For car buyers of a certain age (43, in my case), the analog days of affordable vehicle hunting meant keeping your eyes peeled, head on a swivel for those “For Sale” signs.

Black background, bright orangey-red letters. Usually somewhere on the vehicle’s dashboard.

As a teenager in the late 90s and early 2000s looking to exchange my (limited) lifeguarding cash for a reliable set of wheels, those for-sale-by-owner signs were just as vital and sought-after as another now bygone source of affordable cars: the newspaper classified ad.

While certain physical media relics from the late 20th century have returned (hello, vinyl records!), the for-sale-by-owner signs on cars have all but disappeared.

A new market report whitepaper from CarBuyerUSA investigates the reasons why and, perhaps more impactful, the fallout from this fading source of affordable vehicles.

The report, titled “The Slow Death of Selling Your Car Yourself: How The FSBO Deal Has Gone Extinct,” was authored by Michael Lasini, founder & president of CarBuyerUSA, and Bill Coleman, co-founder and CEO of Novum Auto Services, which operates CarBuyerUSA.com, TruckBuyerUSA.com and DamageMAX.com.

Both have extensive experience in the used-car market, including time with Manheim/Cox Automotive.

“For most of the last fifty years, selling a used car yourself was simple. You put a sign in the window or an ad in the paper, a buyer showed up with cash, and you handed over the keys,” Lasini and Coleman write in the report’s intro.

“That deal is dying, and not from one cause. Several things are killing it at once,” they said. “The big car-shopping websites stopped caring about private sellers. The people who still try to sell on their own are usually under some kind of pressure, which makes them easy to take advantage of, and now scammers have cheap tools that used to belong only to pros.

“A lot of owners owe more on their car loan than the car is worth, so they cannot sell at a fair price even if they want to,” they added. “Add it all up and the old DIY sale no longer works for a growing share of the roughly 10 million casual car sales that happen in the United States every year.”

Of those roughly 10 million casual car sales, CarBuyerUSA estimates that major car-shopping sites capture only 5% to 10%. The firm’s report looks at where the rest of those vehicles go and what are the implications for the market, including dealers, who are often the ones who can handle taking on the average negative equity owners have in these vehicles have ($7,500).

Under a section of the paper looking at what replaces casual sales, CarBuyerUSA notes: “Dealers come out ahead, not because they got better, but because they are the only ones who can swallow the problems. They can roll negative equity into a new loan. They can take a car with issues as a trade. They can arrange financing in-house. They can deal with title messes through their DMV contacts.

“The person who cannot close a private sale, stuck with a $7,500 loan gap or a car with frame damage, has nowhere else to go. That is not a win for the customer. It is a market breaking in the dealer’s favor,” they added.

I’d argue it’s not a win for the buying customer, either — especially the high schooler looking to make summer job dollars stretch.

But it’s not all roses for dealers, Lasini and Coleman warn.

“Dealers should not mistake a lucky break for a lasting one. The same forces wrecking the private market are coming for them too,” they said.

Dealers who take in trades that are under water are taking on risk, they note. That risk increases as loan terms grow and depreciation for high-mileage vehicles gets steeper.

But there’s a position where dealers can win, though.

“Dealers who actually build trust, with upfront pricing, digital paperwork, and a no-pressure finance office, will keep the customers who tried the private market, got burned, and decided the dealer was the safer bet,” Coleman and Lasini wrote.

“The instant-offer companies are chasing the same cheap trade-ins dealers count on for profit. As their pricing gets better and more sellers know about them, dealers who depend on lowball trades will see those margins shrink.”

The full whitepaper can be read (and printed!) here.

Now, if you’ll excuse me, I think the US Postal Service just dropped off the new record from my favorite band.

**Note from report authors: This report is for general information only. The figures are CarBuyerUSA estimates drawn from our own transactions
and public industry data, and should be read as ranges rather than precise statistics.**

 

Joe Overby is senior editor with Cherokee Media Group. Share your old school car-buying stories, summer jobs and vinyl record recommendations with him at [email protected].