10 Things To Consider When Putting Your Supercar on 'Sale or Return' (SOR)
When it comes to selling your supercar, you are faced with a variety of options from part-exchanging, selling privately, putting
it up for auction or selling to a dealer. As a dealership ourselves, we always prefer an outright purchase as it provides the cleanest and most hassle-free way to do business, but most people reading this will probably be familiar with sale or return, or ‘SOR’ as it’s commonly known.
This is where your chosen dealer sells the
car on consignment for you with the aim of returning you a higher figure than what they are prepared to offer as an outright purchase on the basis that you only get paid once the car is sold. In theory, the owner gets a bit more for their car and the dealer benefits by taking less risk and not eating into their cash flow. As the name suggests though, nothing is guaranteed; if there is no sale then the car is returned to the owner.
There are so many factors that should be considered when ultimately ‘giving’ your car to a dealer to sell. Especially at the highest end of the market, you need to have the utmostconfidence in who you are dealing with and ensure that your car is with the best people to secure a successful sale.
So here are 10 things you should consider:
1) HAVING THE CAR ON ONSITE OR OFF-SITE
Some dealers offer customers an arrangement where the owners can continue driving their car whilst it's up for sale. In our experience, this should be avoided. Not only do you miss out on potential walk-in sales by not having the car kept at the dealership but the first impression most customers get when they enquire and find out the car isn't physically with the dealer is likely to be a negative one.
Question marks will be raised as to whether the owner actually wants to sell it if they are still driving and enjoying the car plus it will leave them wondering how long it could take to get the car back ready for sale, and whether it might still need reconditioning. Convenience is so essential these days and it's massively inconvenient when a car listed for sale is not physically with the people you are trying to buy the car from.
One common concern with leaving your car with the dealer is test drives, as understandably you don’t want people with no intention to buy your car going on a jolly, so it might be worth having a conversation with the dealer about how they qualify prospects. Our policy tends to lean towards a test drive happens at the very end of the negotiation so that the deal is pretty much agreed subject to a test drive. To be fair, most of our clients don’t even feel the need to test drive before they buy, especially on newer cars under warranty.
2) INSURANCE AND SECURITY
Something that isn't always easy to attain from a dealer's website is what their security setup is like and whether leaving your car
at their premises is 100% safe. With car theft hugely on the rise, you'll want to be sure the dealership has plenty of CCTV with 24-hour surveillance, that all the showrooms and workshops are securely alarmed and the forecourts are surrounded with locked bollards so there is absolutely zero chance of your car being stolen.
It's always worth asking whether the dealership is insuring the car whilst they have it on their premises. Ideally you want the dealer to fully insure the car whilst it's in their possession for complete peace of mind. It can also save you a few quid by cancelling your own insurance.
3) PREP AND PRESENTATION STANDARDS
In order to stand the best chance of a successful sale, you will want your car to be presented to the best possible standards
both physically at the showroom and online. We strongly believe that every car advertised should be fully prepared for sale and ready to be driven away the same day. If a car needs wheel refurbs, new tyres or a few touch-ups on the paint, I strongly advise getting this done prior to the car being listed for sale. There is nothing worse than turning up to see a car that still needs a load of prep work and being told by a salesperson that they will get the prep done once you've bought it which could take weeks.
Of course, different dealers have different standards, and you just want to make sure your car is going to get the love and attention to ensure it is displayed as immaculately as possible and ideally in a nice spacious showroom environment. The same goes for how a car looks online, making sure there is high-quality photography and that the specification is written up clearly and accurately with all the key selling points of the car clearly highlighted.
Something that is often overlooked is whether the liability is being passed over to the dealer selling the car or whether the previous owner carries the liability should there be something wrong with the car. If the deal is structured where, at the time of sale, the paperwork is really between the previous owner and the new owner and the dealer is merely acting as a broker and taking a separate commission fee like an online auction would do, then most of the liability stays with the previous owner.
So if something does go majorly wrong with the car then there could well be comebacks and you may be forced into buying your old car back. How it should be done on SOR is that, once a sale is finalised, the dealership effectively buys the car into stock from you and then sells it out to the new owner and thereby the liability transfers onto the dealer and not the previous owner. The dealer still takes the same amount of commission but takes their cut out of the middle.
