“How much is my car worth?”
We get that question often and since we purchase thousands of cars each month, we know a thing or two about the car appraisal and car buying process. But it’s not as easy to give you a ballpark value number as you might think. In fact, there are a lot of different variables that go into vehicle appraisals beyond just make, model and vehicle condition. These include factors such as vehicle location, demand for the vehicle, the color of your vehicle, the price of scrap metal and the intangibles, among others. In this guide, we’ll take a comprehensive look at what exactly goes into appraising a vehicle to better help you get an idea of how much it’s truly worth when you sell your car.
Beyond the Pricing Guides
You’ve likely heard of the Kelley Blue Book (KBB), Edmunds and NADA guides. Perhaps you’ve even priced out your vehicle according to these estimating resources. While these guides are all great places to start when it comes to determining the value of your vehicle, they’re certainly not the be-all, end-all that many people might mistake them for. That said, these resources should be the first place you go to get a general idea of what your vehicle is worth. Keep in mind, however, that each resource is likely to give you a different estimate on the value of your vehicle – a key reason why these should be considered more “ballpark” resources than ones that you take at their word. (Think of the KBB, Edmunds and NADA guides like the various entities that analyze and assess your financial history to give you your credit score. You’ll be hard-pressed to get the exact same score from them, as they’re designed to weigh certain financial aspects differently.)
Pricing Guide Factors
The pricing guides will ask you for your vehicle make and model, trim level, color, vehicle condition and mileage to come up with its estimated value. Here’s a brief overview of each category:
- Make and model: Due to the depreciation of vehicles (it’s said you lose 10 percent of a car’s value the second you drive it off the lot), older cars are going to value much less than newer ones. There are some exceptions, of course, but that’s the general rule of thumb on most models.
- Trim level: Some trim levels will come with better values, such as those that include leather upholstery, heated seats, chrome wheels or other significant features.
- Color: Some colors are able to fetch a higher value than others. According to Kelley Blue Book, the top three colors are silver, white and black. These are also the colors likely to net the best return on investment for your car. Straying into more unique colors, like yellow, orange or purple, is never a good idea if you’re looking ahead to the value of your vehicle when you go to sell it.
- Condition: The various pricing resources will use different categories to assess condition. It goes without saying that vehicles in good condition are likely to be valued more than those in poor or damaged condition. Typical condition categories include “excellent,” “good,” “fair,” “poor” and “damaged.”
- Mileage: Finally, mileage is a big factor in car value. Most Americans drive their vehicles anywhere from 12,000 to 15,000 miles per year. If your vehicle’s mileage equates to more than that, it’ll be valued at less. If it equates to less than that, it’ll be valued more.
Once you put in all the information on the pricing resources, you’ll then be delivered the estimated value of the vehicle. However, even this estimate is likely to come in a few different segments. In fact, you’ll likely see different values for resale, trade-in and dealer retail. Here’s a closer look at what each mean:
- Resale: This is the estimated value you would likely be able to command for your vehicle if you sold it to another consumer. Generally, you’re able to make more money if you’re willing to list your vehicle and sell it yourself to an independent party than you would receive from trading it in.
- Trade-in: Though it’s very convenient to simply trade your vehicle in to the dealership and put that value toward the down payment on a new one, you’re likely to receive less overall value for it versus selling it yourself. However, this estimate will give you an idea of the trade-in, or wholesale, price you can expect.
- Dealer retail: This estimate consists of what the dealer is likely able to sell your used vehicle for. It’s likely to be the highest of the three aforementioned price categories.
An additional price category that you may be presented is “certified used.” This is similar to the dealer retail rate but reflects a vehicle that is new enough to be resold with the certified used designation, so it’s likely to be even more than the dealer retail price.
Keep in mind that these pricing guides are best thought of as estimates, as vehicle prices vary based on several other factors. We’ll explore some of these other variables in the sections that follow.
Look for Comparables
In the real estate business, location is everything. Homes in better locations are likely to cost more than homes in lesser ones, for instance. However, it’s also common practice in the real estate industry to pull comparables (also commonly referred to as “comps”) on similar homes in a particular area to help gauge the ballpark price for a piece of property. The same can be true in the auto business, as it’s always beneficial for vehicle owners to go “beyond the book” to determine what the accurate value of their vehicle is. This is really easy to do. Just log onto a site like Auto Trader.com and search for vehicles in your zip code, then browse the listings to find a vehicle that’s similar to yours. Look at what the user is asking for the vehicle, and then also pay attention to how many similar vehicles are available for sale on the site. If the pickings are slim, that’s good news for you when it comes to what you can ask for it. If there are lots of similar models available, then it’s not going to help raise the price. It’s the simple principle of supply and demand, so be sure to take this into consideration.
