When selling your car, determining the right car value can almost be considered an art form, blending both intuition and research. If you do it wrong, you could end up waiting weeks for a call or email from a potential buyer. That is why CARFAX has put together this guide on how to determine the car value and set the price to sell. Follow along to find out more.
Basics of Car Value and Car Prices
Setting the right car prices not only help sell cars faster, but it also allows both parties to feel like they are benefitting from the deal – the buyer doesn't feel like they are getting ripped off and the seller feels they are getting the most car value as possible in return.
Car value is made up of several components, including vehicle age, condition, mileage, optional equipment, and so on. But some factors are completely out of your control. For example, if the used car marketplace is flooded with similar (or the same) make and model as what you'd like to sell, buyers have more leverage to simply walk away from negotiations and buy someone else's car. This effect can have a negative impact on used car values, thus reducing car prices overall.
Ideally, you will find the sweet spot between a price the buyer is willing to pay and the price at which you are willing to sell your car. The following steps should help you to find this sweet spot and determine the car value when selling your car.
Assess the Marketplace
Before even beginning the process of assessing your car value, it makes sense to consider the current situation of the used car marketplace. Asking yourself the following questions can help you better understand the market:
Is this class of vehicle in high demand at the moment? Vehicle classes such as family sedans are almost always in high demand. Additionally, there are always a good amount of people simply looking for basic transport from point A to point B. Lastly, trucks and vans which can be used for work are a hot commodity. These often sell both quickly and with competitive prices.
Is it the right time of year to sell your type of vehicle? Selling a convertible in the middle of winter could lower the perceived car value. This could also mean the vehicle sits on the market for a longer time. Conversely, selling a convertible with summer weather and sunny skies helps to quickly bring out potential buyers.
What is the economic situation at the moment? If it's the middle of a recession where people are more likely to save than spend, car prices can definitely be affected. Also consider the price of fuel. If you are selling a vehicle with great fuel economy, and the prices for gas are relatively high, your car value goes up considerably. The opposite is also true. If you're selling a gas-guzzling SUV when fuel prices are high, buyers may not be as interested in your vehicle.
Take a Look at Listings for Similar Cars
Unless you are selling a very unique vehicle (e.g. classic car), chances are high that someone else is selling a similar vehicle to yours. Checking the local listings in newspapers as well as utilizing online listing sites is a great way to get a general idea what your car value may be. While you may not find listings which match your make, model, year, and extras included in your vehicle, you can still determine whether the price you had in mind was far too high or low.
If you want to be more exact in determining what car prices people are asking for similar cars, don't limit your search to only your make, model, and year. Consider taking a look at other car brands and models which offer a similar experience as your car. Also, consider looking at vehicles which are slightly older than yours. If hatchbacks from 2010 generally cost €3,000 more than ones from 2008, some people won't mind taking the older car and saving some money.
Consider How Mileage Affect Car Value
Don't forget that not all cars from the same make, model, and year are equal. As mentioned in the previous point, it may be difficult to find a vehicle which is similarly equipped to yours, as well as in the same condition. Comparing vehicle mileage is one of the top ways to determine if your car value should be higher than another vehicle's. A car with only 80,000km most likely has a lot more life left than one with 250,000km on the clock.
Calculating how much mileage affects the value of the car isn't an exact science, but here are a few tips about which things factor in:
Vehicle Age to Mileage Ratio. If you are selling a vehicle which is two years old and already has 50,000km on the odometer, people may assume it's been driven pretty hard. Conversely, a vehicle which is ten years old and has 80,000km on the odometer, people can see it wasn't driven much at all. While this doesn't necessarily mean the ten-year-old vehicle is in better condition than the two-year-old vehicle, buyers make a psychological note.
The average mileage of vehicles is 15,000km / year. Buyers can use this as a rough estimate. Owners of vehicles which have been driven more than this average can expect the car value to fall a little bit.
Factor in Vehicle Condition and Added Optional Extras
Mileage is not the only element which can add to or reduce used car values. Added extras, such as GPS navigation, better sounds systems, heated leather seats, air conditioning, sun roofs, and convertible tops all play a role in increasing car prices. Sometimes these extras can also balance out any decrease in car value from higher-than-average mileage.
Consider the condition of your vehicle as well. If you have properly maintained your vehicle and have never been in an accident, this can be to your benefit. Used car shoppers tend to look for cars which fall into these two categories.
Set Competitive Car Prices
The goal as a seller is to set a price which is competitive for the market, but also towards the higher end of the price range. The reason for this is that it leaves some "wiggle room" for the inevitable negotiations from the buyer, while still allowing you to get the most out of your car value.
The best way to start is to think of the final price you'd like to get for your car and work your way up from there. Factoring in all of the previously mentioned elements of determining car value, let's say you'd like to close the deal at €5,000. Listing the vehicle for €5,750 allows for some negotiation without you having to go under your desired price. For more expensive cars, you will need to leave a bit more wiggle room in your price as buyers tend to negotiate in larger sums at these prices. For example, if you're hoping to get €17,000 for your car, consider putting it on sale for €18,500.
Keep in mind, this method may scare off some potential buyers, or perhaps some simply won't even find your car in the listings. Many used car shoppers are not comfortable with negotiating, so if you find you're not having much success with the pricing, perhaps you have made a miscalculation in determining the car value.
Offer a CARFAX Vehicle History Report
If you are hoping to get the best price for your used car, you sometimes need to really "sell" the buyer as to why your car is worth so much money. Promoting the added extras, the great fuel economy, and low mileage are some ways to increase a buyer's interest. Keep in mind that many used car shoppers are skeptical and are always looking for something wrong.
A great way to build trust and show you have nothing to hide is to offer a CARFAX Vehicle History Report for your car. The CARFAX Report summarizes your vehicle's history in a clear, easy-to-read format which provides a full overview about the details pertaining to your car. Used car shoppers will find lots of useful and interesting information, including:
- Ownership Records. Prove that you are the only person who has owned the car. One-owner vehicles tend to have a higher car value.
- Maintenance / Service History. Supplement your own service history documentation or if you’ve not maintained records, the CARFAX Vehicle History Report details when, where, and what services were performed.
- Mileage Consistency. Show shoppers that your odometer readings are accurate and compare your mileage with the average mileage for your vehicle type.
- Accident Check. Confirm for potential buyers that your vehicle has never been in an accident or undergone repairs for structural damages.
- Vehicle Usage. If a vehicle has been used as a taxi, rental car or for other commercial purposes, this can have a negative effect on car value. Show your buyer that your car was never registered as a taxi or driven as a rental car.
- And much more…
Setting used car prices can be difficult, but following the above mentioned steps can definitely help. As with all things, use your intuition to make sure you’re not asking the wrong price. Remember to lean more towards setting a higher asking price in order to best maximize the return on your car value. But if you find you’re not getting much of a response, you can always lower the price until you get a call. If you already start too low, you will sell your car quickly, but won’t get the full value you probably deserve.