5) REVIEWS AND TESTIMONIALS
Of course there is no better way to gauge whether a dealership is running a slick sales operation than to check their reviews on the likes of Google and Trustpilot. Both the overall rating and the number of reviews can give you a quick overview but actually reading
the context of the reviews will give you the best insights. Do the positive reviews seem genuine? If there are negative reviews, how are they handled? You can get a great feel for a business and the people who work there by reading through these reviews, which will help you make up your mind about whether you really want to give them your car to sell.
Getting your car in front of the right buyers is one of the most obvious keys to increasing enquiries and getting your car sold quickly andsuccessfully. Not only do you want a reputable dealership to market your car for you, ideally you want a dealership that specialises in
cars like yours, not only with existing clients they can offer your car to but also high website traffic, a high number of newsletter subscribers and social media followers who are likely to be interested in cars like yours.
Whilst of course having your car advertised on the likes of AutoTrader and PistonHeads is important, it's much more likely to be shared and discussed on social media so a dealership with an engaged and active following is going to be potentially very beneficial for your car. Don't only check Instagram either, look at LinkedIn, Twitter, Facebook and YouTube to see the dealership's potential audience for your car.
Whilst it can be tempting to try your luck at a sky-high figure more often than not you will just damage the appeal of your car so it's important to set a realistic asking price and not let greed get in your way. It's always worth doing your own research: compare like-for-like specifications if there are any on the market, check for recently sold prices, and see what asking price can actually be justified. The best chance of selling your car tends to be within the first few weeks when it's fresh to market, so if you price it out of the market to begin with then you are likely to miss out on an early sale, and it will become increasingly difficult to sell the longer it's left on the market.
Be wary of some dealers making false promises and setting expectations too high, very often in an attempt to blag the car from you. If you are unsure, I would advise asking a dealer how much they would be prepared to actually write a cheque out for the car, even
if you know you are more likely to do SOR, as that can be quite telling.
8) THE FEES
Working out the net return figure to you once your car is sold should be straightforward but make sure you read the Ts and Cs to see if there are any fees or costs to be deducted. The dealer shouldn't charge you for advertising or valeting, but if there is prep work like wheel refurbs then it's best to agree on exactly what those costs are before listing the car for sale. If the car has been collected by the dealer on a trailer this could be a potential cost to them so it’s worth clarifying who is picking the bill up for that.
With regards to the actual commission fee, this is likely to vary depending on the dealer and the car. If the car is out of the manufacturer's warranty, expect the fee to be higher as the dealer is carrying more liability and will have to pay for some kind of warranty. Just make sure you don't base your decision on who offers the lowest commission fee as that will likely be a false economy. You will often find the dealers with the lowest fees will also achieve the lowest sale prices if they sell the car at all. It’s worth considering that a dealer has to pay 20% VAT on their margin so check if their fee is plus VAT or inc VAT.
9) LENGTH OF CONTRACT
In my opinion, an SOR contract should be 30 to 60 days with an absolute maximum of 90 days which can be extended if the car hasn't sold and both parties agree to keep it on sale. Anything less and it’s probably not fair on the dealer who has done a load of work getting the car prepped and advertised. Anything more and you are tying yourself up for too long. If the car hasn't sold within 60 to 90 days, you may want to consider an alternative route of sale or perhaps you have changed your mind and want to keep the car, so keeping the contract length down is going to give you more flexibility.
It’s also worth checking if you do end up taking the car back that you are not going to get charged for anything that wasn't initially agreed at the beginning, so check the small print as some dealers have been known to charge people hidden fees making it difficult for you to take your car back, which it shouldn't be. On the flip side, if the car is sold, you’ll want to ensure you get paid and/or get your finance settled as soon as the dealer has been paid in full.
10) COMPANY STRENGTH
The worst possible scenario for you is that a dealership goes under whilst your car is in their possession. I've seen it happen many times completely out of the blue and often the cars have disappeared along with the dealership. Legally, as you have ‘given’ your car to the dealership to sell, it becomes a civil act rather than a criminal act and there are countless stories, many of them online, of owners having a nightmare trying to physically get their car back off a dealer that has gone into liquidation. To avoid this risk, it's worth checking out a company's balance sheet online, checking how long they've been around for and establishing whether there is any financial risk by leaving your car with them.
Overall, sale or return is something that can work well but it’s no surprise that many clients prefer to take an outright purchase over the SOR route even if it means accepting a bit less for their car. Hopefully though, this will give you a few pointers when considering your options.
Written Exclusively for Supercar Driver magazine by Tom Jaconelli