Buyer?s Etiquette

[DanH]

I'm both buyer and seller every working day...about 40 years worth. I agree with all of Rob's points.

Originally Posted by kbalch

Having sold airplanes, exotic cars, and various other small market items over the years, the absolute worst thing a prospective buyer can ever say to me is some variation of "what's the least you'll take for it?"

So what to do?

Laugh, and say "Ahh heck, there's no virtue in asking a man to cut his own throat."

It's a nice way of deflecting the question without closing the door. And folks with a brain usually get the message.

"Cash offer" has an interesting background . Folks honestly think they are offering something of value, but if asked, most cannot identify why it might be of interest to the seller...or even why they said it.

It has roots in the post WWII used car market. In those days there was no bank or credit union financing for used cars. All financing was extended by the selling dealer.

If a dealer paid $1500 for a nice used car (1950 prices), sold it for $2500, and took $500 down, his entire cash investment and half his profit went out the gate with the car. It only came back slowly in payments. In the meantime, none of it was available to invest in another car for the lot.

Thus the birth of a "cash discount". The dealer could justify taking (in this example) $2250 in cash, as he could immediately replace the car and sell again.

Fast forward to today. Banks and credit unions pay dealers to generate finance contracts, plus a dealer has all his money immediately, cost and profit, when he assigns the contract. Cash (as in "write a check") is absolutely undesirable. In theory, the dealer must raise the price in order to equal a financed sale. Don't say it.

BTW, if the customer is silly enough to actually bring $100 bills, it even generates extra paperwork. The trigger is $10,001 in cash or cash equivalent collected within a 12 month period in relation to one transaction. A dealer is required to file a Form 8300 with the IRS.

[kbalch]

Originally Posted by alpinelakespilot2000

That’s a big assumption. If I’m asking $69.5K and one person offers $69.5k but is going to have to get started on a loan process that may take a few days and another offers $69K with ready cash, I might very well take the $69K ready cash that day. It has nothing to do with ethics.

Sure, but that’s not the way these situations usually develop.

In my experience, it’s not a matter of two simultaneous offers. It’s nearly always one guy who says (effectively), “Take my lowball cash offer because - wink, wink - you’ll make out better with it than selling for more to a guy who has to take a loan.” That’s absolutely an ethics problem and one I dismiss out of hand whenever it comes up.

For what it’s worth, after selling an airplane, multiple exotic cars, many watches, and other “luxury” goods over the years, I don’t think I’ve ever sold anything to anybody who had to take a loan to fund the purchase. All things being equal, I’d rather not deal with with buyers who need loans. Yes, people utilize OPM for a variety of reasons, not all having to do with raw necessity, but still...

[kbalch]

Originally Posted by DanH

So what to do?

Laugh, and say "Ahh heck, there's no virtue in asking a man to cut his own throat."

It's a nice way of deflecting the question without closing the door. And folks with a brain usually get the message.

Fair point. I guess I?ve been unlucky in not meeting too many folks with a brain, at least amongst the set of guys who?ve opened conversations with ?what?s the least you?ll take?? When I?ve responded with a laugh and ?well, what?s the most you?ll pay??, quite a few of them have acted (perhaps even been) pissy and genuinely insulted. I guess my general opinion of my fellow man is pretty low and tends strongly toward the cynical. Interestingly, one of the characteristics of the pilot community which I like best is that it?s highly self-selecting for the ?right? type of folks (at least for me): intelligent, independent, honest, creative, and interesting.

BTW, thanks for the interesting history of the ?cash deal? - I?ve never heard that before, but it makes perfect sense when placed in context.

[DanH]

Originally Posted by kbalch

I guess I’ve been unlucky in not meeting too many folks with a brain, at least amongst the set of guys who’ve opened conversations with “what’s the least you’ll take?” When I’ve responded with a laugh and “well, what’s the most you’ll pay?”, quite a few of them have acted (perhaps even been) pissy and genuinely insulted.

Well, it's not something a professional would say...mostly because they tried it a few times, it didn't work for them either, and no sales = no food.

Hunger is very educational

BTW, thanks for the interesting history of the “cash deal” - I’ve never heard that before, but it makes perfect sense when placed in context.

As dealer cash reserves got larger in the 50's, they pushed financing to make more money. Truth In Lending and Regulation Z didn't come along until 1968-69. Prior to, much of the list price was really an undisclosed interest charge, so "cash discount" gained even more foothold with the public.

All different today, but it's hard to change long-held custom.

[catmandu]

I would say "Cash Buyer!" pays the most dividends on the bottom of the sales charts, but holds some value at the upper end, due to the aforementioned 'hassle' of dealing with the details of a buyer who needs to finance a purchase. Ben Franklins laid out on a table have closed a deal or two at a discount for me over the years for items under $10k.

