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rated:
This week I bought a used car at the Mainheim auction in Riverside, CA. I used a friend with a dealer license and paid him for the service (since only dealers are allowed to bid in the auction). I think this is a fairly common thing for dealers to offer.

I was able to search the http://www.manheim.com/ site (with his password) and found 19 vehicles that matched my criteria (BMW 530i 2005, with the premium+sport packages) selling at the next weekly auction. The MMR (average historical sale price) was approximately 24k @ 40,000 or so miles. My contact went to the auction, looked at all the cars, and eliminated all but six for various reasons.

I paid $25,500 for my first choice which had only 19k miles (with increased the price somewhat). Add on the auction fee of $375 and what I paid my friend for the service ($600) since he had to drive from San Diego to Riverside to bid, and again to pick up the car, in total $26,475 + tax. etc.

Was this a good deal? Well, you’re bidding against other dealers that see the vehicles as generic pieces of metal. In other words, you’re pretty much assured that you won’t get caught up in a bidding war since over 1,500 vehicles were being sold that day and the dealers have no particular interest in the one you’re looking for as opposed to the next one.

Looking at Kelley blue book, the trade-in value in Good condition (this car looked brand new… it was rated by the inspectors as 4/5 at Manheim which is very good), the trade-in value is $29,665.

There appears to be a huge disparity between dealership prices (the dealers I checked with wanted $35-40k for the same specifications) and the prices the cars sell for at the auction. My car was sold by “BMW Financial Services Remarketing, Inc” -- presumably a prior lease vehicle.

Since it appears that all the dealers get their cars from the same place, it doesn’t seem that there would be any difference in quality vs. buying the car from another source.

I’m not sure whether I saved any money vs. going another route, but it was a very nice experience since the Manheim staff creates a condition report of each vehicle and notes every little scratch, ding, repair, etc. along with estimated repair costs. They also note if there was ever any unibody damage and so forth. I was very impressed with how the auction focuses on pointing out the flaws of each car. In the end, when I got the car, I could not spot any of the flaws noted – the inspectors are incredibly picky and they will note things that a normal person would never even notice.

There’s also an incredible selection so you’re almost assured to find multiple matches for whatever you’re looking for at any given week.

It’s presumably not a deal per se. since I paid almost exactly market value, but it was certainly nice to be on even terms with how the dealers pick up their cars.

I will probably buy my next car the same way.

An archived thread touching on the same subject:

http://www.fatwallet.com/forums/messageview.php?catid=52&threadid=752848

Moderator Comment: This thread has been place under moderation to prevent solicitation. — Nov. 12, 2010 @ 2:26pm
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Since only dealers are allowed to bid, did he have to buy the car in his name then transfer it to you? Did you pay Manheim directly, or did you pay via the dealer?

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holla said: Since only dealers are allowed to bid, did he have to buy the car in his name then transfer it to you? Did you pay Manheim directly, or did you pay via the dealer?
Yes, it was in his name. I went with him the second time to help him drive the car off the auction lot. He paid with a cashier’s check, Manheim gave him the title and a receipt, and he then sold the car to me for the same price.

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The city of philadelphia confiscates a lot of cars due to unpaid tickets and the like every year, and these are sold at auctions put on by the city every few weeks. While you do not need a dealer license to bid on them, you are not allowed to drive the vehicles away from the auction as they are unregistered, hence you need to have a tow truck standing by to remove them from the lot that day. This alone makes it out of a lot of people's reach, hence you can pick up cars for fairly cheap at them. I doubt there'd be any late model BMWs, though.

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Just curious, would your friend be willing to do this for a stranger in the San Diego area once in a while for a simlar fee?

I usually shop around for 3 year old, off-lease luxury cars in the area when it comes time to trade. I spend more time than I like negotiating with the local dealers for cars that they picked up at the auction, and usually end up having to give them a little more profit than your friend was willing to take for his low risk transaction (since they took all of the risk in spec. buying the car to begin with, without a buyer in tow.)

