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How to sell your car

February 26, 2013

It occurs to me that this is an obvious follow-up to my previous article about how to buy a used car. If you buy a car without trading in your old one, then you'll need to sell your old one off. But never fear, it's not that hard!

Why not trade in

I have now sold 3 cars and bought 5 through the used market, and I've been more and more happy with avoiding the experience of trading in my car. Specifically:

You will likely get much more money for your car on craigslist than if you trade it in with a dealer. Dealers simply give you much less money for your car. Although I feel that this is basically a scam, it's built into the "blue book" value. (See below).
You can decouple the transactions of buying a new car from selling your current one. When you trade in a car, you're giving the dealer a large second profit margin in which they can conceal the true value of the transaction of the two cars together. With no trade-in to muddy the waters, you will be able to negotiate more directly, and know what you're really paying for your new car.

Why trade in

Still, there are some disadvantages to self-selling:

It takes time and effort for you to prepare the car for sale, craft the advertisement, market the car, meet potential buyers, and then close the deal. For merely the price of getting screwed out of thousands of dollars, a dealer can make all this go away for you. Not that I'm bitter.
You'll need more cash to cover the new car until you've sold the old one. With a trade-in the dealer simply deducts a large sum from the new car's price, which means you don't have to float the cash. If you buy your new car first and then need the money, you may find yourself in a rush to sell the old car, which is stressful and may cause you to accept a needlessly low offer.
You have to find room for an extra car while you're selling the old one. This means keeping it around somewhere and keeping it clean enough to show to buyers. If you have a big driveway this is no big deal, but if you live in an apartment with assigned spaces, this can suck. Alternatively, you have to live without a car if you sell the old one first.
You're at the mercy of buyers out there. If you can't sell in a large metro area, it might be difficult to find a buyer unless you're selling a very common car for your area. In California I haven't found this to be a problem, but your mileage may vary.
If you have a difficult-to-sell car then dumping it on a dealer might be worthwhile. If the car is damaged or has major mechanical problems, you could attempt to convince yourself that the dealer will fix it, and not just trick someone uneducated into taking it and having all the problems that you used to have with it. It's your conscience.

But if you can live with some of these drawbacks, I would point out that it doesn't really hurt to try and sell your car. You might be surprised at how much interest there is or how valuable it is. And if it doesn't go well, you can fall back to trading it in or else taking it to one of those CRAZY EDDIE SELL YOUR CAR FOR CASH places, although I have never done this.

So if you've got time and you'd like to save a few grand, here's an overview of the process.

1. Estimate the sale price

It's a good idea to do this early on, because understanding the financial magnitude of the transaction may affect your thinking. For example, it might change your mind about whether it's worth selling at all, or it might change your mind about how much you can afford to spend on the replacement car. Here are 3 tools for estimating how much you'll get from your sale:

Kelly Blue Book lets you input your car and out pops a price. You want to look at the "Private Party" price, in "good" or "excellent" condition. Be sure to accurately enter the model, trim, and options, and especially the mileage! Miles and trim levels can change the value by thousands, so it's worth getting these right.
Edmunds has a similar service that lets you estimate the "True Market Value" of your car. TMV is lower than KBB, but it sometimes does a better job of estimating value for cars with a "cult following" that otherwise throw off the standard estimate tools. Personally I've found Kelly to be better for Subarus, but Edmunds better for BMWs, for example.
A more difficult to use but in a way more accurate tool is to simply look at Craigslist and AutoTrader and see what cars like yours are actually selling for. You won't be able to get a precise estimate since there won't be any cars with identical mileage, but it's a good way to judge the biases of the aforementioned estimation services.

2. Prepare the car for sale

The better shape your car is in, the easier it will be to sell. On the other hand, it's not cost-effective to spend unlimited money on speculatively shining up the car. The goal is to bring the car up to "good-to-excellent" condition for as little money as possible. Here are some suggestions:

