
Actually right now is our slow period. All the people who wanted to get their refunds right away are done and those who either owe or have the more complicated returns have yet to come in. We should start seeing them in about a week or so, then it will pick up again.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Turbo tax is cutting into the business but it will never make tax accountants obsolete. Turbo tax can only go so far in answering questions that people have about taxes, and in many cases the answer will be different for different people. Secondly there is a peace of mind that many get from having a tax professional do their taxes. Finally while Turbo Tax is fine for most people, I wouldn't use it in the more complicated tax returns.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I would agree BUT ... people always come to me to review their returns in TT.
If Intuit would be more customer friendly with their support, they could capture greater market share.
I have my ammunitation ready, all the numbers from KBB and Edmund's TMV.
What number should I shoot for? In between trade in and private sale?
Is there a way to determine how much they really make off the car?
How about shooting for a price that is near the retail value of the vehicle. There are other costs to make your vehicle presentable on a lot. Dealerships don't just take a trade and immediately slap it onto their lot.
They do touchup on the paint, service work to make sure they are up to safety standards, emissions, etc. etc.
Are you comfortable with the numbers? Do business. If not, then don't. How much money the dealership is making really isn't your concern. Your concern should be in whether or not you're happy with the price.
-Moo
So I'm thinking KBB trade or private value is a good starting point. :confuse:
If it's in mint shape with low miles, they could have paid way over book on it.
Figure out what you're comfortable with paying for this car, and go from there.
On used cars the starting price is from retail down because there is no set invoice on them.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
fortunately, one jumped out at us and literally slapped us in the face it was such a good price i didnt even negotiate it, (though the finance guy did try to pull the wool over our eyes, even though i told him i used to sell cars - i guess being a woman made him think that i was just trying to pull some crap that a book told me to do. funny when i told him to check the back screen of his ADP program or whatever they used to see if the "rust proofing" was still in there causing my payment to be higher than it should have, he turned red in the face, and went to re-check his numbers, the payment "magically" matched mine. "for some reason..." he said "the rustproofing didn't come out when i removed it the first time - you were right" yeah, ok buddy...)
anyways, long story short, between edmunds "real world trade in values" thread, ebay and other car selling sites, you should be able to come up with a general idea of what market price is, and then create your own offer from that. kbb or edmunds tmv are to broad and vague to give you an accurate estimate.
anyways, best of luck!
-thene
Socal4 suggested to start at dealer trade in. The dealership does not buy at this price, but at wholesale prices. Since you will be looking at an 04, there probably won't be a whole lot put into reconditioning. So,depending on the demand of a TSX... inspect the car, decide to start at either trade in or between trade in value and private sale. I was successful with this method... you can be too.
So I hear that 3% of MSRP is reasonable profit. But what if holdback is 2%? In the end, I am the one paying this holdback so can I count this towrds the 3% profit?
If it's a hot car you'll pay over invoice. What car are you buying?
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
OK..... and what did other dealers want?
If this is the best price for that car, in that area, at this time, unless you are willing to travel outside of your area, you have your answer.
This probably isn't the answer you want but you'll have to prove it for yourself.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
Hold back should not be brought into the equation IMO. I know it is a age old debate but allot of times hold back is eaten up by floor plan so it is in allot of occasions a wash. I know are floor plan expense each month can run between $40K and $80K depending on inventory level.
So with that being said using your 3% plan you quibbling over $401. The difference between the $1700 and the 3% of MSRP. $1700 is not a unreasonable profit on the dealers $39500 investment, but if you are not comfortable with it I am sure you all can meet some where in the middle. Or you can continue to shop, it just depeneds if your time is worth the $401 to you and if you think the service you have recieved to this point is worth the $$.
-thene
Really? I've never heard that before. From what I've read on these forums I thought the dealer got the holdback for each car as it was sold.
Am I understanding you to say that if your sales target is 100 cars and you sell 99 you don't get ANY holdback money?
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
Really? I've never heard that before. From what I've read on these forums I thought the dealer got the holdback for each car as it was sold.
It probably varies from manufacture to manufacture. I am not sure how the money flows but I know that if we have a car on the ground for then xx number of days the hold back is eaten by the floor plan. We have some cars that sit here a day and we have some that celebrate Birthdays with us. We are payed it monthly or quarterly I am not sure. I have been doing this 15 years and don't understand the whole concept. I just know I don't get paid on it, I guess thats why I have never really researched it, and quickly lost interest when a consumer brought it up because I knew if they were talking hold back then we were fixing to blow right by the part I get paid on
Yep, that's my understanding as well.
That is a new one !!!!
Are you sure it was "new fangled electronic rust proofing" or was it just "old style dealer BS"?
I've never heard of this stuff so if it is for real, if you don't mind, could you get more info on it and let us know what/how it works.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
Usually we order a car or take one in stock, but In my last negotiations because the dealer didn't have the car my wife wanted he ended at a higher price by about what I considered the holdback amount. I'm sure when they traded they weren't going to be able to get the holdback-the otehr dealer did...
2014 Malibu 2LT, 2015 Cruze 2LT,
I'm waiting for other dealers to respond. It is like pulling teeth to get them to give you a price via e-mail.
I'm not afraid to travel for a deal. I flew from Seattle to LA for my current Lexus. I traveled to Sweden for my Saab before that.
Just kidding, I am sure the trip to Sweden was a blast and you are obviously a person who can do what they want.
