How many times have you taken your car to a dealership for an appraisal and the dealership gives you some ridiculously low price while saying, “this is what your car is worth.” A lot, right? It happens nearly every day with thousands of individuals.
Let me clue you in on one thing: The word appraise means “to give an expert judgment of the value or merit of” or “to evaluate the worth of” an object. I must say (in a sarcastic tone) that I looooove how the exact same car can have several different values while at the same site. Edmunds’ MyAppraise, Carfax’s History-Based Value, and many others show the same vehicle sectioned into three separate value-based models:
- The Retail Price— Buying this car at a dealership.
- The Trade-In Value— Trading this car in for another one.
- The Private Party Value— Buying or selling this car myself.
YourMechanic offers a few simple steps to help you determine the value of a car.
[Let it be known Kelly Blue Book has removed the “Fair Market Range” section from its Price Advisor model. A car owner used to be able to go to kbb.com, punch it the year, make, model, number of miles, and a few other generic pieces of information to receive the “Fair Market” value of his or her car.
So why did KBB stop offering the “Fair Market” value? Oh, because KBB began buying cars from the population. The could no longer give an unbiased fair price, because now they have skin in the game. The only thing that Kelly Blue Book offers now is the “Get Trade-In Value & Offer” or “Get Trade-In Value.” A person can no longer casually see what a car might be worth to use it as leverage against a dealership.]
My questions are… WHY and HOW? Is it because the perceived value of the vehicle changes? That makes sense. Johnny is willing to pay $12,000, whereas Melissa is willing to pay $10,000. I totally get that; the value is in the eye of the beholder. After all, everyone is a businessman.
But no, the issue comes from dealerships— the population has given too much power to dealerships and their “expert” appraisers. The multiple prices basically show you what dealerships will pay for the car (Trade-In Value) and what dealerships will charge for the car (Retail Value).
Unfortunately, when you took the car in, the dealership probably appraised your car at $5,000 ($630 below the average Trade-In Value), yeah? YEAH. How can they do that? If the same people that are buying your car are also determining the “expert” value of your car, how can they turn around and sell it for an increased price? You know for a fact that the dealership knew the car was worth more than $5,000, because they are a business and need to make a profit.
The Pricing Details to the left show how dealership will turn around and sell the car for nearly $3,600 more than what they paid (meaning the appraisal is not an appraisal at all, it is merely a willingness to pay). For some reason, they still use the phrase “this is what your car is worth;” conveniently forgetting the “to us” part. An additional $3,600 is a 63 percent markup, excluding tax, title, license, and dealership fees (TTLD). TTLD will increase the total price for the buyer by another $1,500- $2,000.
[What if Scenario: Home Buying.
What if home-buyers did their own appraisals (i.e. not using third-party or bank- certified appraisers)? They would probably just give their opinion of what they are willing to pay, right? We do not let people say “your home is only worth $100,000, because that is as much as I have saved up” and accept that price. So why the hell do we let dealerships do that?]
We live in a capitalistic society where prices fluctuate based on the willingness to pay. We know the dealership is going to turn around and sell your car for 63 percent more than how much they paid; yet, people happily accept that shitty price. I say appraisals should be done by third parties to determine the true “expert judgment of the value.”
If the retail value of my car is $9,220, then that is what the car is generally worth. After all, that is the price shown to the public. The value of the car should not change merely because you are wanting to buy another car, but for some reason it does.
COLLUSION, I SAY!