In addition to AutoTrader.com, some good sites to check out include Craigslist and eBay Motors.
To piggyback off this above point, vehicles depreciate differently based on where they’re located. For instance, a vehicle that has been driven in the Midwest is susceptible to winter weather conditions, may be rusted and may depreciate quicker than a vehicle that’s been driven in Florida, for instance. A vehicle that’s been driven in Arizona, where it’s susceptible to year-round scorching heat, may depreciate faster than one that’s driven in more moderate year-round temperatures. When you factor in weather conditions with supply and demand, it can make a big difference on the value of your vehicle.
Special Vehicle Status
Do you own a 2013 Buick Encore? A2009 Mazda6? A2011 Honda CR-V?
If so, there’s a good chance that you’ll be able to sell it for more than what the book estimates its value at. Why? Because all three of the said vehicles have been named to Consumer Reports’ “Best Used Cars to Buy in 2018” list. Credible resources such as Consumers Reports release annual lists along the like, where they name dozens of vehicles as their top picks to buy used, backing up their claims based on a variety of different factors. It’s good publicity to use in your favor when you’re shopping your vehicle, as people hold rankings and the like in high regard. Make sure if you’re listing your vehicle, you mention any accolades it has received or any placements it has had on various “best used cars” lists, even if it’s not as credible of a source as Consumer Reports. Any extra oomph you can give to your listing will only help improve its desirability – and perhaps its price.
It should go without saying that the condition of a used vehicle is debatable (to say the least). An owner might think their vehicle is in “good” condition, while a seller might see the car as one that’s in “fair” condition. That said, there are a variety of different categories beyond just standard wear and tear that vehicle owners should be taking a good, hard look at when it comes to assessing the price of their vehicle. For instance, the following can really take a toll on car value:
- Smelly interior: If you’re a smoker and have smoked in your car, that’s a big value killer. That’s because smoke is absorbed by the surfaces inside the vehicle, which can make the smell linger. Even cleaning it can have little to no effect on the overall smell inside of the car because of how deep the smoke is able to embed itself into the upholstery and other surfaces. What’s more is smoking also potentially leads to other car damage, such as burn marks in the seats. An interior that smells like smoke can decrease your vehicle’s overall value by hundreds of dollars. In fact, some auto value experts say to add about $200 to a vehicle’s standard depreciation per year for an owner that smokes inside the car.
- Ripped upholstery: You can score bonus points when it comes to vehicle value if you have luxurious features like leather upholstery or heated seats. But the additional value you could claim for such features can be quickly erased if there are rips, tears, burn marks, stains and more affecting the overall quality of the upholstery. Leather even has the potential to fade over time thanks to the impact of the sun, and it’s often very clear to the seller if leather hasn’t been properly cared for.
- Dents, scratches, nicks: Aside from the interior of the vehicle, the exterior condition of your vehicle can play a big role in the overall value of it. Things like dents, scratches and nicks to the paint job aren’t going to help your vehicle’s overall value. Rust is another big detrimental factor that can go against your vehicle’s value. Some dents you may be able to “bump out,” but others will require a completely new paint job to eliminate. A few minor scrapes all factor into the regular wear and tear of a vehicle, but if the exterior blemishes are more widespread, it could become more of an issue.
- Check engine light on: While check engine lights aren’t ideal, they’re not the be-all, end-all that many make them out to be. While it’s certainly better to be selling a vehicle that doesn’t have the light illuminated, if you are, it’s essential that you know what the issue is. This is easy to find out, just take it into your local auto repair shop or your auto parts store and get a diagnostic check on it. Diagnostic checks are typically free and only take a few minutes for you to learn what’s triggering the check engine light. In some cases, the issue may be so minor that you invest in having it repaired before putting your vehicle on the market. In other situations, you may just move forward with the sale regardless. In any situation, however, know what the issue is and know about what it costs to repair it so you can price the vehicle accordingly. If you don’t know what’s setting off the check engine light, many sellers just assume the worst-case scenario and will want a significant sum of money taken off the listing price.
