Can a private seller compete with an FFL on price?

Bucky B said:

Check out online offers to sell handguns and compare non-licensed sellers with FFL's. .

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I doubt many "non-licensed sellers" are selling new firearms. Being that they don't hold an FFL, they cannot lawfully engage in the business of dealing in firearms and would not be able to buy from a manufacturer or distributor. If you are referring to used guns, then the value of the gun doesn't change.

Even if the private seller can undercut a dealer on the basic price the FFL has the edge when it comes to shipping. An FFL can mail a handgun by Priority Mail for about $35. A private seller must ship by either UPS or FedEx using next day air so his shipping cost will be more than twice that of the FFL.

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Yup.

Going to a local FFL to have the handgun shipped entails a transfer fee in addition to the mailing cost. The FFL has no incentive to discount his fee since the private seller is competing with him.

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I ship around five handguns a week for customers......except today when three customers brought in five guns to ship out. They aren't competing with me in the least.

It seems the best options for the private seller are word-of-mouth with friends, posting at the gun club or trudging the aisles of the local gun show all day hoping to find a buyer

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If that was true then Gun Broker or the WTS section of gun forums wouldn't see much use.

Private sellers can get a Fedex shipping label from shipmygun.com, which is owned by Bud's, for about 1/2 price.

Bucky B said:

Check out online offers to sell handguns and compare non-licensed sellers with FFL's. Even if the private seller can undercut a dealer on the basic price the FFL has the edge when it comes to shipping. An FFL can mail a handgun by Priority Mail for about $35. A private seller must ship by either UPS or FedEx using next day air so his shipping cost will be more than twice that of the FFL.

Going to a local FFL to have the handgun shipped entails a transfer fee in addition to the mailing cost. The FFL has no incentive to discount his fee since the private seller is competing with him.

It seems the best options for the private seller are word-of-mouth with friends, posting at the gun club or trudging the aisles of the local gun show all day hoping to find a buyer.

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Being that I do not have a FFL, I avoid selling online because I'd have to sell at a lower price, and have to pay and deal with a FFL which will also cut into my profits.

Unless you have a rare highly sort after firearm, an online vender can usually beat your price. I live in a state were face to face sales are perfectly legal, I have sold off at leat a dozen firearms via ArmsList over the years, and I have purchased two firearms from there as well. Never had an issue.

I buy online from the cheapest reputable seller via Gun.Deals, and when I sell, I only sell on ArmsList F2F. Except on one occasion, I've always been able to sell my used gun for the same price or more than I purchased it for online...

There are a few FFL's that won't accept a firearm from anyone but another FFL. That adds considerable cost to ship because anyone can put a long gun in an unmarked box and ship it USPS to an FFL. I've done it many times. My FFL friend won't even ship a long gun, he just tells everyone to do it themselves and save some money. He's too busy doing transfers.

With handguns it's a wash. Ship it yourself or use a dealer. I use a dealer. I can't transfer in this state anymore without using a dealer but a lot of people still can do that.

FedEx from Buds sounds like the way to go.

Bucky B said:

How much do you charge customers to ship a handgun?

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$10 for any firearm + actual postage/insurance/adult sig on delivery. Most handguns will run $30-40 depending on insurance.

When I shipped an M1 Garand to get rebarreled I shipped it in 2 parts. Basice stock with barrel an reciever. Bolt, trigger, spring, rod and gas tube in another. They shipped back same, no ffl because just shipping parts.

skeeterfogger said:

When I shipped an M1 Garand to get rebarreled I shipped it in 2 parts. Basice stock with barrel an reciever. Bolt, trigger, spring, rod and gas tube in another. They shipped back same, no ffl because just shipping parts.

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FYI.....a firearm receiver is a firearm.

Shipping it in two boxes is silly and doesn't change a thing.....except you cannot legally ship only a receiver via USPS unless you are a licensed dealer/manufacturer. (USPS classifies firearm frames, receivers and other firearms capable of being concealed on the body as "handguns", and only mailable by dealers/manufacturers)

And its perfectly legal for you to mail a rifle to an FFL in any state for repair or replacement of the same kind and type and that FFL return it directly to you, provided your state law does not prohibit such.

skeeterfogger said:

When I shipped an M1 Garand to get rebarreled I shipped it in 2 parts. Basice stock with barrel an reciever. Bolt, trigger, spring, rod and gas tube in another. They shipped back same, no ffl because just shipping parts.

