The Ferrari market rises and falls in cycles influenced by the global economy, generational shifts and currency swings. The collectable Ferrari market was last a buyer’s market just after the double whammy of the real estate crash of 2007 and the Lehman Brothers bankruptcy in September of 2008. That market bottomed in 2010 and started a strong recovery, peaking in 2014. As we look back to the heady days of 2014, we then received only one or two calls or emails a day from people who wanted us to help them to market their Ferraris. There were more buyers than sellers. Today, we receive half a dozen calls or emails every day and the number is growing. The roles have reversed. Today there are more sellers than buyers.
With each call, we laboriously explain that regardless of whether prices are going up or down, in any market it always takes the best car; best photos; best documentation; best service history; best marketing and best price to sell. Buyers simply do not wake up in the morning and decide they will buy the highest-priced, poorly photographed car on the market, yet I’m amazed at how many sellers refuse to grasp this simple marketing concept.
Since very few cars meet all these criteria, you will always need to have the best price comparable to similar cars before you can sell. Forty-plus years of selling Ferraris has proven that all too often, those wanting to sell or consign their Ferraris value their cars by what they saw a vaguely similar car sell for at a Monterey, Scottsdale or Amelia auction at the peak of the market in 2014. That worked in a rising market, but that ship has sailed. Turn on any of the business channels or open any business publication, and you will know that the global economic situation is very different today than it was last year.
Psychology of Sellers
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 the bottom line is that he wants to sell. His car will soon be gone.
Next you have the “committed seller” who knows his financial needs, has a good idea what his car is worth and has decided to sell, but wants to haggle in an attempt to get the last dollar. They may be able to sell their cars in a softening market, but will probably chase the market 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 an over-market offer. Alas, over-market offers are a distant memory. He will be an owner for a very long time.
Also on the list is “Mr. just testing the waters”. He doesn’t really want to sell, he just wants a warm and fuzzy feeling as to what his car is worth, at the time and expense of the dealer’s brain damage. Regardless of what the dealer tells him, he thinks it’s worth more.
Lastly, there is “Mr. can’t make a decision”, who thinks he wants to sell a car or cars because he feels values are still up, but might be going down. He has been waffling for months or years or even decades watching the price cycles. 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 find long term storage. Very long term.
As Jim Weed of the Ferrari Market Letter commented, “I know the story. ‘I can’t sell it because it keeps going up in value’. ‘I’m not going to sell it unless I can get the highest price’. ‘I guess I’m going to keep it until the prices go up again’. and the cycle continues…”
Oh, Did I Mention Best Photos?
Great photos sell cars, it’s really that simple. Yet I’m amazed at the never ending stream of clients who want us to market their cars using half a dozen cell phone photos. I’ve patiently explained that a car gets only one chance to make a great first impression. Cell phone photos taken in their garage, or on a rainy day, simply vaporize any chance of selling their cars.
Many today own high-quality cameras, some have the skill and patience to photograph their car, but good automotive photography is specialized. We provide a guide to our clients to help them photograph their cars as needed. There are also some references on the web but don’t assume it is like taking a picture of Aunt Edna at the family reunion. Aunt Edna was probably not just detailed–you did actually make sure the car is clean, correct?—and you want all the kids in the background with Aunt Edna, but not with your car!
If you don’t want to tackle the job yourself, there’s no lack of professional photographers who photo weddings, or real estate or cars. All have great cameras, understand lighting and background and know how to do a Dropbox or Wetransfer download of high-resolution photos. If you’re not willing to spend $500 for a professional to take great photos, or take the time to do it right yourself, you’re not serious and you’re not going to sell your car. Period.
Three Options to Sell
Given the nebulous state of the Ferrari market, 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 both a buyer’s and a seller’s commission, no lack of other fees and charges, and shipping to be paid. Your car is also gone for months, drifting around auction warehouses. Additionally, few auction houses will take a car without a low reserve today. Take your Lusso to the wrong auction house, at low or no reserve, and you might not like the results.
As Bruce Trenery of Fantasy Junction wrote, “…in an auction format, it is hard to take trades, (or) get a deposit and wait for the balance, (and) you never know where the price of the car will go until it is on the block, and then it’s now or never. All of these can be dealt with in a dealer or broker setting.”
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. They know what is selling, and for how much.
Selling high-end exotic cars is a contact sport, and your representative’s list of contacts with other dealers is what will get your car sold. We chart the many dealer connections involved in our sales, and about 60%–70% of our sales are through connections with other dealers who have a buyer they work with.
Any professional will insist on an exclusive listing for a minimum of 90 days. Auction companies will want a commitment through the auction and they’ll want a commission if it sells within a certain period after the auction. No dealer or auction house wants to document your car’s history, set up a quality web site presentation and a marketing program, only to hear that you are calling other dealers trying to get bids on your car. The collectible Ferrari world is small, all the dealers know each other and talk often.
Buyers Now Write the Rules
While rising prices create euphoria, falling prices induce paralysis. In theory, there should be no lack of would-be buyers who want to take advantage of price drops, and while there are always a few, most are overwhelmed by the force of the herd.
Making marketing more difficult, buyers have short attention spans. No one “needs” a Ferrari, and the first offer is often the best offer. Attempting to endlessly negotiate to grind out the last dime on any sale is a deal-killer. Today’s buyer is an enthusiast and an end-user, and not a speculator. Endless negotiations take the fun out of the purchase. The buyer will go elsewhere.
As Spencer Trenery of Fantasy Junction wrote, “In the current market, the first offer may be the best offer, and unless great care is taken by the sellers, with immediate steps toward closure, it could very well be the only offer. By my rough count thus far this year to date, two deals that I have personally closed have weathered an offer/counter offer/acceptance chain of events. Every other deal this year-to-date, died when the seller insisted on a counter offer. And that is not to say, however, that every deal we didn’t counter on (just accepted) completed!”
And as Tim Wyman, an investment banker wrote, “In a down market, time never enhances a deal.”
If your car isn’t presented to the market with all the boxes checked, it will probably not sell, and will certainly not sell for top dollar. If you want or 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 today it’s a buyer’s market.
About Michael Sheehan
Michael has more than 45 years experience as specialty broker of exotic cars, specializing in Ferrari as well as Lamborghini and Maserati. He also owned European Auto Restoration, then the largest U.S. full-service Ferrari organization specializing in sales, service, restoration, crash repair, frame repair, assembly and detail.
He raced in the Mazda Pro, Trans-Am, IMSA GTO and GTP Camel light series, with three stints in both the 24 Hours of Daytona and the 12 Hours of Sebring. He has provides Ferrari market analysis for FORZA, Ferrari Market Letter and Cavallino. To see more from Michael, visit Ferraris-online.com.