- Cracked windshields: Cracked windshields are unsightly and can be a major distraction for drivers. Chips or nicks in the glass aren’t huge deals, just make sure to take your car in and have the issue resolved before they have a chance to spread. Larger cracks should be addressed before putting the car up for sale, however. Replacement windshields aren’tcheap, which can make this off-putting for many drivers. However, if you call around to several different auto repair shops, you’ll find that most are more than willing to work with you to come in at a lower rate than what your insurance deductible covers. You may just need to put in a little more legwork.
There’s one more factor that’s worth mentioning when it comes to assessing the value of your used car, particularly when it comes to vehicles that are designated “poor” or “damaged” and don’t have much – if any – serviceable driving life beyond their sale: scrap metal prices.
Yes, some used vehicles will just be designated for the junkyard, which is why the fluctuating costs of scrap metal prices can play a big role. Scrap metal prices vary, but they’re typically assessed by the ton. Keep in mind that the average vehicle weighs about 4,000 pounds, and much of this weight is metal. In fact, about 55 percent of the average vehicle is made of steel. Here’s a look at some ballpark scrap metal prices, per ton:
- Steel: $345
- Sheetmetal: $265
- HMS: $345
- Shredded scrap: $365
- Bundle: $385
- Busheling: $395
- Steel castings: $360
Keep in mind that prices vary based on the condition of the vehicle. For instance, if a vehicle has been totaled and won’t see the light of day again, the damaged metal may be worth much less – if anything. However, there’s a good chance that scrap metal may become much more valued in the short-term thanks to the increasingly volatile trade relations between the U.S. and China. As off all 2018, there’s a 10 percent tariff tax on hundreds of imports from China, including metals. Unless relations improve by January 1, 2019, that tariff tax will increase to 25 percent.
List High to Allow Room for Negotiation
So, noting all of this that we’ve covered in this post, the big question remains: Just how much is your vehicle worth? Like we’ve talked about a lot in this piece, there are a variety of factors that you need to consider. Unless your vehicle qualifies for some sort of special status – like placement on a top used car list that we discussed above- we’d recommend sourcing pricing from several of the available auto estimators. Once you get the estimates in, you can proceed from there a few different ways, but each way involves listing high. Even if you’re super motivated to get rid of the vehicle and return price isn’t a huge deal to you, listing low can scare of sellers who may wonder why it’s listed this way compared to relative worth. Here’s a look at some listing strategies you may want to administer:
- List with the highest value estimate: You want to get the most you can for your vehicle and you also have to factor in the belief that there will be negotiation between you and the acquiring party. That said, one option is to list your vehicle at the highest estimated price you receive from the auto sources you’re using. Knowing that there will likely be negotiations, you can even list a few hundred dollars higher, with the hope that the price you settle on is around the highest value estimate.
- List with an average of the high estimates: Say you’re selling a vehicle and you get an estimated value of $6,000 from one source, $5,800 from another and $6,200 from the third source you seek a value from. Another way to list is by taking the average of the estimates you’ve gotten. You can even tell potential buyers that this is how you priced it as a means of being transparent with them.
- Get savvy: If your car pops up on any “best used cars lists,” has any special aftermarket features (i.e. enhanced stereo system, remote car starter, rear-camera, etc.), then we’d suggested listing even higher than the prices you’ve received from the value estimators. For aftermarket additions, we’d suggest rolling in the price you paid to incorporate such features into the total asking price.
It’s important to do your due diligence when it comes assessing the value of your car. However, one thing that you also have to account for when it comes to its asking price is what a reasonable person would be willing to pay for it – that’s the true price of the vehicle, and it’s not always easy to determine this. That said, do your homework when it comes to getting a ballpark estimate, and then work in any intangibles that may increase or decrease the asking price. Also, don’t forget to search for comparable vehicles that have sold in your area and what the availability of said vehicles is like. Finally, we always recommend listing high to allow room for negotiation, which is often consistent involved in the transaction of used vehicles.
Like we said in the opening, we here at Junk Car Medics assess and purchase thousands of vehicles per month, so we’re well versed in the process that goes into accurately valuing a used vehicle. For more information on learning just how much your car is worth, contact us today.