I’ll let you in on a little known secret about the relationship between the Buy It Now and Reserve Prices for eBay Motors auctions, the Reserve Price is usually around $500-$1000 under the Buy It Now price, based on empirical evidence. You can safely ignore the current price because most cars worth anything will not be listed without a reserve price (there are exceptions of course) and so unless the reserve has been met, it won’t be sold.

If you see that the Buy It Now for the car is more than a grand over what you want to pay for it, chances are you won’t be able to get the car for that price this time around. My suggestion? Watch the auction, if it doesn’t sell then the seller will likely drop the Buy It Now price a few hundred bucks and relist. You may even want to call him up and ask him how much he is looking to get for the car and, if you’ve done your homework, may be able to suggest to him that the price he is waiting for is a little too high given your research. Unless you are low-balling the seller, he or she will likely hear what you have to say and may be willing to sell it to you outright.

Remember, if you buy it off eBay, you have no protection from eBay.

So you’ve done the research, located an auction with a seller (who is a dealer) whom you trust based on some telephone conversations (risky, but better than relying on feedback numbers), and now are ready to plunk down a bid and potentially buy yourself a nice shiny new (to you) ride. Be forewarned that the final auction price will definitely not be the total you will have to shell out to get that ride onto the road.

When I purchased my Toyota Celica for $16,000 I still had to pay an additional $1,300 (8.125%) in taxes, shipping, and fees. (and I found an incredible price for shipping too!)

State Sales Tax:

The biggest non-auction-related cost will be sales tax. In Maryland, this is a nice 5% payment that you will be required to make to the state whenever you register the vehicle. If you bought it from an in-state seller who collected it, then you simply present the receipt and Maryland will accept that as payment. For a $15,000 vehicle, 5% is $750 so please make sure you figure that into your costs.

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As I mentioned earlier, the feedback system is a little less valuable for purchasing vehicles simply because private party sellers oftentimes don’t sell a lot of cars and representatives of dealers, who do sell a lot of cars, will rely on the dealership’s name and not their own feedback. That being said, feedback still plays an important role in assessing the risk of a particular seller.

Also, with this and any other high dollar item, you will need to contact the seller. Most, if not all, vehicle sellers will list a phone number and, hopefully, their name. You have to talk to the seller at least once.

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In part 2 of the Buying Cars on Ebay series, I’ll dissect an Ebay Motors auction listing which can be a little overwhelming. An Ebay Motors auction listing is very similar to any other auction listing in that it’ll have a standard set of information (mileage, transmission, trim, etc.) but it’s the description that you must make careful note of. In this particular regard, the professionalism and transparency of the auction is paramount.

The standard information is the same for all vehicles and looks similar to a book or other commodity type auction (DVDs, concert tickets, etc.). Take this auction for a 2004 Celica for example. The standard information is mileage, transmission, doors, interior, year, warranty, title, condition, engine, VIN (important!), interior and exterior color, and inspection. There is also a list of the standard and added optional equipment on the vehicle. That’s the extent of the required information.

As you can see, that auction doesn’t look as professional as this auction for a 2005 Celica GT Hatchback and the difference is the first is an auction from a private seller and the second is an auction from Precision Toyota of Tucson. Note key and critical differences.

And that’s just the superficial details of the vehicle.

Photos are important because that’s all you get to see of a car in an Ebay auction. You want to see, at a bare minimum, two photos: one of the VIN and one of the odometer. While they can always switch it on you, at least you know they have the car in their possession. Second, the contact information is critical because before I’m going to commit this much money for anything I’ll want to talk to the seller on the phone (that’ll be for a later article).

I put in the number of words description only because the more detailed the description the better. Of the 87 words in the first auction, half was fluff and meaningless, whereas all 297 words of the second auction were descriptive (though part of that was standard specs for the Celica such as trunk space). It’s not a discriminator but it’s a sign of professionalism. If you can’t spend more than 20 minutes to put together a nice useful description of your car then how much time are you willing to spend on the other things?

