Historically, our customers have experienced increases from 1.0% to over 2.5% in gross salvage return in a quarter by tracking the added revenue from re-run gain alone.
In addition to the measurable increase of re-runs, some indirect gains are attributable to the efforts put forth by MAST’s daily inventory management process. We review all vehicles before the sale and place minimum expectations on each one.
In conjunction with our market research, our Analysts are thorough in their quality check of the auction vendor’s preparation of the vehicles to verify an accurate display of information on the listing. Additionally, we provide cost-benefit analysis on enhancements that might impact value at auction such as obtaining or cutting keys, updating pictures or videos, cleaning or washing vehicles, requesting a wrap to preserve condition of exposed interior parts, changing flats out for spares, accounting for missing equipment, and cleaning obstructions from wheels when possible. Combined, all of these efforts contribute to measurable improvement of overall gross return.
The salvage laws in some states allow for the resolution of “problem files” by providing an alternative means to dispose of some salvage. At the insurance provider’s request, MAST Analysts will review aging inventory — usually “problem” files — and make appropriate, cost-effective disposal suggestions based on the individual vehicle and the jurisdiction.
Expertise – Our process was developed and implemented over 25 years ago as a part of an overall system of salvage management while our CEO was employed by one of the highest volume auto insurance providers in the nation. In doing so, studies were conducted to ascertain the best method of managing salvage auctions. The best, consistent auction results were produced by attending sales where seasoned adjusters, experts in property damage analysis, previewed the salvage vehicles to preset minimum bid expectations. Data suggests previewing vehicles on site is the most accurate method of estimating minimum bids. Real-time auction management through the auction vendor’s digital platform allows interaction and negotiation with the buyers to produce the best possible results. It is the best way to develop true expertise in auction management.
Sole focus – Producing maximum returns through auction management is our sole focus. Our team of Analysts have physical damage experience and are I-CAR certified. We train them to understand, interpret, and adjust to short cycle market analytics that impact the salvage industry. Our expert salvage review combined with time and expenses saved is the most efficient way to maximize expectations. MAST Analysts are incentivized to identify under-performance and work for an increased return in a way that a salaried employee of the insurance provider or auction vendor is not.
Volume – Studies indicate the average re-run net gain on each re-run vehicle sold is approximately $669.86, and the optimum re-run volume is about 25% of all units sold. In other words, indications are 1 in 4 vehicles sell for less than fair market value. The MAST process identifies and negotiates the below-market bids by evaluating every auction run on every vehicle.
Absolutely. We offer a 90 day, no compensation pilot to serve as a needs assessment. We can discuss location and inventory levels to develop a tailored pilot program to suit your business needs. At the end of the pilot period, we’ll evaluate the results and plan accordingly. Our process will likely surpass your current gross return results and identify improvement opportunities exist within your claims handling process.
At the close of each sale, MAST independently records the high bids for each vehicle. Upon bid rejection, if there is a negotiation between the high bidder and MAST resulting in a sale, it will be documented on the corresponding vehicle. All sale activity and final resolutions can be verified within the auction vendors’ platform. All detailed data on the insurance providers’ vehicles in inventory is accessible through the salvage vendor’s website.
Auction under-performance is identified by assessing fair market value through researched expectations and setting minimums on 100% of the inventory. When determining fair market value, one must consider all auction variables, including specifics of the individual vehicle and the auction dynamics at work on sale day.
If reserve expectations are set too low, vehicles will sell without the opportunity for negotiation, and MAST cannot earn compensation. If reserve expectations are set unrealistically high, subsequent auction runs will likely also produce bids that will not reach the original amount. Again, this means MAST cannot earn compensation.
The key is to set realistic expectations on each unit and reject those that fall short of fair market value. Additionally, MAST is contractually bound to reimburse our clients for any losses incurred due to a poor rejection decision.
MAST works on behalf of the insurance provider for the sole purpose of improving salvage results. We partner with the auction vendor to make sure that happens.
In addition to insurance providers, the auction vendor must also be sure to address buyers’ needs. The auction vendor’s primary purpose is to provide a service to move the inventory.
MAST Analysts focus without distraction on our clients’ vehicles to ensure the best possible return outcome. The auction vendor appreciates MAST’s efforts to satisfy their mutual customer, solidifying the likelihood of a renewed contract.
Our fees come from our ability to recognize under-performance and negotiate buyers up to a fair market value on each unit sold. We have done this with a 91% success rate in 2020. There is no fee associated with our efforts if we do not produce a gain. MAST calculates its performance-based pricing structure on a percentage of the re-run gain. We are profitable only if we have been successful in increasing your profits as well.
“Fair market value” is defined as an agreed-upon value that a buyer is willing to pay and a seller is willing to accept. However, within the economics of an auction, buyers are frequently looking for bargains, hoping to spend less than they feel an item is worth. In reality, it takes multiple interested parties bidding on a single unit for the high bid amount to realize what might be considered a “fair market value.”
Unfortunately, various obstacles can prevent a piece of salvage from reaching a “fair market value” in a single auction run. Based on our research and observation of historical returns, any single auction typically has an opportunity for additional earnings on roughly 25% of the vehicles sold. It’s MAST’s job to identify these at the time of auction.
MAST Analysts assess salvage market value on 100% of your salvage inventory. This way, we can assure each vehicle achieves its full market value potential at auction by placing minimum expectations influenced by current market trends and monitoring auction performance in real-time.
When the highest bid falls short of the posted reserve or expectation, we immediately decide to accept, reject or negotiate the current high bid. The subsequent auction is a “re-run” when the initial bid is rejected and the vehicle is assigned a new auction date.
If the subsequent auction run produces a higher bid than the initially rejected bid, a re-run gain is realized. The higher the re-run gain, the higher your realized returns. MAST is compensated on a percentage of the re-run gain. MAST compensation is performance-based, and we do not earn money unless you make more money.
Once the auction closes, a negotiation opportunity may exist. Negotiated sales occur when the high bid at auction falls short of the posted minimum expectation, and MAST offers an alternative amount to the bidder. If the high bidder and MAST can agree on a purchase price, the difference between the closed auction high bid and the agreed sale amount is considered a re-run gain on a negotiated bid.
They are. Several of the larger insurers employ full-time salvage personnel because they recognize the untapped potential in the salvage auction. This was not always the case.
When MAST founder, Jim Hissong, was working for one of the three largest auto insurers in the nation, he persuaded Texas management to not only move their business exclusively to auction, he also proposed, organized, and managed their salvage unit for the state.
He independently developed the concept of insurance personnel managing inventory at auction and employed field specialists to review inventory, confirm title types on sale vehicles, set minimum bids, attend auctions, and negotiate with buyers.
MAST gives insurance providers, who may not have inventory levels sufficient to warrant a full-time salvage staff, the advantage of expert salvage auction management.