Fix body damage up to 10%ish:
If the car has major dents or damage (like, the size of a basketball) then it's going to be some trouble to sell. The newer and more valuable your car is, the more it's worth it to fix that stuff at a body shop before you bother to list it. For example, if your car would be worth $15,000 in excellent condition, then it's probably worth spending a thousand or two at the body shop to repair a really nasty crunched quarter panel or something. But if your car is only worth $5000, it's certainly not worth spending $2000 to fix dents. I would try selling the car as-is first, and only repair it if it seems like it's not selling. The good news is that buyers shopping for a cheaper, older car will also be more tolerant of imperfections.
Resolve mechanical issues:
If there are noises, smells, or broken features of the car that the new owner would likely care about, it's worth having a mechanic deal with them if it can be done cheaply. (Go get an estimate, at least.) If there are small issues ("windows roll up slowly" or "CD player sometimes doesn't work" or "steering feels weird when the car is cold") I would NOT fix those. They'll be expensive and the new owner could potentially not care about them.
DON'T do maintenance:
If the car is near / only slightly overdue for any scheduled maintenance (like 60k) or wear maintenance (like brake pads), it's not worth it to do those things before the sale. Private party buyers understand that the car costs less than it would at a dealer because they have to assume the maintenance burden of the brakes, tires, oil, etc. It's priced in, so you don't have to spend that money.
Remove your "improvements":
If you have an aftermarket stereo, put the stock radio back in if you can. If you have other modifications such as phone holders, navigation unit wiring, suction-cup note pads, fuzzy dice, bumper stickers, seat covers, dream catchers, license plate frames, shift knobs, steering wheel covers, or cupholder decorations, take them all out. The buyer may not share your taste in improvements, so it's best that they encounter your car as they expect it--- in factory condition.
Detail the car:
It's always worth it to spend $75-$100 to have the car detailed before a buyer sees it. Shiny, clean cars are objects of desire and will help your buyer fall in love with your car. This will also help the interior look its best and not make the car feel quite so... used.

If you aren't going to drive the car while you're trying to sell it, then you can just detail it and leave it in your garage, at your work garage, or under a car cover if you have space.

If you have to leave the car on the street or continue driving it while it's for sale, you might try to arrange to have it detailed immediately before a buyer sees it. This is more of a hassle but it will save you some money if the car gets detailed and then immediately splashed with mud or whatever.

3. Photograph the car

Lots of clear, well-made, high quality photographs of the car will make a big difference to online shoppers. A typical clueless craigslist poster will put up 3 grainy cell phone photos that make the car look like it's "probably black". Don't be that guy.

You'll notice, in contrast, that the dealers always get the car clean and then take like 50 pictures of it. This is what you want to do. Here's a checklist of photos that I always take:

The exterior from each of the four corners (from about 20 feet away)
Representative shots of the interior and the seats
A close-up of the odometer reading
A close-up of the VIN plate
The engine bay
The inside of the trunk
A shot of the dashboard and center console which shows the radio
A shot of the center console that shows the shifter (to confirm the transmission type)
Close-ups of any damaged paint or ripped interior that you intend to mention in the advertisement (see below)
Features or angles that you think are attractive about the car, like the sunroof or the gigantic spoiler.

Prefer corner shots of the car with the front wheels turned away from the camera, so that the viewer can see the wheel. It is more informative and it looks better. You can judge what angles of your car look the best, but I think most cars look better from the corners than from the sides.

Upload the pictures to somewhere globally accessible. I host large versions of the images on my own web server, but you can use Flickr or Blogger or one of many other image bucket services. (Don't use Facebook or any service that requires buyers to sign in to see the pictures. You can test by making sure the pictures appear when you use Chrome's "Incognito Window" to view them. If it works, then no authentication is required.)

Here is the last set of pictures I did for a car ad (click to enlarge):

4. Write the ad

I write a fancy web page because I am compulsive, but you can just write a Google doc and then paste it into Craigslist. Depending on the kind of car, you might write a few nice sentences about the car's best features ("very reliable!" or "great for Tahoe!" or "fun to drive!" or "great for kids!") The best way to market the car mostly depends on the car and the likely buyers.

Regardless, there are some facts that every car advertisement should include:

Year
Make
Model
Mileage on the odometer
Your asking price
Body type or trim type. (depending on how many styles of this car were sold this year, you might have to be quite specific here.)
Clean title (I assume you're not trying to sell a salvaged car)
If you don't want to negotiate, say "firm" after the price
Which optional equipment the car has. (If you want to be safe you can just do what dealers do, and list every feature, down to "power door locks" and "seats 4".
How you want to be paid (I always say "Cashier's check or cash only, no personal checks. No shipping.") If the amount is more than a few thousand I also say "no cash".
Where the car is located, and/or the range of places you're willing to meet prospective buyers.

Known Issues
Personally, I want the buyer to know everything that I would want to know about the car if I were buying it. To that end, I mention every issue I know about in the advertisement. If there are scratches, dents, upholstery rips, or other damage, I include photographs of them in the ad. I also mention any mechanical issues I know about.

You don't have to be as complete, and much depends on your conscience. But consider this: a misleading advertisement is likely a waste of time and cause a poor transaction for you. Buyers will be excited about the car based on the ad and will take up your time scheduling meetings to see it. But if upon seeing it they are disappointed, they'll walk away or offer you a much lower price because of the surprising things they find about the car in person. In my view it's more efficient to attract only motivated, well-qualified buyers to the "meet-and-drive" stage of the sale. But it's up to you.

