The used car market has been extremely volatile recently, with the trend likely to continue for another year, maybe longer. Tight supply on new vehicles has driven used vehicle prices up about 25% over last year, even amidst short term peaks and valleys. As an owner trying to sell your vehicle for the most money possible you might be wondering, what’s a good guide for setting my price?
Our advice: think like a professional. Professional buyers working at used car retailers use a variety of valuation guides when appraising vehicles. Some of them include books like Kelley Blue Book, Black Book, or JD Power, along with sale data from recent auction transactions.
The problem with all these different valuation guides is that they often produce drastically different valuations for the same car. As a professional appraiser I often see variations up to ten thousand dollars or more. As a seller, you want to pick a price that will net you the highest possible profit while still getting good engagement from buyers. Pricing yourself out of the market likely means you simply won’t sell your car very quickly, if at all. So how do you choose the right price?
Regardless of what the guides say, base your pricing on live market data.
Regardless of what the guides say, our recommendation is to base your pricing decision on live market listing prices for comparable vehicles, and work backwards from there. Find five to ten vehicles, comparable to yours, that are for sale locally at reputable retail establishments with names you recognize. Pay attention to trim levels so you’ll get an accurate set of comps.
Average the listings prices, then average the miles. You’ll end up with a rough snapshot of your local market conditions for that particular model. If your vehicle has lower than average miles you’ll be able to price it above the average, and vice versa. Now that you have the average price and miles for comparable vehicles in your market, there are just two more variables to consider.
First: How much reconditioning will your vehicle require to be in retail ready condition, like the comparable vehicles you’ve just found? Subtract that estimate from the price. This is fairly simple to calculate.
Second: Given that you’re selling the vehicle privately, how much under the retail price is fair?
This is exactly the calculation that Vehicle Hero performs when providing a qualified offer for your vehicle, and we’re going to tell you exactly what to expect. Not including reconditioning, which varies by vehicle, our buyers generally pay about $2500 – $3500 below the average retail listing price.
“NOT FAIR!” you might think. Why should a dealer make $3k on my car?? While you’re not alone in your thinking, let’s dive in for just a minute.
Most retailers have been in business for decades and are constantly improving on their services and offerings.
Dealerships offer a well-appointed, safe place to do business.
They have dedicated staff to handle the presentation of the vehicle, paperwork, loans, titling, and even registration in many cases.
The vehicles they sell have been professionally repaired and reconditioned so they’ll look and drive like new, including a professional detail.
Most purchases include warranty coverage, ranging from all-encompassing manufacturer certification to basic powertrain coverage, depending on the vehicle’s age and mileage.
Because dealerships are heavily vested in maintaining a decent reputation, they’ll often assist with necessary repairs that pop up days, weeks, or even months after the sale.
Many offer free services (such as car washes or loaner cars) or discounted services (like oil changes) to customers who purchase from them.
Finally, keep in mind that dealerships often discount from advertised listing prices to make a deal.
That $3k margin starts to get slim, all things considered.
The one thing you have going for you as a private seller is the fact that many people despise the dealership experience. You’re not a used car salesman (or saleswoman) and these days that seems to count for a lot. But considering all the other benefits, most people agree that vehicles for sale by owner should sell for less than retail.
There are many other variables that could affect the value of your vehicle.
There are many other variables that could affect the value of your vehicle. Local supply and demand, transaction trends that may be rising or falling, issues with global supply chains, new vehicle price trends, and many other things. If you’d like us to provide a market analysis and price recommendation customized for your vehicle and your market, we’re happy to help. Good luck and happy selling!
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