One good thing about the brokers on LH is that they are offering really attractive prices/packages compared to what most people can negotiate when they interact directly with a dealer.
However, I often forget the USA auto industry (outside of the DTC sellers like Tesla/Lucid/Rivian) has ingrained in buyers that they have to negotiate to avoid overpaying.
There’s an unwritten rule that brokers aren’t your normal auto sales person. Unlike a normal sales employee at a dealership, brokers aren’t employed in a way that provides them bigger commissions if they transact at a higher net price. The brokers rely on a much flatter pricing model and need volume to make their activities worthwhile.
But to your point, a new user wouldn’t realy know this. And it’s the habit created by the auto industry to negotiate on price until the salesperson says “no” and work back up to close a sale.
Unfortunately, brokers aren’t like a normal salesperson. If you get brokers saying “no” to your offers, they’ll often times also not negotiate back up even if you’re now offering to pay their listed price. And the worst possible thing (also an unwritten rule) is to take a broker’s offer then do an end-around to ask a dealership to match the same price.
Brokers aren’t offering the lowest-of-the-low pricing for unicorns. To get the truly best deals, the buyer has to do the work. In some cases, individuals who bypass brokers can get better better deals on unicorns than what the brokers are offering. But on the flip side, sometimes a buyer does a ton of leg work, wastes a ton of hours, then fails to beat or even match what a broker could have achieved.
TLDR, there are some unwritten rules when it comes to brokers… so using “normal” car buyer negotiating tactics against brokers will result in responses that different than what you will find with normal sales people.
“Broker’s arent employed in a way that provides them bigger transactions at a higher price”
Bud you are trippin
Let me break this down for you.
A vehicle is sold at a dealership at 2500 below invoice. The sales person gets 20% of the commission. Since you get a percent of a negative number the salesperson gets a flat commission of anywhere from 50-250 (depends on the store and pay plan)
A vehicle is sold at the store at 1500 below invoice. sales person gets a flat.
A vehicle is sold by a broker at 1500 below invoice. THE BROKER GETS A CHECK FOR $1,000
You have no idea how this business works and speak with zero knowledge.
You’re right, I meant to say the brokers aren’t getting bigger commissions at a higher price. Since the brokers are incentivized to move volume at pricing approved elsewhere.
So yeah in your example, a broker could dip into their $1,000 to help close a sale, but most would just wait for another buyer so the broker could get the full $1,000. So a user negotiating against a broker is a much different outcome than if someone walked into your showroom and began negotiating with you or your direct team that has a different compensation structure.
You do realize if you break down the math the broker is incentivized more than a common salesperson to charge a HIGHER price right?
Once a salesperson hits a deal thats positive 500 or less, its a flat. So for them they are more willing to get to the bottom number just to get a deal. negative 2500 and positive 500 is a 3000 dollar swing that the salesperson would help you get as it does not effect their commission.
A broker is the opposite, every dollar they “save” by not giving you a discount goes straight into their pocket. Thats how bird dogs work.
Doesn’t this structure mostly apply to most of those “brokers” in NYC and other areas that get the same price as a walk in customer? Can’t imagine the brokers on this site (ones actually charging a fee) pocketing additional discount when they are so deep to begin with.