Some of them are more severe than others.
Understand
those factors well, you will be more informed next time when you are in
the market of buying or selling cars.
You will hear those terms more often when you go
visit
local dealers. The term value referring to
Car Trade-in Value or wholesale value.
I am assuming you are familiar with Blue Orange
and
Black Book value guides, if not, please return from Valuation Variables
to
Kelley Blue Book or
Nada Guides
- Mileage
This one is the GOLDEN RULE of valuation
variables.
The lower the better! Average people drive 10,000 to 15,000 miles or
kilometers per year in North America. From dealer’s perspective, if
your vehicle's mileage is over 100,000 the book value will go down to
HALF. Prestige brands like BMW or Mercedes can be even more than HALF,
remember the keywords here are dealer’s point of view and book value.
NOT the retail value, the retail price will be
determined by the market it self. Keep in mind, high end model used
cars are traded in very inexpensively due to their higher depreciation,
however most of them are still asking for high price. Be sure to take
your time and negotiate for the best price.
- Reconditioning Costs
This is the ONLY place you will here the term
RECONDITIONING: The amount of money a dealer has to invest to bring the
car into acceptable resale condition.
Depends on the Make, Model and Market (3Ms) of
the
vehicle, the cost of reconditioning varies quite a bit. An old Ford
Taurus requires much less reconditioning cost than a late model LEXUS.
People looking for reliable used Toyota
Corolla
usually care less about a paint fading of rear bumper scratch than the
person who's looking for a BMW 5 series.
Sometimes if the dealer believes that certain
vehicle will NOT yield a desirable profit, they might even cut the
reconditioning down to minimum for a quick sale.
So be prepared next time when you plan to
trade in
your vehicle, listen to the sale rep and judge it for yourself. Is he
being realistic or just purely LOW BALL to your trade?
- Options And Equipment Installed
Valuation variation can be TRICKY on car's
option.
For example if you live in an area like Seattle, WA where steep streets
are every where, a MANUAL transmission car will be LESS desirable. In
Georgia a car does NOT have Air Conditioning will kill the car value
big time!
Here's a piece of advice: Do not spend tons of
money
on car stereos and sound system on your vehicles, they add ZERO or very
little value when you trade it in
Once again depends on your needs and wants,
preference and requirements. Options are more of personal matter. Just
remember what you think is great for the vehicle may not always
register with your buyers thoughts.
- Transaction Time
At what time you trade in and what kind of
vehicle
you trade in can affect used cars value BIG TIME. People are much more
motivated to buy cars during spring, summer seasons than they would for
late fall and winter.
You noticed there's more SPECIAL SALES during
the
colder days of the year from your local dealers, they have harder time
to run the business. Summer time is great for sports cars and SUVs,
don't trade-in your Solara convertibles in winter, there's simply no
market for those cars. Don’t blame the dealer too much on this.
- Physical Location Of The Vehicle
Speaking of convertibles, they sell for more
money
in Florida than in Buffalo, NY. If you own 4x4 SUVs, they tend to sell
higher than those in Texas.
- Color Of The Vehicle
Lighter colors will always easier to sell than
darker colors. Ask yourself, how many people really like bright yellow
or red colors? By the way, the best selling colors those days are
still: SILVER and WHITE whether you like it or not.
- Collision damage to the vehicle
Collision damage involved three parts: frame
damage,
paint work and vehicle repairs.
It's hard to put EXACT depreciation dollar
amounts
for each car involved in a hit. If the car has major FRAME DAMAGE, the
value can go down to 50% or more, dealer may not interested to take
your car as trade-in or offer you a ridiculously low price of your
trade.
A vehicle's paint job can negatively affect
the
value of the car especially if it’s in the high end models: It costs a
lot more to repaint door panels of BMW 5 series than Mazda 6s. So,
don't
be surprised to hear salesman's saying your paint work drive the value
down to $1,500 to $2,000 depends on make and model.
Vehicle repairs are referring to major or
minor
mechanical work performed on vehicles to keep the car running safely on
the road. Run a
CARFAX Report to see if there is any major repairs of the
vehicle. DO NOT confuse the term record with maintenance records, which
the more you have inside gloves box the better for you and your buyer.
- Dealer's Inventory Situation
This particular valuation variable is
interesting! A
dealer will pay you more, a lot more if he's desperately LOW in
inventories and vice versa. It's true that certain dealer will not take
your car for trade-in simply because they have too many cars.
- Model Year Change
Most people overlooked the time of purchase as
a
valuation variable factor. A newer body style will normally increase
the value by thousands dollars. Next time when you are buying a
vehicle, do some research on the model changes. Edmunds is a good
place to research and learn about options, DO NOT follow their value or
pricing guide, they are too inflated.
- Vehicle Marketability
Last but not least, this valuation variable is
a
wild card! How desirable is your vehicle from dealer's point of view
sometimes can be VERY different from yours. And the same goes between
yourself and your buyer if you want to sell the car in private.
I remember this lady take her Volvo S60 to us
and
ask for an arm and leg for her trade-in value. I had to KINDLY explain
to her this particular brand and model is not in demand and offered her
a little bellow average book value, she was NOT happy at all!
Those Are The Major Valuation Variables
The above are 10 common used car valuation
variables. Try to remember some if not all of them can help you make
better buying decisions in the future.
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