Recognizing a Deal

In round 2 of my car negotiating, I set out to find a replacement for my car that was totaled last month. Me being me, I had to learn a lesson in the process. More on that later…

My search was quickly narrowed to getting the same type of car (a Volvo V70 Cross Country station wagon). My guilt about the gas mileage was outweighed by my need for a super safe car. After getting hit from behind by someone going WAY too fast, I realize that I don’t always have control of what happened when I am driving so I need to put myself, family and clients in a car I feel will perform well in the worst of circumstances. Knowing I wanted to buy a used car, my next criteria was low mileage. Any candidate for purchase also had to have leather seats (easy to clean) and be in like-new condition inside and out.

It took a couple of weeks but I finally found something on Craig’s List that seemed perfect on paper. After emailing with the owner I decided to take it for a drive. It was as good in person as the ad and emails stated, and everything checked out beautifully with a mechanic.

Deciding what to offer was the hardest part. The car was already well-priced, compared to everything else I had looked at and Kelley Blue Book values (www.kbb.com); Kelly Blue Book is a great resource for retail, private party, and trade-in values for used cars. The car was already 28% below Blue Book retail value, and 10% below Blue Book value for private party transactions. However, I knew I would not be happy paying full asking price because I had cash. As with real estate transactions, I expected a discount for being able to write a check and close the deal fast. So, I offered what I felt would not be an insulting price, the seller made a counteroffer, and I told him I would be there the next day with a check half-way between his asking price and my original offer. We agreed and I now have a great car that was a third less than what a dealer price would have been, and 14% less than the Blue Book private party value.

What was my lesson? Recognizing a good deal and be willing to take it. When I found the car on line, it seemed like a great value. While I did expect a small price reduction in return for my cash, there was no point in beating up the seller. Ask for too much of a discount and I risked him not wanting to sell me the car at all. And, I needed a car.

I see the scenario I went through played out with real estate. As home values decline, buyers know they are holding most of the cards. Even when a house appears well-priced by al objective measures, buyers still want to negotiate. Realistic sellers will make deals, as long as they make sense and there is some fairness attached to the negotiation. And as always, cash is king. Finally, just as I needed a car to get around (I couldn’t rely on the good will of the friend who had loaned my family an extra car forever) people need to put rooves over their heads.