Lastly, Terms & Conditions are critical in a transaction like this and they’re standard for dealership listings. Read them over very carefully because if you notice on the second auction, there’s a DOC Fees of $279.00. You had to switch tabs from General to Terms in order to see it. They’re not trying to trick you because T&C is exactly where that information will be and should be listed.

Read over a whole bunch of auctions to get a feel for the types of information given. A lot of private party auctions will have some personal information (I’m selling because I’m moving, my girlfriend dumped me, etc.) but that’s not obviously as important as the specs of the car. If you’re tentative about shelling out so much on an auction, remember that you can always limit your search to vehicles being sold by dealerships.

This is Part 1 on the Buying A Car On Ebay Series and this one goes through the process of pricing research so that you’ll know how to take advantage of Ebay. I’ll identify what I considered the three “markets” of used vehicles, help pricing vehicles, and how to take advantages of the differences between the different markets. This step isn’t specifically Ebay-related and should be the first step in any car buying process.

With the advent of online car buying research sites, finding the price of your target vehicle is relatively straightforward. If you break up the pool of used vehicles, you’re limited to a dealer used vehicle and a private party used vehicle (coincidentally, these are categories of pricing available on Kelley Blue Book). Within the private party used vehicle, you have local and long distance sellers. In the past, long distance wouldn’t be an option but with the growth of these sites and of Ebay, buying a used car long distance is now easier (albeit with a bit of added risk).

For the discussion below, I’ll be looking solely at Toyota Celica’s made within the last five years (2000 – 2005).

Dealer Used Vehicles
Price will always be higher but risk will be lower (a typical tradeoff).
1. Check CarMax – CarMax reminds me of the Best Buy for used and new vehicles. They have a no haggle price and are very friendly, they aren’t like the horror stories you hear about dealerships with a lot of pressure. At one point I asked what CarMax’s commission structure was and the sales clerk told me!

Here are some sample prices (for Laurel’s CarMax or locals with $0 transfer fee, what appears when you click that link will probably be different as their inventories obviously changes):

What’s nice about CarMax is the sheer number of cars available so you can do some price comparisons. There are two ’03 Toyota Celica’s listed Autos listed: 1) Blue Automatic 20k at $16,998, 2) Yellow Automatic 15k at $17,998, 3) Blue Automatic 13K at $17,998. (there are more but this is sufficient) What you can learn is that 5-7k in mileage will cost approximately $1,000 in price and you can use this general barometer as a scale. It is generally accepted that typical mileage usage in a year is 12k-15k – any higher usage and most places will consider it a high mileage vehicle. Remember that benchmark number.

2. Check CarsDirect (or any of the car list websites): Just like the airline ticket websites, I think they all use the same database of vehicles so anyone you pick will give you similar data. You just want to know the basic going rate for the vehicle make and model in your area. A search for Toyota Celica’s in my area code on a site like this shows private party and dealer used vehicles.

Prices will vary but I’ve found dealerships usually have worse deals than CarMax, there are exceptions of course, because CarMax deals in high volume and will take a smaller cut. For example, the CarsDirect listing of a ‘03 Toyota Celica GT Auto 42k was $16,995 compared to a CarMax ’03 Toyota Celica GT Auto 20k listed at $16,998. Granted, you can’t just look at transmission and mileage but the same price for 20k difference in mileage is significant. (Also recall that 42k in miles was put in probably under 3 years of service).

Private Party Used Vehicles
I’d suggest your local Craigslist or the local paper’s classified advertisements for good deals on vehicles. The selection will of course be limited but you can find some real gems. I’m afraid I don’t have much experience but you should get a general idea of the going rate.

Finally, you can always rely on the numbers given to you by Kelley Blue Book or an Edmunds.com True Market Value but remember that they’re averages. (if you do a search for used vehicles on those sites, you’re typically rerouted to another site) Your mileage will vary.