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Had a similar experience, went with a freind to Manheim in riverside back in Jan of 2006 and bought
a 2003 HOnda odyssey exl with dvd 49k miles for $18.6 + $500(to friend) + tax +title license.

at the dealers were selling this van for $22-24k

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Fairly common, i have a guy in South Florida that will do the same-same fee of $600

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DDD777 said: Just curious, would your friend be willing to do this for a stranger in the San Diego area once in a while for a simlar fee?

I usually shop around for 3 year old, off-lease luxury cars in the area when it comes time to trade. I spend more time than I like negotiating with the local dealers for cars that they picked up at the auction, and usually end up having to give them a little more profit than your friend was willing to take for his low risk transaction (since they took all of the risk in spec. buying the car to begin with, without a buyer in tow.)

I would assume so. I think he does it a few times a month. If you give me your contact info I'll pass it along to him.

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magicboy2 said: The city of philadelphia confiscates a lot of cars due to unpaid tickets and the like every year, and these are sold at auctions put on by the city every few weeks. While you do not need a dealer license to bid on them, you are not allowed to drive the vehicles away from the auction as they are unregistered, hence you need to have a tow truck standing by to remove them from the lot that day. This alone makes it out of a lot of people's reach, hence you can pick up cars for fairly cheap at them. I doubt there'd be any late model BMWs, though.

Do you have any personal experience with this? I've thought about it and been meaning to go just to check it out.

Some thoughts:
(1)They don't have keys for these cars. So you can't even open them up to see what the interiour smells like, engine condition, etc. When you do win an auction, you have to hire a locksmith to make you a key.

(2)It goes without saying you never get to see it run. Many of these cars were impounded for parking tickets or no registration. Why? In some cases because the owner decided 'this car doesn't run anymore, it's not worth it for me to pay the tix/renew registration.

(3)You have to get the car towed off the lot. (AFAIK, it must be a properly licensed tow operator...no dragging it off on a dolly.)

(4)You can't register it until you get the title (a couple weeks at least). You can't park an unregistered vehicle on the roadway. So obviously this is not workable unless you don't need the car right away and have off street parking.

Like I said I've been meaning to go check it out. But I suspect used car dealers may go there and snap up the "good" ones.

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I hate to tell you but the fact the BMW was selling the car auction means that it couldn't be certified.

Be careful of future problems.

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timothy86 said: I hate to tell you but the fact the BMW was selling the car auction means that it couldn't be certified.

Be careful of future problems.


Of course, he never said that BMW was selling it...

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Does anybody know any of the dealers around D.C area who charges similar price? I am in the market to buy a M3. Any lead would be appreciated.

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That is absolutely incorrect. Dealers goto the closed BMW sales to get cars that they then certify.

timothy86 said: I hate to tell you but the fact the BMW was selling the car auction means that it couldn't be certified.

Be careful of future problems.

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Great post OP, very informative. I would imagine a person with a dealer's license would have to do this sparingly to avoid getting caught (assuming there are some limits to it or else anyone with a license would be spamming Craigslist 24/7). Hopefully by the next time I need to buy a car I might know someone who has a dealer's license.

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isn't there a risk you could be buying a $25,000 timebomb?

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ArbolLoco said: isn't there a risk you could be buying a $25,000 timebomb?

Dude. Just make sure there is no ticking sound.

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This thread is related to my post on this thread.

I bought a 2007 Toyota Hybrid Highlander ( fully loaded ) with 8200 miles on it from a TX dealer on eBay for $29,700. I am 100% sure he got the car at an auction. The same car is being sold in LA by dealers for $34,500 - $38,900...

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many times an manheim cars are sold that are ex-rentals. My family did the same few years ago at the PA manheim. Dealer we went with asked for $500 and included all the reg fees. Interesting thing he mentioned is you have to be very careful with manheim cars. He(and others) sell many after accident cars there with rolled back milage and he spent the whole day explaining which cars he knew for sure were with rolled back milages, just from experience.

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(3)You have to get the car towed off the lot. (AFAIK, it must be a properly licensed tow operator...no dragging it off on a dolly.)

