Vehicle Donation Sleight of Hand? When the Donation Company Runs the Auction
How do you know that your donated vehicle will be sold for the best price possible? Good question—and it’s hard to figure out the answer sometimes.
 
To sort through the issues, Car Talk recently spoke with Joe Hearn, the President and CEO of Advanced Remarketing Services (ARS), the company that handles the title transfer and sale of each vehicle that comes in through Car Talk Vehicle Donation Services.
 
Here’s a glimpse behind the scenes—and a few things every donor should consider before offering to donate a vehicle… and every charity should mull over, before selecting a vehicle donation partner.

 
Joe Hearn, President & CEO of Advanced Remarketing Services, answers questions about how donated vehicles are sold.
 
Car Talk: How do vehicle donation companies sell the cars they receive?
 
Joe: Most companies sell the vehicles through just one or two routes, such as an auction or a dismantler—that’s because many of the current vehicle donation vendors started out as auction houses and launched new subsidiaries that now handle donated cars. Vehicle donation is a means for them to get more cars into their system.
 
Car Talk: It’s another way for them to acquire cars?
 
Joe: Exactly. And, of course, they pocket more money that way. How do I know? I used to work for them! I have worked for the largest auction houses in the country — they’re behind some of the vehicle donation vendors in public broadcasting, too. (I’ll be polite, though, and not mention their names!)
 
Car Talk: So, we get a glimpse behind the scenes. What was it like working for them?
 
Joe: It was difficult because it's hard for any one company to be good at a lot of things. Auction houses are very good at rounding up buyers and running their own auctions. But it's very difficult to be good at taking care of donors or assuring top sale price when that's just not your primary business. 
 
They want their cars to go to their auction. So, only under very rare circumstances would they ever pull a donated car and sell it on eBay, for example. I found that frustrating. It's not to the advantage of either the charity or the donor. However, it’s great for the vendor. He can collect fees from both the charity and the buyer!
 
There are pricing games that some other companies play too, that make the fees to the charity look lower. 
 
Car Talk: Can you share an example?
 
Joe: Well, you might get an auction report that will show you how much the buyer bid on a vehicle. But it won’t show you the true sale price, because the buyer is mentally calculating his auction costs into his bid.
 
Car Talk: How is that a game?
 
Joe: Because the costs still come out of the purchase price of the vehicle. But the charity never sees that cost. It’s obscured. A service like ours shows you the true sale price, and all the fees. 
 
When you compare the true costs, our overall fees are lower and revenue collected is higher. Their overall returns are substantially lower.
 
Car Talk: How's a donor to know if the company through which they're donating is profiting both ways, and may be not getting top dollar for their gift?
 
Joe: Call and ask questions! Ask plenty of questions until you're entirely satisfied. For example, "How will my vehicle be sold?" Ask if they're owned or managed by an auction company. That's a pretty good indication that the program primarily benefits the auction company.
 
To be frank, this is one of the main reasons we started ARS. I saw this happening first hand and I didn’t care for it. I wanted an organization that worked for the charity’s best interests, period.
 

ARS recommends calling the company you donate your car through to find out how your vehicle sale will be handled.

 
So, how do we sell vehicles at Car Talk Vehicle Donation Services? Good question! Lots of ways, in fact! We'll visit with Joe about that in our post, next week.