Example
Here's the last advertisement I used to sell my STI. I got the price I asked for, by the way: http://www.zerotrickpony.com/rus/sti-for-sale/

5. Post your ad

Once you're ready to start meeting buyers, it's time to post your ad! I would start with craigslist because it's free, but if you're concerned about more exposure or if it's not getting much interest, you might try purchasing an ad on AutoTrader. I've never posted there but I do look for cars there, so I know that it's a place where a lot of people look. If you use craigslist then you'll receive responses via anonymized email. (Although I believe there's no way to respond to the sender without revealing your email address.)

6. Arrange a meeting

This is the bad part. Craigslist has real buyers, but it also has idiots, flakes, and thieves. You should read the Craigslist warning about scams and protect yourself. Here are three things to watch out for (these are not common):

Shipping: Do not deal with anyone who wants you to ship the car. Almost all of the scams involve you shipping the car and then not receiving money for it.
Wiring money: Do not do any wire transfers; people proposing wire transfers are trying to get your bank account information. Only deal with cashier's checks. (See below about cashier's check scams, which DO exist.)
Phishing: Don't give any personal information to someone until they have demonstrated some comprehension of your car. If the response says "I am interested in the item what is your phone no lemme call u" it's obviously just a ploy to get your email address or phone number or both. I ignore these.

Besides scammers, craigslist has non-serious inquiries, flakes, car brokers, and people who are generally bad at communication, grammar, and time management. Unfortunately one of these people will likely be your buyer, so you'll have to field inquiries from them. Some tips:

I like to do this over email as much as possible so that I can process a lot of inquiries at once. I end most emails with "Let me know if you'd like to schedule a time to come look at the car in Santa Clara. I am free X, Y, and Z mornings / evenings this week." I always suggest the next action so that they can get the ball rolling. Be sure to schedule during banking hours.

I don't give my home address until after they've confirmed a specific time. Leading up to the meeting time, I confirm with them (usually the night before) to remind them of the meeting. Often they've forgotten about it and now can't come, so it's good to save yourself this headache.

Prior to meeting, I usually ask something like "which bank will you be drawing the cashier's check from?" This allows you to check the hours and location of the nearest such physical bank (see below), and also to confirm that they're not going to use First Scam Bank of The West. It also reminds them that you expect them to come prepared to buy the car.

If you have an unusually desirable car, especially a sports car, you might say something like "I've had a lot of problems with joy rides, so please don't come until you're ready to buy the car." For a normal car you won't have to say this.

This will likely be frustrating, but once you actually get someone to show up, they will probably buy the car. My cars have always been bought by the first person to come see them. So take heart.

7. Show the car

When you finally get someone to actually show up, it should only take another hour or two to sell the car to them. Let them look over the car. I try to chitty-chat with them as they do this; they're more likely to trust you and buy the car if you get them to like you. This is a good time to check one last time that you've gotten all your possessions out the glove box, compartments, cup holders, under the seats, etc. And ejected CDs from the stereo, if you're selling a car so old that it had CDs.

8. Test drive

ID required:
Before they drive the car, photograph their driver's license with your cell phone camera, and confirm that it's not expired. (As the owner of the car you can be ticketed for allowing an unlicensed driver to drive it, so be sure they are licensed.) You're also going to want to know exactly who this person is in case there is an accident and a police report. This is very unlikely but it's good to be careful.

Stick shifts:
If your car is a stick shift, confirm that they are experienced driving a manual transmission. If during the drive they seem to have lied, simply tell them to pull over to the side of the road. When they do, take the keys out of the ignition and then switch places with them. The test drive is over, drive home. Tell them they're welcome to drive the car more after they buy it.

Stay calm:
During the test drive, try not to freak out. Remember: they'll probably buy the car, so it's about to not be your problem regardless of how they abuse your motor, clutch, and brakes. If they really damage the car then you'll have legal recourse. (This is very unlikely.)

That said, there's no need to allow a long test drive. They should at most need 10-15 minutes, go around surface streets, and one exit on the freeway. If they propose to go further, politely recommend a shorter route.

Close the deal:
Once back in one piece, I usually say something like "So what do you think? Want the car?" If they brought a car guy, you can let them confer by themselves. (Let them look at the car, but take the keys with you.) He / they should make you an offer or walk away within a few minutes.