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Unbelievable. Please don’t post stuff like this.

Assessing financial comparisons between a private sale of personal goods and retail sale of consumer products (which is legally what we MUST be talking about since we’re considering firearms), you really can’t focus entirely upon macro pricing models such as the opening post here.

A private seller’s pricing has no employee overhead to payback, no inventory cost (carry), no licensing costs (business and Federal), no rent/property tax, no insurances, no utility bills, no cost of business operations rolled into its price. Private sellers can take significant losses on sales, chalking it up to entertainment value and depreciated value of their now-used (or more used) asset. Businesses - good ones at least - don’t have the same luxury of operating at loss and still feeling good about it.

As such, you really shouldn’t be surprised by the reality we all live in - most often, a buyer can find their best price (lowest opportunity) through a private party purchase, and a seller can fetch their best price (highest opportunity) by selling to a private party.

One particular breakdown in the macro-pricing factors the OP assessed above, transfer fees are almost always a part of any online purchase. If buying/selling a handgun, two FFL’s are involved - if the seller is an online or otherwise out-of-state FFL, the firearm must still come to an FFL locally. Same with a rifle - anyone can mail it to the buyers local FFL, nobody can mail a transferred firearm directly to a buyer out of state. So those charges always carry somewhere in the mix.

Value is what value is - if nobody is willing to spend what something costs, all in, the product won’t sell. More often than not, someone WILL buy a firearm, even at a marginally higher than market value price, because on that day someone with enough money and enough desire found the product they wanted.

These kinds of threads always make me feel fortunate to live in a state with a large enough population of gun-owners that I have access to a pretty robust secondary/used market via legal FTF sales.

ATLDave said:

These kinds of threads always make me feel fortunate to live in a state with a large enough population of gun-owners that I have access to a pretty robust secondary/used market via legal FTF sales.

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Do you buy on ArmsList? In my state, ArmsList private sale prices are above what I can buy the same firearm for new online.

There seems to be 3 markets when it comes to firearm prices. Online prices, brick and mortar gun shop prices, and F2F sale prices. Online from FFL is the cheapest, followed by F2F, then LGS's.

Many online retailers drop ship or buy in bulk. They can then price a good percentage below MSRP while still offering "free" or low cost shipping. The buyer then only pays a $20 or so transfer fee.

Gun shops price their guns higher to pay for overhead, and on top of the higher initial cost, the buyer has to pay state taxes which will in many cases cost more than a transfer fee.

Private sales via online are usually priced below online prices, but then you have the added cost of shipping and transfer. This will result in either the sell taking a greater lose in profit, or the buyer spending more in shipping fees. The buyer still has to pay a trasfer fee.

Lastly, from my experience, private sellers usually price their firearms based on what they can be found for locally at LGS which is usually at or above online pricing.

This is why I buy online, but sell privately. I can usually undercut what everyone else is selling their firearms for locally while still getting all or at least most of my money back on a used firearm.

ATLDave said:

These kinds of threads always make me feel fortunate to live in a state with a large enough population of gun-owners that I have access to a pretty robust secondary/used market via legal FTF sales.

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Our secondary market is like the ocean with floatsum, one just has to be patient and it'll come around with something one wants.

Styx said:

Do you buy on ArmsList? In my state, ArmsList private sale prices are above what I can buy the same firearm for new online.

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Nope. We have a neat website in Georgia (https://www.theoutdoorstrader.com/) that allows people to list items, but the actual transaction doesn't occur online. More like Craigslist than Ebay.

But people aren't generally using it to try to get new firearms for less than dealer/gunstore/online-retailer pricing. Every once in a while, someone will win or be given a new firearm, or take delivery and then realize that they don't want it, but it's mostly used stuff.

Styx said:

Private sales via online are usually priced below online prices, but then you have the added cost of shipping and transfer. This will result in either the sell taking a greater lose in profit

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Private sales cannot be focused around “profit.” If they are, then the firearms are business owned assets, not personal goods, and the seller would have bought the firearm via perjury, lying on their 4473. Many states and municipalities, and not just blue states, prohibit the operation of any business without a business license, and further prohibit firearms businesses -dealers - from operating without an FFL. We all know guys do it, but it’s no more legal than lying on your taxes, or selling illicit drugs.

