The Downsides of Motorhome Consignment

You have made a big decision; you have decided to sell your motorhome. Like most people, you have lots of questions as this is unfamiliar territory. What price do I ask for my motorhome? How do I market it? What are my legal responsibilities? This may seem like a daunting task, but you have options. Instead of selling it yourself, you could either contact a dealer for motorhome consignment in Oro-Medonte or you could sell it directly to a dealer or wholesaler like Motorhome Buyers Canada.

Most individuals know the dictionary definition of consignment. For instance, in a consignment relationship, the owner of the motorhome (consignor) consigns the vehicle to a broker. The broker is responsible for the sales and marketing process. Although this appears simple enough, as the owner, there are ramifications you need to consider:

Marketing

Consignment companies/dealers routinely claim that they are responsible for the costs and the work required when marketing your motorhome. As the owner of the motorhome, it is difficult for you to measure the extent and value of the dealer’s marketing efforts. It is common for a consignment dealer to consign multiple vehicles to improve their roadside appearance; this tactic is a “more is better” approach. With this approach, your motorhome may not be a focus for them, as models they consider in-demand or unique will likely get their attention first.

Motorhome Condition

When you consign your motorhome for sale, it is your responsibility to prepare the motorhome for sale. In order to entice a buyer, you want your motorhome to stand out and be desirable. As motorhomes are large and sometimes complex vehicles, this can be a big job. Preparing the motorhome for sale can include exterior and interior cleaning, household repairs, and motor vehicle repairs. Sometimes the costs can be much more than expected. Why put yourself through this task? By selling to a dealer, you avoid the time, work, and stress involved in preparing the motorhome. Leave that task to the dealer that has the staff, facilities, products, and experience to deal with it. By doing this, you have just transferred that risk to them.

Use of Your Motorhome

While your motorhome is on a consignment contract with the dealer, it will be on their premises. Your motorhome will not be available for your use during this period of time, even though you own it and maintain the insurance on it. You have all the responsibility of ownership, without any of the perks.

Paperwork

In an attempt to attract your motorhome to their consignment program, the consignment dealer will claim that they will be responsible for all of the paperwork. This may not entirely be the case. You will be called upon to provide additional documents such as insurance, bank documentation, service records, and perhaps accident reports (ex. CarProof). In addition, if the transaction takes place in Ontario, the dealer MUST get you to complete a Vehicle Information Statement.

Transportation

The consignment dealer may not be located near your residence. The dealer may seem well suited to sell your motorhome, but you will spend time and fuel to transport your motorhome to the dealership. In addition, as you are responsible for maintaining your motorhome, you will need to check on it from time to time. This will also increase costs that can eat into the proceeds of a future sale. However, the dealer does not give you a guarantee that they will sell your motorhome.

Consider Selling Your Motorhome to a Wholesaler

If you’re looking to sell your motorhome, skip the consignment headaches and go directly to a wholesaler like Motorhome Buyers Canada. We can help take the hassle out of selling your motorhome. Feel free to fill out our appraisal form and check the list of requirements for what we need to begin the sale. If you have any questions about selling your motorhome, please contact us.

A Consignment Dealer Has No Investment

When you consign your motorhome, you do not receive an immediate payment. The dealer does not pay you to consign your motorhome, and you take all the risk. On the dealer’s side, there is no investment in the motorhome; they have no risk therefore limiting their motivation. You are the only one motivated in the relationship. You do not receive anything until the motorhome is sold, and the sale could take weeks or months. In the meantime, the dealer is in possession of your motorhome with no cost or risk to them. However, if you choose to sell your motorhome to the dealer, you are paid immediately, and they assume the risk.

Contractual Commitment

Most consignment dealers require you to enter into a contractual arrangement with them. These contracts generally specify a 3 month period that your motorhome must remain on their premises for sale. While the contract has value to both the consignment dealer and the owner, the time factor is a big disadvantage. The motorhome is exclusively under the consignment dealer’s control for that period of time. If a neighbour, friend, or acquaintance of yours is interested in purchasing your motorhome then your options are:

  • Wait until the contract expires at which time the selling opportunity may have vanished.

  • Process the sale through the consignment dealer and pay the dealer a commission for simply having the motorhome on contract with them.

Both of the above options are not ideal.

Fees

Most consignment dealers will charge a flat fee or a commission (based on a percentage) for selling your motorhome. Commission percentages generally range from 6% to 10% of the selling price. Many consignment dealers also require a minimum commission of $3,000 to $5,000. For instance, if the commission rate is 6% and your motorhome sells for $40,000, the commission owing to the dealer should be $2,400 unless your contract includes a minimum commission amount. Furthermore, most of these dealers require you to pay for the following items:

  • Automatic renewal fees

  • Exterior and interior cleaning fees

  • Storage fees should your motorhome be declared unsellable for a period of time

  • Contract cancellation fees

  • Paperwork fees, such as CarProof

  • Fuel charges

In addition to the commission fee, additional charges can seriously erode the amount you ultimately receive from your motorhome sale.

Insurance

While your motorhome is contractually committed to the consignment dealer, you will be required to maintain and pay for full insurance even though you do not have use of your motorhome. This scenario reduces the proceeds you will receive from the future sale of your motorhome.

Loss of Value

Like any item for sale for a period of time, your motorhome will become less valuable. What the dealer originally appraised your motorhome at can change as time passes and the seasons change.

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