Summary: This quick research will inform you that in general, an ’03 Toyota Celica Automatic with average mileage will probably run you around $17,000 not including all the ancillaries (taxes, title, etc.). Armed with this information, you can start looking on Ebay to see if the risk is worth it. (I bought a ’03 Celica Automatic with 15k mileages for $16,000 a little over a year ago) Incidentally, there is a 2003 Toyota Celica GT Hatchback with 36k miles (Manual) listed with a Buy It Now of $16,900.

In the next installment, I’ll discuss the importance of contacting the seller prior to bidding or buying the vehicle they’ve listed.

The more I talk to people the more I realize how “surprising” it was that I’ve purchased two vehicles on Ebay and thought that the perfunctory discussion of my Ebay car buying experience wasn’t thorough enough. In the coming days and weeks, I’ll write in detail about the second of my two purchases which was a 2003 Toyota Celica in Nov/Dec of 2004.

Right off the bat, I want to warn you that buying anything, especially high-dollar items like cars, on Ebay is risky. The feedback system is weaker for low volume items like cars because unless the seller is a representative of a dealer, you won’t find many sellers with 100+ feedback who just sells cars. The time frames for cars, shipment and such, is much longer and thus the 35-day fraud protection window is that much smaller. If you’re not buying local you can’t see the car (you rely on photos) and you depend on the Carfax report to be accurate which may or may not be the case. There are significant risks to buying a car on Ebay but the rewards may outweigh them.

Currently Published Parts:

• Part 1: Vehicle Choice & Research – This part isn’t strictly Ebay related and should be a part of every car search, it gives you a good idea of how much you should be paying for the vehicle you want.
• Part 2: Dissecting An Auction Listing – There are distinct pieces of information and characteristics about an auction that you must look for. The auction listing should give you warning signs if there are any with a particular auction.
• Part 3: Feedback & Contacting The Seller – I don’t trust Ebay’s feedback system when it comes to auto auctions, before you bid you must talk to the seller and get a feel for what kind of person he or she is. I call it the pre-Ebay feedback system, use it.
• Part 4: Hidden Costs – I discuss the multitude of hidden costs that might not come to mind and will greatly increase the price of your vehicle, such as shipping.
• Part 5: Understanding Buy It Now & Reserve Prices – The relationship between the publicly known Buy It Now price and the hidden Reserve Price is pretty easy to figure out…
• Part 6: eBay Protection Policies – The protection policy is nice but don’t buy a car you wouldn’t buy without the polic.
• More to come…

The Fall semester at Johns Hopkins’ MBA program just ended today and I’m going through the usual end-of-the-semester ritual of selling my gently used textbooks for dimes and quarters on the dollar. I never really sat down and investigated which service would give me the most bang for my buck until now and I still think I am making the right choices. While I was pretty sure what their commissions were and how each service operated, having sold items on Amazon, Ebay and Half.com before; I never looked in close detail at the numbers.

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A little while ago there was a big of news made about Ebay offering a health care option to its PowerSellers because many of their sellers, who relied on Ebay as their single source of income, had no other health coverage. The health insurance (called it Healthcare Solutions) is provided by Marsh Advantage America and the level of insurance coverage depended on which of the five PowerSeller tiers you’re in. I think the most stunning revelation I had was that you only need to have PowerSeller status at the time you sign up for the insurance, it’s not a pre-requisite for holding the insurance – you only need to keep current on premiums.

The Ebay Healthcare FAQ has a wealth of information but the most interesting piece of information is the fact that you only need to be a PowerSeller at the time you sign up for insurance. “If an individual loses their PowerSeller eligibility for any reason, their existing coverage will remain effective as long as their premiums are paid when due.” (Question #2) The only thing you lose is the ability to change plans or make changes to your plan.

To become a powerseller (full requirements) you basically need to sell more than $1000 for three consecutive months and have a feedback greater than 100 (98% of which is positive), it’s something you can achieve if you sell on a regular basis. The gross sales criteria is what affects which tier you’re in. $1000 qualifies you for Bronze, $3,000 for Silver, $10,000 for Gold, $25,000 for Platinum, and $150,000 for Titanium.

That’s about all the publicly available information I could find about it since specific plan coverages and premiums are dependent on your zip code.