Yeah.. watched a few episodes of the show Parking Wars and it's PITA to get a car towed out from the PPA. It must be from a licensed tow operator with all the right paper work.

As for as the cars offered at auction from PPA. They are mostly junk! You are right about the key thing. I know someone who purchased a truck from PPA and they had to.l

1. Get it re-titled from Harrisburg before you could register.
2. Get keys made.

Just make sure you add a few hundred to the total cost of the car. If you ever dealt with PPA, you wouldn't want to deal with the hassle.


As far as OP going with the Mainheim route. Your friend is basically saving you some $$ with no almost no risk for him. Was it a good deal? You will find out during the next 12 months. Don't get me wrong, your friend did you a favor and you save some money but it's always a risk to buy a used vehicle. You minize the risk by having enough time to test and research the vehicle. I am not sure if that is possible with an auction vehicle.

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how much information can you really know about the car before bidding? i assume there's no maintenance record/receipts. can you get a pre-purchase inspection done at your cost?

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torchedlh said: how much information can you really know about the car before bidding? i assume there's no maintenance record/receipts. can you get a pre-purchase inspection done at your cost?
You have the condition report for each car which includes notes of everything the third-party Manheim inspector could find as well as estimates for repair costs. The interior odor is noted as well as how clean it is inside. It seems that they disclose everything pretty well. Unibody damage is noted in particular. They're pretty detailed down to notes on whether the books and records are there, if the nav-cd is there, and so forth.

All the cars have the keys in them so you can start them, drive them (if there is space) and so forth. You can also buy the car guaranteed which means that you can bring it back if your mechanic finds a problem with it when you check it out in detail.

I think that you can pay for an on-site inspection, but I simply had my mechanic check it out before accepting it. Since you can't go in person without a dealer license, you'll partially need to trust the experience of the person buying on your behalf and that he knows what to look for.

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vkl168 said: As far as OP going with the Mainheim route. Your friend is basically saving you some $$ with no almost no risk for him. Was it a good deal? You will find out during the next 12 months. Don't get me wrong, your friend did you a favor and you save some money but it's always a risk to buy a used vehicle. You minize the risk by having enough time to test and research the vehicle. I am not sure if that is possible with an auction vehicle.
How much more research can you really do on a car when buying from a dealer? The Manheim website gives you the VIN noted for each vehicle so you can do some research there. You’ll also have the third-party condition report which a dealer wouldn’t give you. Whereas the dealer is trying to work against you getting all the correct information, Manheim volunteers it all up front since it’s a B2B transaction rather than an interaction with the public.

It's probably safer to buy late model vehicles though since the car I picked up still has factory warranty left, and was maintained by BMW as part of their free maintenance program.

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I have a friend who is a dealer who got me a Ford Windstar 2003 for 8700 from an auction there. Low miles and he drove it down from Seattle to Phoenix for me for a small fee. I came out ahead of going to a used car lot.

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Great post you've explained the process quite diligently. I have to add that having bought cars from the Manheim auctions for friends and family the results have been very good overall. We recently purchased a 2006 BMW 650I convertible for a friend. The price for the car without taxes but including the auction fee, post inspection, shipping etc was around $62k. This was a grade 3 with 11,000 miles. The lowest priced similar make and model at the time including Craigslist, Autotrader, and local dealers was $4,000 over.

With dealerships averaging a gross profit of 12%-14% it makes sense that the bulk of the savings come from the high end cars. The downside was the 650 had to be taken to BMW of San Diego to fix a few items but their warranty covered everything. All in all was it worth the savings? That all depends if the buyer wants to invest some time into the process.

Having spent time understanding the industry buying wholesale from Manheim is much better than the normal process of visiting dealerships. If you guys want to know wholesale prices of any cars visit my thread.

http://www.fatwallet.com/forums/deal-discussion/684770

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OP thank you for sharing. I'm no expert, but based on the numbers you gave, you probably did get a good deal. Enjoy your new ride!

