You are looking to buy or sell a used car. After a brief internet search of the year, make, and model, you have found a wide range of prices listed for vehicles that appear to be exactly the same. What causes these price discrepancies? And how exactly are you supposed to know if a car is priced fairly?
The fair market value of a car comes down to what someone is willing to pay for it. Sometimes it’s relatively easy to determine this value because there are a lot of particular vehicles on the market. This makes it easy to see what buyers are paying. The equation becomes more complex when you involve rare, customized, and rebuilt title cars.
While sellers are trying to make as much money as possible from a used vehicle, buyers aren’t willing to pay more than they would for a similar car down the road. Charging fair market value is important. It can help your car seem like a good value compared to others on the market, which will help it sell faster.
The best resources for pricing cars are the organizations specializing in tracking used car sales, collecting and analyzing data, and determining the market value of a used car. The three major sites are Kelley Blue Book, National Automotive Dealers Association, and Edmunds. These are the gold standard in helping price cars for resale.
These organizations have created a master equation that factors in all of the details that will affect a car’s value. After evaluating the year, mileage, color, condition, and geographic location, they will give you a ballpark figure for the fair market value of any particular car.
Pricing a rebuilt title car can complicate things because of the vast spectrum of quality when it comes to rebuilt title cars. A rebuilt title car falls under the umbrella of “branded title cars.” These are cars that have had an insurance incident (flooding, wreck, fire, etc.) and have been deemed a loss. Underneath that classification are rebuilt title cars, which are those that are restored to road-worthy condition.
On one end of the spectrum, you may encounter a rebuilt title car that was put back together in someone’s backyard shop with the bare minimum done to get it to pass an inspection. On the other end, you can find a branded title car that a seasoned professional restored with the highest quality standards. If you find this kind of gem, you will not only get your hands on a vehicle that might be in even better condition than many used cars with clean titles, but the savings you’ll get will be hard to beat.
So how do you know if you are looking at a fair price for a car? Here are the factors that go into determining the fair market value for your vehicle.
(senivpetro/Freepik)
Year, Make, and Model
Year, make, and model are your starting points. But if you enter only that information, you will find a wide range of pricing. The car’s details will determine where in that range the car will be priced, and further information will help you narrow this down to a fair dollar amount.
Features
A car’s features are going to help you narrow down the pricing. People will pay more for higher-end features and trim packages, resulting in a higher resale value. Things like leather seats, sunroofs, heated or ventilated seats, heated steering wheels, tow packages, and tech packages will all drive the price of the car higher within that range.
Mileage
A car’s mileage is the best indicator of approximately how much life is left in that car. As a car’s odometer ticks upwards, the value of the car incrementally ticks downwards.
Color
The car’s color will also change the value of a used car. Surprisingly, the color that holds the most value is yellow. Other bold car colors (red, orange, blue, and even purple) bring in more money on the used market because they are rare. Black, white, gold, and silver cars lose more value because they are easy to find.
Condition
A car kept in pristine condition will always sell for more than a car that hasn’t been well maintained. Most used vehicles fall somewhere in the middle, having a flaw or two. Deciding which flaws decrease the value is personal to the buyer. Some buyers want an impeccably maintained engine but don’t mind some visual wear and tear, while others prioritize a beautiful car more than anything. It’s not uncommon for sellers to view their car in “excellent” condition, while car buyers might rate it lower just because they see the car differently.
Geographic Location
The car’s location can impact the sale price for various reasons. Some areas have a higher cost of living, which pushes the price of everything higher. There are also geographic considerations. Mountain regions create more demand for all-wheel-drive vehicles, while small sedans lose value quicker. Conversely, convertibles will fetch higher prices in Florida than in the north, where the season for convertible driving is short.
Title
The title of your car will tell you a bit about its history. A rebuilt title car (you’ll also hear them called restored title cars) tells you that at some point, the car has been totaled. Depending on the car, this can indicate extensive damage, but it can also indicate relatively minor damage. Rebuilt title cars have been brought back to life, are safe to be on the road, and can lead to savings of anywhere from 20-40% because of this designation on the title.
While the pricing of used cars is complex, understanding the factors will help you navigate buying or selling a used car and better equip you to negotiate a price that works best for you.