As long as people have been making cars, other people have been figuring out ways to evaluate what they're worth. In the case of Kelley Blue Book, they've vehemently pursued vehicle values for over 80 years and offer one of the best online resources for companies and private individuals to understand how and why their cars are worth X amount of dollars.
We talked with Jack Nerad, the executive editorial director and executive market analyst for KBB.com, to explain some of the best ways that you can evaluate your vehicle's worth.
Don't Fool Yourself
Surprisingly, one of the problems in properly evaluating a vehicle's worth has nothing to do with the vehicle. Think of the computer phrase IT guys like to use, " It's a PICNIC error." Which stands for "Problem-In-Chair-Not-In-Computer," meaning that nothing is really wrong with the computer, the real issue is the person using it. Nerad says that some people trick themselves into thinking their vehicle is worth more than it actually is.
"Where we get into difficulty is when people start fooling themselves about the condition of their car -- that they believe it is in excellent or pristine condition when actually if it has two or three years on it, it's going to have some miles on it, some wear and tear."
You may have yelled at your family and friends every time they even considered bringing a coffee cup into the car, but it's still a used vehicle, uh, I mean pre-owned vehicle. "Even if you've taken wonderful care of it, it's not going to be as fresh as it was when it left the showroom -- that's something people are going to have to keep in mind."
Know the True Condition
Although you have to be honest with yourself about how your car compares with others on the road, taking good care of it can pay off when selling. "When you have a used car, condition, condition, condition are the three most important things," Nerad explained.
"So actually assessing your car's condition is crucial to getting the right value, understanding the right value and arriving at the right value. The good news is that at our Web site we give you a checklist that you can essentially go through and it includes things like mileage, equipment levels and also an assessment of condition, which helps you arrive at the appropriate value." Nerad said that the values KBB gives are estimated ranges of what the vehicle is worth rather than an exact dollar amount because they are factored remotely. Still, an estimate from the Web site is one of the best and simplest ways to calculate your car's worth.
Body Shops Can Help, but a Wash and Wax Might Be Better
"Most often, it's been our experience that you're better off giving an honest discloser of the car's condition and selling it as is opposed to doing things like cosmetic changes, which can be pretty expensive and are kind of in the eye of the beholder," Nerad said. He mentioned that the person purchasing your vehicle might not care as much about some of the minor cosmetic flaws and would rather hold onto their money than pay for a car in pristine condition. "I don't think too many people who are buying used cars, especially over a few years old, are expecting a car to be in perfect condition or even nearly pristine condition. I think they're expecting to buy something that has a few miles on it in all senses of that term."
There is a difference between taking your car to the body shop and taking your car to have a wash and wax job done, however. Appearance is still one of your car's best selling points, and you should do everything you can, short of spending more than your car's worth, to make it look good.
"I think the thing that most helps is appearance. It's kind of like the curb value of your home. Appearance is going to catch people's eyes, and it's going to give off the impression that the car was taken care of. If the car is dirty and there are scratches on it, inside and out, if it doesn't appear to be taken care of, that's going to have a negative effect on what you're liable to get for it," Nerad explained. "The good news on that cosmetic stuff, washing the car, giving it a wax job, cleaning the tires, those kind of things are pretty inexpensive to do. Even cleaning the interior out helps the added value. It's certainly worth doing to put your best foot forward that way."
Understand the Resale Game
Since Kelley Blue Book released its 2008 resale value guide not too long ago, I asked Nerad about the assessment of car values. He explained that cars can have high resale values based on their actual resale value, their perceived resale value or simply their demand. The better you understand where your car fits into this system, the easier it will be to understand why your car is worth what is and how to sell it.
"For instance, a Honda, BMW or Volkswagen has a reputation for resale value in the marketplace, so it helps them to have good resale value," he said. Although not necessarily true for the brands just mentioned, Nerad notes that sometimes brand equity, the popularity of a particular brand, can override its current level of reliability, although it's not common.
"What we've found though, is there are really no major swings in this, there are changes, year to year changes and we adjust our site year to year, but they don't really move in a volatile way," he said. "It's something that has a degree of predictability about it."
Keep in mind that your car's resale value is public information; anyone can go online and look it up in 2 minutes. If you let the online experts do their job in evaluating your vehicle's worth, you're likely to sell the vehicle a lot faster than if you overprice it or exaggerate its condition. Keep it clean and happy selling.
Read about Car Ownership:
- Is Your Car Loan Upside Down?
- Consumer Reports Cost of Ownership Comparison