9. Agree on a price, shake hands

Now you are that used car salesman! At this point they should make you an offer on the car, and you can decide to accept it. If they are savvy, they will make various arguments as to why they should pay a lower price. You can rebut or accept these arguments as you like.

Time, the most precious asset
As with many kinds of negotiations, the person least in a hurry often does the best. If you are in a hurry to sell because you need the money or because you are frustrated by the process, then you're likely to capitulate to a lower price. For example, the buyer might say something like "well I'll take it today for $1000 off the price, but otherwise I'll need to think on it." You may find this tempting if you're in a hurry.

On the other hand, if your car is desirable and you have a lot of interest, then you don't really need to accept a low offer, because there will be others. For example, you might say "I don't really see why I would reduce the price, I've got someone else coming to look at the car tonight." That puts the time pressure on the buyer, and it may cause them to accept a higher price.

If you both agree on the price, shake hands! You just need to get the money and then you're done.

10. Get paid

In-person car purchase scams are rarer than shipping scams, since you have the person's identity, driver's license, eye witnesses, etc. Even so, you should protect yourself in case this person attempts to deceive you. It's not that hard, fortunately.

Cash
If you're accepting cash, then you simply need to count it and then you can be satisfied. Touch every bill and, to the best of your ability, confirm that it is real. I would recommend that you drive the cash to your bank and deposit it in the presence of the buyer, before you let him leave with the car. If the sale price is more than a few thousand, you might consider refusing cash and taking only a cashier's check.

Cashier's check
If they haven't already made the check, you can simply go to their bank with them and watch them have the check made. Offer to write your own name on the withdrawal slip so there are no typos. Confirm the amount.

If they're bringing you a check that's already made, you need to verify it before you accept it. There are several scams involving fake cashier's checks, so it's a safe form of payment only if the check is real AND the bank is real. Here's how to confirm payment:

Confirm that the bank is real. It's simplest if it's a bank you've heard of like "Wells Fargo", but they may be using a credit union that's real but obscure. If you see it on Google Maps and in StreetView, and nothing comes up for a Google search of "[BANK NAME] scam", it's probably fine. Or you can just drive there and go inside.
Look up the bank's phone number using 411 or Google, or go there. Do not call the phone number printed on the check. (If it's fake then the phone number will also be fake.)
Call the bank and get through to an operator. Tell him that you want to verify a cashier's check.
The check has a long unique number, read it to them and then confirm the date and amount and also that it is made out to you. (A common scam is to make a valid check but copy it to many recipients, effectively using it more than once.)
The operator may not be willing to tell you any information about the check, but they should be able to positively confirm it. They'll say something like "yes, that is a good check."
This should work, but if it doesn't, don't accept payment. Offer to go to the buyer's bank to finish the transaction. But if they refuse, walk away.

It's very unlikely that anyone will try to give you a fake check, so in all likelyhood this went fine. You can deposit the check as soon as the paperwork is done and they've driven away with your car.

11. Sign over the title

Just like buying a car, but the other way around:

You sign the "1a" box on the title document to give the seller proof that you release the car to him
You write the accurate odometer reading on the title, and then sign the box underneath it to declare that the odometer is correct. (If it turns out not to be, you can face a felony perjury charge.)
You sign again at the bottom (Line 2.)
The buyer should write the sale price on the back of the title in the "price paid" box.
At this time, you write the same sale price on the white top part.
The buyer writes his name and address on the white top part in the "new owner" box. He doesn't have to sign.
You rip off the white top part of the title, which you have to fill out and mail to the DMV within 5 days. This notifies the DMV that the car is not your problem anymore.
The buyer fills out the back of the title. Make him do this in your presence, and make sure that he writes his own name on the title. (This protects you from the buyer attempting to resell the car in your name, an actual scam that I've heard of.)
The buyer takes the brown part, you take the white part.

The car is now sold! Bon voyage. Now go deposit that check. If you accepted cash, don't keep it around! Go deposit it right away.

The "selling price" box
When I have sold cars I have been propositioned by the buyer to write a lower price on the DMV forms than the real price. The purpose of this is to mitigate the sales tax and I'm sure it's illegal. When I have gone to the DMV to register the car (see below) they have quizzed me aggressively about the price of the car, because they know that this evasion is common. I know people who have done it and they get away with it as far as I know, but it's not legal.

12. Release liability

You have to mail the white top part you ripped off of the old title to the DMV. Mailing instructions are on it. Mail it in as soon as possible. Also call your insurance company and drop the car from your insurance. Do this as soon as possible. If the new owner gets in an accident, you want a paper trail that the car is no longer your problem.

Enjoy your free parking spot and your pile of money!

Posted by rus at 12:28 AM

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