[rocketman1988]

Originally Posted by kbalch

Yes, I keep meticulous records of every purchase made for my projects (no matter how small) and submit them when it?s time for sales tax calculation. Don?t you?

The last thing I am is a hypocrite.

Yes I keep track. Here is a question for you. So let?s say you need some AN426-3-3.5 rivets. There are approximately 5618 rivets per pound and you buy 1/8 of a pound, or about 702. Of those, you use 56. Do you calculate the tax on those 56 rivets and add it to the aircraft price while putting the rest in ?inventory?? Or do you just add the total tax on all 702 rivets to the aircraft cost?

You will no doubt say that this is a trivial example, and it is, however, in a project the size of these aircraft, adding 12.5 times the tax to the aircraft value (total tax on 1/8 lb versus 56) can add a substantial amount of tax in the end. The other side of that coin is not adding anything which is fraud.

I think most folks estimate the value at the end of the build based on approximate values along the way...

[f1rocket]

So since we are talking buyers etiquette here, let me pass this example by you and tell me what you would do. This happened to me on the sale of my RV12 and I still feel bad about it.

Buyer one calls and is very interested in the airplane. We talk several times and after about a week, he makes plans to fly commercially into my home state to look over the airplane. He never talks about price with me and never offers to make a deposit and I didn?t ask for one either. Trip is planned for next week.

Next day, buyer two calls. I said I have someone interested and he?s coming in next week to look at the airplane. Buyer two offers me full price and is willing to wire me a $5k deposit and says he will be there tomorrow to inspect the airplane and sign the paperwork.

What do you do???

Here?s what I did. I let buyer two come inspect the airplane and closed the deal. I then called buyer one to tell him the airplane was sold. He was very upset and I felt bad (and still do). He was a really nice guy.

Here?s my reasoning. With no deposit, I had no way of knowing whether buyer one would show up or if he did, buy the airplane. However, if I would have asked for a deposit, buyer one probably would have sent me one. I?ve never been able to figure out if it was his fault for not putting a deposit down or my fault for not asking him for one.

Your thoughts?

[Timberwolf]

From the first page going back to the ?what?s your bottom dollar? question, I?ll sometimes ask that as a clue bird that I think you?re asking price is high, and second being my time home between deployments is very very limited. I don?t have time to play the back and forth game. I want to know if I?m wasting either of ours time or if I need to move on. If the price is in the neighborhood of what I?m willing to pay, then I?ll take it from there. If they treat me like ****, I move on. It probably isn?t as great as the seller claims anyways.

My last 4 airplanes have all been purchased sight unseen. Most by asking what do you have to have for it?

[Timberwolf]

Originally Posted by f1rocket

So since we are talking buyers etiquette here, let me pass this example by you and tell me what you would do. This happened to me on the sale of my RV12 and I still feel bad about it.

Buyer one calls and is very interested in the airplane. We talk several times and after about a week, he makes plans to fly commercially into my home state to look over the airplane. He never talks about price with me and never offers to make a deposit and I didn?t ask for one either. Trip is planned for next week.

Next day, buyer two calls. I said I have someone interested and he?s coming in next week to look at the airplane. Buyer two offers me full price and is willing to wire me a $5k deposit and says he will be there tomorrow to inspect the airplane and sign the paperwork.

What do you do???

Here?s what I did. I let buyer two come inspect the airplane and closed the deal. I then called buyer one to tell him the airplane was sold. He was very upset and I felt bad (and still do). He was a really nice guy.

Here?s my reasoning. With no deposit, I had no way of knowing whether buyer one would show up or if he did, buy the airplane. However, if I would have asked for a deposit, buyer one probably would have sent me one. I?ve never been able to figure out if it was his fault for not putting a deposit down or my fault for not asking him for one.

Your thoughts?

Don?t feel bad. But be upfront...a deposit or it stays on the market. I did the opposite and held it for a ?friend? only to lose the sale 3 times over.

[WingsOnWheels]

In line with the RV12 example, but different. Back before I started on the RV I was interested in building a Volocity. I found a kit for sale about 4 hrs away. I spoke to him on Wednesday. We agreeded on a price and place to meet on Friday. I offered a deposite and he declined as unessesary. I got the cash and took Friday off work. Picked up the trailier. As I am departing, trailer in tow, he called me and said he sold it. I was PO'd, heck, I still am. As far as I sm concerned we had a deal, a verbal handshake. I am a person of my word, and I don't respect those that are not. I have been on the other side of the situation and turned down higher offers since I had already made a commitment.

If price is not discussed or a deposit to hold the item, then there is no hard commitment. For the RV12, I probably would have called buyer 1 first and offered to hold it with a deposit.