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Confessions of a failed car broker

Hiring a professional to negotiate your new car purchase sounds like a good idea, but is it?

  • Brand New Cars in Stock. Dealership Vehicles Lot. New Cars Market.

I’ve had a lifelong passion for cars – new or used, foreign or domestic.

This means between the “Hi, how are yous?” and the “Come back soons!” at barbecues and cocktail parties, I get nabbed for free car-buying advice from relatives, friends, acquaintances and acquaintances of acquaintances.

So when I was offered the opportunity to be a part-time car broker – in other words, actually get paid to be an automotive know-it-all – it sounded like free money to me: $500 for each sale, to be exact.

From a car buyer’s point of view, using a broker can seem like a way to level the playing field with the car sellers. Car dealers spend all day every day thinking of ways to sell cars; most people buy a car on average only once every seven years, and therefore don’t have the knowledge of the subject that a professional like a broker might have.

Most of my clients were busy professionals – people who had no problem paying to have their homes cleaned, lawns manicured or taxes done. To them, my fee didn’t seem outlandish, especially when I could save them anywhere from $1,000 to tens of thousands of dollars on a new vehicle.

What exactly did I do in order to charge that amount? And can you get the same deals, without having to shell out more than five big ones to a broker?

For $500, my responsibilities included recommending vehicles, finding the right car, negotiating a price, doing all the paperwork (financing, licensing, ownership), dealing with trade-ins when necessary, and taking final delivery of the new vehicle.

When it came down to the final sale, I would show up at the dealership before the buyer got there and round up all the paperwork from the dealer. When the buyer arrived to hand over the cheque for the agreed-upon price, everything would be ready to go.

Not all brokers are created alike, however. Some have a dealer’s licence and will actually buy the vehicle from the dealer, then turn around and sell it to you. In effect, you don’t have to set foot in the showroom.

It pays to shop around. In some cases, the broker will charge you a percentage of the purchase price of the vehicle. You can imagine what that does to their advice.

Because I charged a flat fee, I had no real biases. I didn’t give a flying Fiat if you were interested in a $27,000 Acura CSX compact or an $85,000 Volvo XC90 SUV, I got my $500 no matter what.

How much I saved my clients depended on the vehicle. On a compact car where the profit margin is slimmer, I could save a client $750 to $1,000 off the cash price. On a luxury vehicle worth about $50,000, I could shave $5,000 to $7,000 off the price because the profit margins are greater.

Now, these are not hard and fast rules, and how much you can save by using a broker will depend on the vehicle you’re after. The hotter the model, the less wiggle room when it comes to price.

How did I manage to get my clients these better deals? Mainly, I had the advantage of volume on my side.

The business I worked for had been around for more than a decade, and delivered as many as 300 vehicles per year.

As such, most of the discounts were from longstanding relationships with dealers. There was still some room to manoeuvre, depending on how much inventory a dealer had sitting around.

Because of the longstanding relationships we’d built up, I’d also be aware of all the incentives the car maker was offering the dealer in order to move certain models of vehicles that may have been languishing on the lot. All that knowledge meant potential savings for my clients.

Having these trusted relationships allowed me to negotiate fairly, quickly and efficiently. Sometimes I could get a price in minutes that would have taken a customer walking in off the street days of back-and-forth haggling and repeated trips to the dealers.

In practice, most clients got more than $500 worth of my professional time.

In one case, a husband and wife came to me looking for a new vehicle. The one they had initially settled on was the Ford Edge.

However, on a trip to the Ford dealership, it quickly became apparent they hadn’t got straight in their own minds what they were looking for from a vehicle.

Like a kid in a candy store, they were easily distracted. From the Edge, they suddenly got interested in the Freestyle, then the Escape Hybrid.

A few days later, and they were interested in Hondas because they had a Honda and felt loyal to the brand. They liked the Pilot – until concerns over fuel economy kicked in, then it was on to the Honda CR-V, before they had me chasing down info on the Hyundai Veracruz; Toyota RAV4, Camry Hybrid and Solara; and finally a Chrysler 300 AWD.

In the end, they bought a VW New Beetle convertible without my help.

This whole process took more than 40 hours out of my week, not to mention the countless hours of their time.

Of course, some new-car dealers don’t like the idea of even a single sale going to anyone except their own sales staff.

“Why would I take a sale from one of my sales guys and give it to a broker?” one dealer asked me.

Fair enough. But the smarter dealers welcomed me with open arms.

Think about it: I would take the potential client out for coffee, discuss their interests and what they were looking for in a vehicle, do some initial legwork on prices and stats, before taking them in to the dealership.

In effect, I was acting like an extension of their dealers’ sales staff – one that didn’t take coffee breaks, and wasn’t paid a commission.

But then, not all car brokers are created equal.

The Ontario Motor Vehicle Industry Council, a not-for-profit agency that administers the Motor Vehicle Dealers Act on behalf of the Ontario government, warns that if you are thinking of buying from someone other than a registered new-car dealer, make sure you don’t become a victim of “curb siding.”

OMVIC defines “curb siders” as “impostors who pose as private individuals, but are actually in the business of selling stolen, rebuilt or odometer-tampered vehicles.”

When looking for a car broker, make sure to ask to see their new vehicle dealer’s licence, as required by law. Referrals from previous clients are a must as well.

What about all those car broker secrets I’ve left out? The dealer kickbacks, and crumpled paper bags of money passed along in dark alleys …?

That may happen somewhere, some place. But I didn’t see any of it.

The cold hard truth is that anyone can get the same deals I did. It’s just that it takes a lot of hard work, patience and good old common sense.

And as I told my clients up front: if you’re willing to put in the time and effort – do the research, figure out how to deal with a trade-in, camp out at the dealer to negotiate a fair price, and go through the delivery process – you didn’t need me.

But dealers and automakers take note: Beyond the savings in money and time, my clients told me that never having to deal with a salesperson or even step foot into a dealership was the most appreciated and valuable part of my service.

Some would even pay me $500 to avoid it.

So why did I stop being a car broker?

As I discovered soon enough, it’s much harder to sell cars than to write about them.

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