A very simple question that’s very hard to answer. Even dealers with decades of experience get car valuations wrong all the time. The trick is to get it right most of the time. Below I will guide you through the various processes available and the way to put a valuation on a car you want to flip or take in part exchange.
Why is it so hard to give an accurate valuation?
The answer to this is that no two used cars are the same. Even if two cars were made in the same month of the same year, in the same colour and spec with similar mileage. Each car will have been used and driven differently. Some cars have been meticulously cared for by an enthusiast owner, while others have had a busy family or business life. So comparing like for like can be dangerous.
Researching and pricing your car
Online car valuations
Will give you a good idea of the value similar cars have sold for. These valuation services offer a good starting guide price, but as stated above each car is unique. You need to bear in mind that these online valuation services make various assumptions about cars, such as average mileage and condition. Taking data from multiple sources.
The most advanced use information from hundreds of thousands of cars, from classified websites, individual dealer websites, major car auctions and leasing companies. Combining them to give an accurate average value across the market.
The problem with mass data like this is the assumptions taken from it. If your vehicle doesn’t fit into one of the boxes the valuation is often inaccurate. The data is tailored to the average and each vehicle is as previously stated, unique.
CAP and glass’s guide
For years I used to carry around the car salesman’s bible that was Glass’s Guide. A book produced monthly that covered trade and retail pricing on every common make and model. It even came with little snippets of information on how the manufacture and models were performing form month to month. CAP provided a similar service and both companies are still in business. But guides are no longer available in paper form and are now only available in various online platforms.
I do know some used dealers that still use these guides but they are nowhere near as popular as they once were. Larger dealer groups and finance houses still use them and they are still of some use in an auction environment.
But again they suffer from the same issues as online car valuations. Plus they are expensive. So only represent value if you are valuing lots of vehicles a month, and in my experience are no more accurate than a free online valuation.
Part exchange valuations
Both the guides and most of the online valuation services offer a suggested part exchange price. Again this is the result of data either harvested from the private customer or the dealer network. But with so much business being bought and such a wide verity of part exchange prices being offered. The water is so muddied the suggested price is no more accurate than a weekly weather forecast. Serving only to prove the inaccuracies of the retail valuations.
Searching your local area
This is my preferred method if you are looking to flip a car. This is where you are going to be selling a car, so its this localised market that matters, so naturally it’s the best place to look. You can still look on large national websites. But instead of searching for an online valuation, you search your local area.
You also need to look at more localised classified websites, Facebook selling groups and used dealers. The current cars for sale in your local area are your competition and a much more accurate barometer than data that’s sometimes months or years old.
Most experienced flippers and used dealers use this method and have long since abandoned Glass’s and CAP. Local data is what matters not mass data collected from areas that have no bearing on your area.
Things that can Increase a cars value
Now you understand that every car is unique, and you have established an idea of a cars value using the techniques above. You can look at the other variables and price your car accordingly.
1. Desirable colours
Some colours are more desirable than others, typically grey, black, blue and silver. So can often fetch a premium.
2. Optional extras
Some, but not all optional extras can add value. Normally this only applies to very expensive and rare options. Just because the car has the optional stereo upgrade doesn’t necessarily make the car more valuable. It may however make it easier to sell.
3. Full service history (FSH)
A really good service history can enhance a car value, especially if it’s had lots of recent work carried out.
4. No damage
A well cared for car is one thing, but a truly immaculate car is another. If a car is immaculate then that always adds value.
5. Well below average mileage
Low mileage is often stated as making a car more valuable. But in the same way that most optional extras don’t add value. Unless the car has ultra low mileage it normally just makes it easier to sell.
Things that can decrease a cars value
1. Higher mileage cars
Higher than average mileage even with FSH will decrease a cars value.
2. Gaps in the service history
Skipping services can have short term financial benefits, but can drastically devalue a car long term.
3. Aftermarket add-ons and modifications
The used market in general hates modified cars.
Dog or smoke smells can have a massive effect on values.
You need to be honest and objective about the cars condition. Try to see things from a potential buyer’s perspective. Look at a car objectively and give it an honest appraisal, deciding if the car is clean, average or a little rough. None of these thing are necessarily a bad thing.
In fact selling a car that isn’t perfect but is priced accordingly can be easier to flip than a perfect car. Then simply decide if it’s going to make a little more or a little less than the competition.
But if you are looking to flip a car quickly your car needs to be priced competitively either at or below market value. So again look at it objectively and from a potential buyer’s perspective.