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Any suggestions on how to find a trustworthy dealer? I would like to try this out in the future, just not sure how best to find a dealer that will do this for me. I'd take specific names via PM (in either Dallas or NYC area), but was thinking more along the lines of a good process to research a trust worthy dealer (perhaps posting on enthusiast forums? - bound to be car enthusiasts who post to the forums and have dealers licenses, I'd imagine).

Also, anyone with experience dealing with Manheim auctions - can you please describe how the independent mechanic inspection process works (ie. after the auction has completed). I was under the impression that this was buyer beware, etc. and once you bought the car it was yours.

thanks!

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Been saying this very thing for years. Dealer auction is the way to go. Avoid public auctions at all cost.

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qapla said: Since you can't go in person without a dealer license, you'll partially need to trust the experience of the person buying on your behalf and that he knows what to look for.

I used to be a mechanic. The dealer I use has been looking at dozens of auction cars a week and buying them for 30 years. I trust his skill in making a five minute car inspection a lot more than I trust mine.

BTW, anybody in the area around Lansing/Jackson Michigan who wants to do this for bid price + auction fees + tax,title,license + 500 for the dealer's profit can PM me.

rated:
Oh, I forgot to ask, is it possible to tell prior to the auction whether the vehicle was a fleet rental car? You can usually get this from carfax, etc. Just curious if this is noted by Manheim.

Also, slightly off topic, but is possible to also SELL a car directly at the auctions through a dealer (ie rather than dealing with it privately)? I know this is less financially sensible than a private sale BUT presumably much better than trading in to a dealer. Do these cars sold at manheim have a reserve? Or are they absolute auctions? If they are reserve auctions and don't hit the reserve price, what is the cost to list and re-list?

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I think I went to a similar auction but I went to the Fontana site. I bought 3 cars in the 2000-2001 timeframe. The dealer brings in maybe 5 outsiders at every auction. He'll meet us at a gas station close to the auction place. Outside the auction place, there are people who sell used/old sticker badges that we use to get in. A day before the auction, he emailed me the list of all the cars so I can check carfax in advance. (Now, you can probably check the website.) Once inside, you are free to roam around, go inside the cars, check the engine, etc. Just don't "roam around" too much that they suspect that you're not a dealer. When your car is close to being auctioned, I call him and tell him my max bid for the car. I stay beside him in case I have to increase my bid. I come back with him 2 days later with a check from my credit union. We complete the sale right there and I bring home the car. He only charged me $200 for the service. I asked him why it was that cheap, I guess their dealership also gets incentives based on how many cars they buy.

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stook2001 said: Oh, I forgot to ask, is it possible to tell prior to the auction whether the vehicle was a fleet rental car? You can usually get this from carfax, etc. Just curious if this is noted by Manheim.
Manheim provides you with the VIN for each car on their website before the auction day. You can compile a list of cars you're interested in and run the Carfax report for them before the auction.

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stook2001 said: Any suggestions on how to find a trustworthy dealer? I would like to try this out in the future, just not sure how best to find a dealer that will do this for me. I'd take specific names via PM (in either Dallas or NYC area), but was thinking more along the lines of a good process to research a trust worthy dealer (perhaps posting on enthusiast forums? - bound to be car enthusiasts who post to the forums and have dealers licenses, I'd imagine).

Also, anyone with experience dealing with Manheim auctions - can you please describe how the independent mechanic inspection process works (ie. after the auction has completed). I was under the impression that this was buyer beware, etc. and once you bought the car it was yours.

thanks!


I got my new car from a dealer( independent) through eBay. Everything looks good so far except I am still waiting for the lein free original transferred title from him. Will keep you posted. I will PM you details of this DALLAS dealer once I get title..

rated:
I have purchased several cars here:

http://www.executiveautogallery.com/showroom.php?type=Car

Most of his cars are all sold with "salvage titles" but include a 36 month bumper to bumper repair policy. (If sold as ready to go)

The cars I purchase are ones that I plan to drive until the "wheels fall off" and so if/when I sell them the impact of the salvage title on resale is small. (If I am selling to someone who is buying a car for $1500-$2500 they see the receipts of all the maintenance I have performed, and it is pretty easy to convince them that a they are getting a good deal, for the low price, and the car is "reliable" since I owned it for several years and all ready drove it 80 or 140K miles.)