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BMW really has the only great deal for Euro Delivery... Extra big discounts, but they don't pickup any of your travel/lodging.. You can save enough on the vehicle to pay for a reasonably cheap Euro vacation.. or, at least defray a large part of the expense... Of course, you won't have any rental car costs in Europe...
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i was very irritated with the finance guy though...salesperson was great. i told him i sold cars, and we talked about the biz for a bit. the f&i guy was very condescending though. i loved watching his face turn bright red when i saw through him. there was just no need for that.
oh well, its all done now, we got the car at the right price with no add ons (i was thinking of getting a warranty too, but i certainly did not want to put money in the f&i guy's pocket at that point, so he missed out) and we love it. brand new, the car had an MSRP of 32k, and we got it one year old with 13k miles for 16999. yeah, its a saab, but its basically a subaru wrx wagon with a saab front end on it - so im not worried about reliability. it was funny, because the same car with wrx badging cost more than the saab version! it was quite a deal
my two cents
-thene
True-Holdback does pay for the interest on the car as it sits on the lot. Obviously the dealership does not own its inventory, nor does your local department store.
I've been in the industry 5 years now & it amazes me that we are the only retail industry where you (as a consumer) know exactly what we paid for an item & are expected to negotiate a "deal"
Try to find out what the best buy down the street paid for their tv & offer them that! :shades:
Heck ya all the time. At the end of the model year you will look up and see a few of those cars sitting around from launch that are missing a few of those options that were not available at release, a Crown Vic we didn't want in the first place that the factory force feeds you Or sometimes there are car that just get walked around for some reason.
What? Of course they do, that's why the manufacturer pays the dealer holdback, to cover the cost of owning the inventory.
The dealer don't own crap. In the rarest of occasions a dealer will own his inventory. Maybe 1 out of every 1000 dealers. The bank owns the cars thats why they have right to come and shut you down if you get out of trust.
I don't know of any that own it outright (cash)
Ford sends Dealer a car with invoice of $20K.
Ford Credit pays Ford $20K for car.
Dealer Floor Plans Car with Ford Credit for prime+1 paying on invoice total of $20K.
Dealer sells car for $21K +TTL
Dealer pays Ford Credit $20K and keeps the $1000
There is allot more to it then that but there it is in it simplest terms.
We own our trade-ins and floor our new cars and programs cars. A dealer can floor them all if he wants.
Ford Credit pays Ford $20K for car.
Dealer Floor Plans Car with Ford Credit for prime+1 paying on invoice total of $20K.
Dealer sells car for $21K +TTL
Dealer pays Ford Credit $20K and keeps the $1000
There is allot more to it then that but there it is in it simplest terms.
We own our trade-ins and floor our new cars and programs cars. A dealer can floor them all if he wants.
Forgot to add, that Ford also pays the dealer 3% (holdback amount) as part of the deal. That's an additional $600 on your $20K car. If the dealership sells the car before the note on the car is due, the dealership keeps the entire $600. If not, that $600 gets whittled away the longer the unit sits.
In addition to that, Ford also offers the dealership unit bonuses. That can vary....from moving a certain amount of Explorers (just as an example) to moving a certain amount of total units. That's in addition to whatever amount over invoice the dealership sells the car for.
I know the sales folks don't get paid on the holdback. But, that doesn't mean the dealership isn't making money on it. The units must be very distressed for a dealer to offer up part, or any, of the holdback amount. More likely, Ford has some added incentives to the dealership that makes it look like the dealership is dipping into the holdback (that the salesperson isn't aware of...maybe the sales manager isn't aware of). Dealership principal, and maybe the GM would be aware of the other incentives, though.
All that said, benefits, salaries, commissions, bonuses, building maintenance...even down to the lot boy....all have to be paid on whatever profit the dealership makes on any given unit sold.
That's why used car sales, service dept, F&I dept, etc are much more profitable for the dealership than new car sales.
OK, let me ask you this: When the sale document is drawn up does it show the dealership to be the seller or Ford Credit?
If you hit at the right time usually about 5-6 months of the year we under some type of Dealer Cash Plan. Thats another great thing about being a A/X/Z/D plan customer, Any dealer cash you get in the form of a rebate.
That's why used car sales, service dept, F&I dept, etc are much more profitable for the dealership than new car sales
Very good, you even have them in the correct order of profitability.
You obviously know what you are talking about because everything you said was correct, except one point.
Ford has some added incentives to the dealership that makes it look like the dealership is dipping into the holdback (that the salesperson isn't aware of...maybe the sales manager isn't aware of). Dealership principal, and maybe the GM would be aware of the other incentives, though.
There are no Secret plans that only the GM and the Owner know about. If we are in the hold back then we are in the hold back.
OK, let me ask you this: When the sale document is drawn up does it show the dealership to be the seller or Ford Credit?
OK, if it is worth splitting hairs over you win. It says we are the seller. Who's name is on the Deed of your financed home? Can you just give it away, or sell it and keep all the money. No the bank owns that puppy, you can't do crap with it until you pay it off. Same with our cars, we store them, we insure them, we wash them, we sell them. But when it gets right down to it we don't own them till we pay for them. Ford Credit can call the note anytime they want and we are out of business.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
They do own their inventory, yes they owe money on that inventory but that doesn't mean that they don't own it.
Try to find out what the best buy down the street paid for their tv & offer them that!
I have negotiated lower prices at Best buy before.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D