How to determine a Used car's worth (insurance, vehicles, 2009)
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Are you a buyer or a seller, or just trying to determine valuation for insurance purposes?
"true price discovery" on any given day will be found at an auction in your area or at the transactions of similar cars in similar condition to the one you're looking at.
The published guides lag the marketplace, and the numbers reported are "funny" numbers at best because you never know quite what the condition of the cars are nor the whole structure of the deal where they traded hands. For example, a car deal with an "overallowance" for the trade-in doesn't reflect what the price was for the car it was traded in on; ie, I can give you $20,000 for your 2008 Firebreather deluxe (bought new for $25K a year ago) in trade for my 2009 $30,000 retail stickered Smokeater Special ... which could be bought for cash at $25,000. The dealer network loves this type of game because it overrepresents the "value" of the 2008 car for the guides; what they don't want to see is the guides showing the 2008 car having depreciated to a FMV wholesale of $15,000 which suggests that the cars are losing value very quickly.
Collectable cars are a whole 'nother game from transportation cars ....
I know KBB (and probably edmunds) are "math formula derived" and are if not useless, they are just a starting point. Since everyone now knows about KBB they use it when they are going to list their car on craigslist, DESPITE BEING A BOZO about how to realistically evaluate condition.
IMO, in order to fall into the "excellent" condition category I expect a car to have less than 1,000 miles on the tires, have been detailed-inside and out, to have COMPLETE SERVICE RECORDS, and not need ANY MAJOR SERVICES in the next 5,000 miles or 6 months. If the car is within that mileage/time of needing; belts, hoses, tranny or brake fluid change, timing belt etc, then the price needs adjusting by 120% of what the dealer charges for that service.
I've found that most cars on CL are listed just higher than "excellent condition" despite not being anywhere near that condition. Of course Carmax does the same. When we were looking for a car for my wife 6 years ago we spent a few hours at Carmax and looked at about 6 models that med our criteria. EVERY ONE of them was about $400 over the KBB top price, despite needing some "moderate" repairs, torn seat backs, less than pristing tires, MISSING SERVICE RECORDS.
I've gone so far as to post for sale a "similar" model to the one I'm considering and watching the number of inquiries that I receive. If I'm 15% below what others are asking and not getting calls then I know he's way high!
On the car I just sold I used both edmunds and kbb to arrive at the price (I used to sell new and used cars so I'm pretty critical on evaluating condition). At the prices I got from them I had exactly TWO replies and it turned out that both of them had similar cars for sale!!!!
Once I adjusted my price by about 12% I got many more inquiries and sold it to the second looker. The next day the first looker called me back to make me a low-ball offer.
It really dpemds on the car really. The best will be sold for pretty close to edmonds retail by individauls mostly. Most of those at auction are the ones not keep by dealers to sell and thiers will be over edmonds retail price. Besides most of those sold by individals are sold to people who know the seller or have heard from someone who does.Now days ;if you have a lower miage ;well maintained vehiokles ;its very easy to sell from my experience.
Again, if you're going to use the published books, you need to understand what information they're giving you ....
If you are a retail seller, then you're seeing the inflated prices of the dealer network that reports their sales to the publishers.
If you are trade-in seller, then you need to see what the loan value or wholesale value is of the car, not the retail.
If you are a buyer, then a car is worth only what you are willing to pay for it given the condition and it's availability at it's price point to other similar (or the same condition model) cars in the marketplace in your area; ie, what the market will pay for a used Subaru in Seattle or Bennington or Denver is a lot different market value than in Dallas. You must also consider your seller's value added position ... are they a dealer with a warranty for the car, or are they a private party just wanting to walk away with a few more dollars than a dealer offered them for trade-in, or is it a true distress sale where a bargain may be had?
Horse trading is an old and practiced art ... extending to cars. Beauty and value are in the eye of the beholder and the person with the money. Sellers can ask all they want for their merchandise, however reasonable or unreasonable the price point is ... what determines the market today is what willing buyers are paying for like kind merchandise.
I've bought a lot of cars through the years where a seller came by the shop with a car and an asking price, which I could not justify. However, I always made an offer, good for a limited time. I had more car sellers come back to me later with a demand that I buy the car at the price I'd offered when they found out their car wasn't selling, wasn't getting any interest or qualified buyers .... like I'd entered into a contract to buy their car which they had previously rejected. Some came back in a few weeks, some in several months .... but I never paid more than I thought a car was worth. Most of the time, I was right ... but then there were other times where I did pay too much, or the seller sold their car to another party at their asked price (well, good for them both, I'm sure they were happy with their deal).
Other than taking Kelly and Edmunds prices at face value, there are too many variables, how do you know the market value of a used car?
Interesting question, Terchertype.
The KBB and Edmunds tools are great for regular stock type vehicles, however, they are worthless for unique older vehicles.
As an example . . . if even listed (I've never checked because I have no intentions of selling), my '86 CJ-7 would probably be priced out at about $3k to $5k while I would never even consider an offer less than $15k to $17k.
If you have an older unique vehicle, I would suggest researching selling / asking prices for similar vehicles in Cars.com or AutoTrader.
Good Luck
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