Any of the prices listed can be negotiated 10% or 20% lower if you bring cash, and know how to negotiate.
As of now he has this car available:

2006 BMW 525XI
Description : Black/tan leather Sunroof AWD auto loaded
Miles : 19094
VIN :WBANF33506CS35158
Price :$27,900.00

I would guess you can get this for $23,0000 to $25,000 cash, without a lot of sweat or negotiating.

He publishes the VIN number, so you can do a carfax, you can also go there and test drive the cars, and take to to a mechanic you trust to "check them out", if you want, no "auction pressure", got to make up your mind quickly.

They also will tell you "what they did to the car", and why it has a salvage title.

For sellers of used cars they are "reasonably honest", and don't really care if you buy a car or not... since they do plenty of business, and have been in business doing this for a long time.

If you are more adventurous the "son" of the owner also sells cars for less money with no guarantee, prior to "fix up" with the 5+5 warranty.
5+5 Warranty= If you get the car 5 yards off the lot , and 5 minutes pass, the warranty has expired.


I have also purchased a few of the "5+5 warranty cars" mostly "flood damage", and had no problems.
Key issue to check with any flood vehicle is to be sure there is no evidence of water in the automatic transmission, (red transmission fluid will have a white milky appearance.) If you have water in the transmission, you will need to replace that, after a very few miles/weeks.

Note that folks are "terrified" of flood damage cars, and there are lots of "horror stories" on the net, but.. all automotive electronics are engineered to survive long long summers in very humid climates, and the connectors and circuits if not "killed" in the flood, do not genearlly "go bad" if they survive a "quick dunk".

One of the IC tests required is to pass 1000 hours of operation at 85C with 85% relative humidity.

Note that 85 degrees Celsius = 185 degrees Fahrenheit

I have also seen issues with flood damage impacting the motors in electric seats, but. if you are handy, most car seats are held down with 4 bolts that are easy to remove, and a couple of plugs that are easy to unhook. In other words , if you don't mind getting your hands dirty, you can save a lot of money.

I have replaced Air Bag computers and had good success with Air Bag CPUs' from auto recycling centers.
Just make sure you disconnect the battery before you start messing with the airbags.


I bought my wife a 2000 flood damage Maxima with 25000 miles on it for $8K 4+ years ago, and the paperwork and owners card and owners manual were all still in the glove box with no evidence that the "water" got in the glove box (all the books and paperwork was perfectly dry).
Drivers power seat did have to be replaced, that was it.

No I don't work for this company, and no they don't pay me to advertise, just passing on some information, believe me , if you go to any auto auction, you are "rolling the dice" and if you buy one of the "ready to go cars" here, you more clearly understand exactly what you are buying.

CPU

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You are lucky that your paid only $600 to your friend. I had a friend who wanted $10,000 commission in order to buy me a car from auction (in Wisconsin)!

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cpumechanic said:
No I don't work for this company, and no they don't pay me to advertise, just passing on some information, believe me , if you go to any auto auction, you are "rolling the dice" and if you buy one of the "ready to go cars" here, you more clearly understand exactly what you are buying.

CPU


Appreciate the explanation. I'd make two points though about your above comment. The same "dice" that you roll buying at auction you are also rolling with a rebuilt car (ie. you have no idea what the ownership and maintenance history is for your rebuilt car, in most cases --- I assume this is what you meant). I will grant you that you have more opportunity to back out of a deal on a rebuilt title car when compared with a dealer auction.

I believe that there is such a fundamental difference in the marketability of a rebuilt title car that for most people it is not worth the up front savings. An auction purchased car, though comparatively less "discounted" vs. retail suffers from no real liquidity constraints. Big difference (to me, at least).

By the way, these guys run a similar operation in Connecticut Imports Unlimited.

