Six months ago we received one or two calls or emails a day from people who wanted us to help them to market and sell their Ferraris. Today we receive half a dozen calls or emails every day, and the number is growing.
With each call I laboriously explain that regardless of whether prices are going up or down, in any market it always takes the best car, best documentation, best service history, best marketing, and best price to sell. Since very few cars meet all these criteria, you will always need to have the best price comparable to other, similar cars before you can sell. Buyers simply do not wake up in the morning and decide they will buy the highest-priced, least-documented car on the market, yet I'm amazed at how many sellers refuse to grasp this simple concept.
Thirty-plus years of selling Ferraris has proven that all too often those wishing to consign their Ferraris value their cars by what they saw a similar but Platinum-level car sell for at a Monterey auction. That might work in a rising market, but turn on your television or open a newspaper and you know that the economic situation is very different than it was even three months ago.
The psychology of sellers
1. Motivated: Sellers fall into many categories. First you have the "motivated seller," who for whatever reason just wants to sell the car, for as much as possible, of course. But bottom line he wants to sell. His car will soon be gone.
2. Committed: You next have the "committed seller" who knows his financial needs and the market, has a good idea what his car is worth, and has decided to sell. He is willing to haggle, within an acceptable range, and is willing to be flexible in pricing to sell the car. These people will be able to sell their cars in a softening market.
3. Too good to turn down: Then there is the "if the offer is too good to turn down seller," who doesn't really want to sell but isn't about to turn away a good deal. Those "good deals" are increasingly difficult to come by, and so this guy will be an owner for a very long time.
4. Just testing the waters: He doesn't really want to sell. He just wants a warm and fuzzy as to what his car is worth, at the expense of the dealer's brain damage.
5. Can't make a decision: Lastly there is this owner, who thinks he wants to sell a car or cars because he feels values are still up. He has been waffling for months or years or even decades watching prices go ever higher. Such people are studies in indecision and live in a world of bizarre denial when it comes to accepting that Ferrari prices do go down as well as up. Regardless of the market or the offer, they are convinced the next offer will be higher. A year ago, they were tempted to sell. Today, they need to put more stabilizer in their fuel tanks. A lot more.
Every market has a peak
Any commodity, be it oil futures or Ferraris, is worth only what a willing buyer will pay-and what a willing seller will accept-on that day. When we look back at any boom and bust cycle, we look for turning points or easily definable high points.
In November 1989, we sold 250 GTO s/n 3909 to Takeo Kato for $13,300,000, plus the usual modest commission, defining the high-point sale of the 1985-89 boom and bust cycle. Years down the road, when we look back at the 2003-08 cycle, the reported sale of 250 GTO s/n 5095 for $28,000,000 will be seen as the high point of this cycle.
Initially for this month's column, I attempted to extrapolate where I thought the Ferrari market or Ferrari prices might be in six months or a year, but the future of virtually all markets is now a function of the success of the Paulson-Bernanke $700 billion stabilization plan and its many evolving iterations, and how quickly liquidity and confidence can be returned to the world's economic market.
New rules of the game
Given the nebulous state of the Ferrari market, here's what you need to do if you really want to sell today.
1. You can sell privately, through a broker, or at an auction. Privately you might save the cost of a sales commission, but you will not be able to offer the same marketing reach or connections a broker can offer. As for auctions, there is a commission, fees, and two-way shipping (if it does not sell). On the other hand, auction companies offer the best marketing bar none of any seller on the planet, and they also keep a dossier of qualified clients to whom they will pitch your car. In some cases, the right auction company can get you the absolute highest price, even after commissions. On the other hand, if you take your Lusso to the wrong auction house, and offer it at no reserve, you might have a disaster on your hands.
2. Listen to what your dealer or broker or auction house says as to the current value of your car. They are in the trenches daily, working to sell these cars, and every day they talk with the other dealers doing the same thing. We know what is selling, and for how much.
3. If you don't agree with your dealer or broker or auction house's evaluation of your car, ask them for recent comps on value. If you don't agree with their comps, then call around and get your own, but don't look for values from six months or a year ago; they are no longer relevant.
4. Selling high-end exotic cars is a contact sport, and your representative's list of contacts with other dealers, or in the case of auction houses, with their regular and new clients, is what will get your car sold.
5. When you decide to sell, and you know which dealer or broker or auction house you are going to use, expect that organization to insist on an exclusive listing for a minimum of 90 days. Auction companies will want to have a commitment to have your car through the auction in which the car is featured, and they'll also want a commission if it sells within a certain period after the auction. No dealer or auction house is going to waste his or her time documenting your car's history, setting up a quality web site presentation on your car, and marketing your car, only to be called by other organizations whom you have also called trying to get bids on your car. The collectible Ferrari world is a small one, and all the dealers know each other and talk often.
There are still many Ferrari buyers in the market, and the upper-middle and top-end of the Ferrari market remain strong, but only for cars with no stories, which are properly marketed and offer "no questions" appeal to the buyer. Regardless of whether the market is going up or down, a seller has to grasp the simple axiom that it takes the best car, with the best documentation, best service history, best marketing, and best price on the market at that time to sell.
If your car doesn't have the best combination of those features, it will not sell for top dollar. And if it doesn't have the best combination, and you need to sell, it's time to step back, take a deep breath, and face the reality of the marketplace. Whether you like what you find is irrelevant. The market is the market, and right now it is a heartless and demanding one.