Consummating the Deal

STATE BY STATE REQUIREMENTS

Please check with your state's Motor Vehicle Division to learn specific requirements for handling transfer of title, license plates, damage disclosure and other documentation. Magnatize.com also maintains a list of direct Web links for each state where you can review this information.

PUT IT IN WRITINGreturn to top of page

Okay, you've negotiated the deal. No matter what you discuss, what you agree to, always put it in writing. If the buyer gives you a hundred dollar deposit, write down the exact terms. If it's a non-refundable deposit, put it in writing. If certain repairs are to be made, put it in writing. Both parties must sign and date the document. Use your Magnatize Deposit Agreement to set the terms.

MONEY TALKSreturn to top of page

Funny money — Very often, someone will want to buy your car who has unpredictable funds. Examples include: credit approval hasn't gone through, waiting on a tax refund, selling another car, dad's sending the money, etc. The rule of car selling is the first person with cash gets the car. Obviously, you want to accommodate the buyer, especially if he's offered the asking price. If you feel the buyer is serious in his intent, ask for a nonrefundable deposit using the Deposit Agreement form, for example $100 cash for seven days. If after a week, the buyer comes up short, you pocket the money. If he wants to extend the terms, ask for another $100 for another week.

Show me the money — There are only two ways to receive payment for your car: bank draft or cash. Never, ever sign away the title unless an official bank check or cash is in your hand. No personal checks or deposits either. If you accept a deposit with a promise to pay the balance later, there is no guarantee you'll ever see the money. There is one variation on this to the cash or bank draft rule: Some dot-com loan companies have a new approach where you and the buyer meet at a Mail Boxes Etc. store. The paperwork is notarized and faxed to the lender. You are paid on the spot with a special check that's actually filled in by the buyer.

Bank Draft Fraud — Cashier’s checks (bank drafts) must be confirmed by calling or visiting the issuing bank. If you accept and deposit a bank draft into your account that turns out to be fraudulent, you are out the money. The typical fraud with bank checks involves the buyer presenting a check for an amount greater than the sales price, i.e. an “insurance settlement” and asking for you to cash-back the difference.

Blank Check Loans — Some third-party lenders may prepare a “blank check” auto loan for pre-qualified buyers. The blank check simply means that the buyer has been pre-authorized to spend a certain amount for a vehicle. Once you’ve agreed on the price, the buyer will have to go back to the lender to secure the actual payment. Like with any other transaction, do not release the vehicle until you have secured the payment – in this case, a bank check that you can verify.

BILL OF SALEreturn to top of page

Create a bill of sale — In many states, your title becomes a bill of sale and odometer statement. Still, it is recommended that you additionally draft a separate bill of sale. The MAGNATIZE Bill of Sale is designed to cover a range of needs, including instances where there is more than one owner or where notarization is required. The sales price entered determines the amount of sales tax the buyer will pay. Avoid the temptation to under-report this amount to cut the buyer's tax liability. The state revenue agency will investigate suspiciously low sales prices. If the price is considerably less than market value (i.e. there is accident damage or you're selling cheaply to your child) include this explanation on the form.

Odometer statement — Enter the actual reading on the odometer. If you've driven over an odometer limit of 99,999, check the box [] In excess of mechanical limits. If the odometer has been modified, replaced or is inoperative, check the box [] Not the actual reading. Cars 10 years old or over (today's year minus the model year) typically don't need an odometer statement.

Damage disclosure statement — The state of Iowa requires a damage disclosure statement to be completed by the seller. Download the form here. Check your state's DMV for your requirements.

SIGN THE TITLE AWAYreturn to top of page

Don't sign the title until all the terms are agreed and put in writing, and when you have cash or a bank draft in hand. All owners whose names are joined by "AND" on the title must sign it. Only one owner needs to sign when names are joined by "OR." If the vehicle was financed, the lienholder's signature will be needed as well. See Don't Lien on Me.

WHAT ABOUT LICENSE PLATES?return to top of page

In most states — Take the plates off the car and keep them. They can typically be transferred to your new car within a specific time period. If you inadvertently sell the car with the plates, notify the DMV immediately. Otherwise, the buyer's parking tickets will accrue in your name. If you're not getting a another car, most states want the plates returned, others let you destroy them. For a complete list of plate policies by state, visit our DMV info page.

In California — The plates stay with the car. Complete a Notice of Release of Liability (Reg 138) as soon as possible in order to be cleared of future liability on the vehicle. Download Reg 138 through the Magnatize DMV Links photocopy for your protection and mail to: Department of Motor Vehicles P.O. Box 942859 Sacramento, CA 94259-0001.

What about registration stickers? — Most states include a registration sticker on the plates. If the car uses a window registration sticker, such New York, be sure to remove it.

Can the buyer drive without plates? — The bill of sale and signed title typically allows the buyer to drive without plates for a short period. A police officer may ask to see these documents. Newly-purchased vehicles typically attach a “Tag Applied For” sign on the vehicle. Some states (i.e. Georgia), are cracking down on tag-applied-for abuse by giving private-party buyers only 7 days to get proper state-issued tags or temporary tags.

Registration refunds? — Some states will refund part of your registration fees (i.e. if a full six months or more remains) or simply transfer the registration to the next car. Check your state's requirements.

CAN YOU SELL VEHICLES FOR FUN AND PROFIT?return to top of page

Most states let you sell a limited number of cars per year before you have to get a dealer's license (for example, up to five. Check with your state first). Technically, though, if you buy even one vehicle with the specific purpose of reselling it, you need a dealer's license. At that point, you will also need to keep full business records and collect sales tax. A dealer's license also gives you access to dealer's auto auctions.

HAPPY SELLINGreturn to top of page

We hope this information doesn't make selling a vehicle seem terrifyingly complex — it isn't. At the simplest level, you attach your Magnatize signs, accept the cash, fill out the Bill of Sale and sign the title. In the interest of helping you get the best possible price while protecting your investment, we have included a wealth of information. Magnatize Inc. has set out to become the definitive resource to help individuals sell what's probably their single most important investment after a home.

If you find information here that is out of date or needs to be revised, . We particularly want to share your selling stories on the Web — good and bad alike — so that others can learn from your experiences.

Good luck and happy selling.