Important Note: I have never done business with them. Called a couple of times on interesting vehicles and I used to work with a guy years ago that bought a car from them and had good success. That is IT! Buyer beware.

Also, as a side note, I think I'd prefer to buy a partially stripped theft recovery vehicle than a flood car. Like all the other sheep out there, I wouldn't touch a flood car with a 10 foot pole.

rated:
I have bought two cars from similar auctions. This is where dealers get their used cars. I had good experience each time. I saved quite a bit. I would go there again. You should know that there are many kinds of sellers in these auctions. Each selling lane is well-defined so you know who the sellers are. For example, there will be a lane for dealers to dump their trade-ins - I avoid these. The there are rental lanes - say Enterprise, I am reluctant to purchase rentals but they are usually good cars with remaining warranty. I prefer the lanes where manufacturers are selling their lease returns.

This is a great way to save!!

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I second what the guy above said about salvage title and even flood cars. Thats is the business we are in and run much the same type business. We show damaged pictures, old parts if we still have them around, show exactly what was done and recipets for genuine (non-aftermarket) parts. We certainly save people TONS and do it very honestly. We often give 3yr/36K miles warrenties as well.


As far as a 'dealer buying for you at an auction', playing devil advocate here I will tell you why we will never do this unless its a very close personal friend who we feel money is really not an option. Lets say person A on FW contacts me, wants to buy this 30K BMW. I tell him, ok, 500, I'll do it. We buy it, and he doesnt pay me, cant get a loan, etc, etc, etc...we have heard ALL kinds of excuses to that effect, which is why we will not hardly buy anyone a vehicle for just a fee. We have told people, ok, give us 25K...then we will buy a car, but obviously, that makes people un-easy. Yet they dont see why I should be uneasy going the other way.

I dont disagree that buying a vehicle at a drivethru auction is a better way than buying from some used/new car store... its just that unless you have a good friend with a license, better hope you can find a new dealer that just hasnt been burnt by someone...yet.


Good luck!

rated:
ArbolLoco said: isn't there a risk you could be buying a $25,000 timebomb?
Very well said ALoco. After seeing my the erratic behavior of my boss's 7 series car, I truly believe that BMW is a timebomb to blast in your wallet.

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troutmd said: As far as a 'dealer buying for you at an auction', playing devil advocate here I will tell you why we will never do this unless its a very close personal friend who we feel money is really not an option. Lets say person A on FW contacts me, wants to buy this 30K BMW. I tell him, ok, 500, I'll do it. We buy it, and he doesnt pay me, cant get a loan, etc, etc, etc...we have heard ALL kinds of excuses to that effect, which is why we will not hardly buy anyone a vehicle for just a fee. We have told people, ok, give us 25K...then we will buy a car, but obviously, that makes people un-easy. Yet they dont see why I should be uneasy going the other way.

Why not use an escrow service to hold the buyer's cash and write up a contract detailing buyer & dealer obligations? I won't make an effort to value someone else's time - so it may not be worth your time for $500 - but this seems like a perfectly reasonable solution to the issue.

Buyer and Dealer just need to be smart about how business is conducted. Obviously, if the buyer isn't asked to put up money before the purchase there will be those who view the transaction as optional. Again, this is the purpose of having a contract in place and using an escrow service to ensure that the buyer completes their end of the deal. I see no reason to avoid this business for the reasons you describe.

I'll add one other comment. From a practical standpoint, you may run into financing issues with my idea above. The average person, for whatever reason, insists on financing car purchases. That said, I would put a deposit into escrow with a binding contract. The deposit should be enough to cover your losses in the event the buyer doesnt complete the purchase. Terms could be defined in the contract. This would cover you if the buyer doesnt get the loan. Again, just requires being smart about how you run the business.

Lastly, check out escrow.com for an example. The escrow service are not expensive. Frankly, seems like a decent side business to me if you are already going to the auctions in your mainline work.

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rated:
Does someone know if at (Manheim Houston - Post-Sale Results)
The price that shows is that the price that the car sold for? Or what

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