Varminterror said:

Private sales cannot be focused around “profit.” If they are, then the firearms are business owned assets, not personal goods, and the seller would have bought the firearm via perjury, lying on their 4473. Many states and municipalities, and not just blue states, prohibit the operation of any business without a business license, and further prohibit firearms businesses -dealers - from operating without an FFL. We all know guys do it, but it’s no more legal than lying on your taxes, or selling illicit drugs.

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Under federal law, a person engaged in the business of dealing in firearms is a per- son who “devotes time, attention and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms.”

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As long as a person is not frequently and repetitively buying and reselling with the purpose of making a living, they should be fine whether they're focusing on profit or not when they decide to sell.

I believe you took my comments out of context. There's nothing wrong with me or anyone else focusing on profit when selling off our used firearms. That alone does not mean we're in the business of selling. Even when I buy firearms for my collection, I thing about how much they'll hold their value (resell value) or how much they'll increase in value. When I decide to sell one off because I the money, I no longer have a use for it, or to fund another purchase, there's nothing wrong with me trying to break even or make a profit.

Someone correct me in I'm wrong.

ATLDave said:

Nope. We have a neat website in Georgia (https://www.theoutdoorstrader.com/) that allows people to list items, but the actual transaction doesn't occur online. More like Craigslist than Ebay.

But people aren't generally using it to try to get new firearms for less than dealer/gunstore/online-retailer pricing. Every once in a while, someone will win or be given a new firearm, or take delivery and then realize that they don't want it, but it's mostly used stuff.

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There's only ArmsList in my area which is also like Craigslist for guns. In my area, private sellers are selling their used firearms for around the same price that I can buy it NIB online, but less than the NIB LGS prices.

Here's the most recent ATF guidance on when someone is or is not engaged in the business of selling firearms: https://www.atf.gov/file/100871/download

It's not a simple yes/no situation. In any event, it's no surprise that the (legal) private, non-FFL market cannot supply the same volume and selection of new guns as dealers.

Styx said:

There's only ArmsList in my area which is also like Craigslist for guns. In my area, private sellers are selling their used firearms for around the same price that I can buy it NIB online, but less than the NIB LGS prices.

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Are people selling them for those prices, or just listing them for those prices? On our local (statewide) site, there's no transaction recorded online. Typically, the listing might generate a PM exchange between the seller and one or more prospective buyers, and then a follow-up posting listing the item as sold. Does ArmsList work that way?

If people are paying the same price for a private FTF transaction for a gun used as one bought new online, it suggests they are paying extra for not going through the 4473 process. There are flatly illegal reasons for wanting to do this (can't pass a BGC), and not-illegal reasons (want to have one or more firearms that cannot be located through paperwork).

ATLDave said:

Here's the most recent ATF guidance on when someone is or is not engaged in the business of selling firearms: https://www.atf.gov/file/100871/download

It's not a simple yes/no situation. In any event, it's no surprise that the (legal) private, non-FFL market cannot supply the same volume and selection of new guns as dealers.

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The link basically says what I stated. Plus it also stated that courts have concluded that you can also be in the business of selling firearms whether you turn a profit or not.Taking into account resell value and/or making a profit before making a purchase just in case you decide to sell off a firearm in the future does not necessarily mean you're in the business of selling. Trying to make a profit or the most money you can when selling a firearm from your collection also isn't necessarily being in the business of selling. Within the scope of the OP, all my comments are based on an average gun owner, similar to the OP, who wants to occasionally sell a firearm of theirs.

Styx said:

The link basically says what I stated.

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I don't know if it's possible to characterize that document as "basically" saying anything. It is explicit that this is a rather grey area of the law and courts have identified various factors. It supports what you're saying and it also supports what Varminterror is saying. That's why I said I thought you guys were talking past each other a little bit.

NOT LEGAL ADVICE: I think it's fair to say it's fine to try to maximize the sales price of a gun that you legally own. That's not a problem in and of itself. But if you're buying principally for the purpose of flipping the gun for a profit, that's well into the grey area. And, from a prosecutor's perspective, it's a lot easier to prove that intent if you're talking about guns that are flipped in a short period of time, particularly new commodity-type guns. If someone is wheeling-and-dealing a lot, and is generally coming out to the financial good on the transactions, they are taking a legal/compliance risk.

The whole context of a thread based on the (rhetorical?) question of whether a private seller can "compete" with an FFL on price. Private sellers aren't supposed to be "competing" because they're not in the business. They're just trying to cash out of something they have. If they're trying to compete, they're taking a risk.