WHY KELLEY BLUE BOOK PRICES MISS THE MARK
For starters, if we could sell every vehicle to Kelley Blue Book at the prices they say cars are worth we’d be rich!
Everyday we get multiple callers citing “But Kelley Blue Book Says the value is…”. Reality check, Kelley Blue Book doesn’t buy cars and they lack human element. At one time KBB offered viable resources to get quotes on what cars and trucks were worth. As time progressed, they became more of a marketing company generating tons of web traffic where they push affiliated products and services to the general public. They’re heavily compensated by their affiliate providers of those services. Web traffic translates into revenue for them. They also offer a vague scale of pricing estimates when assessing your vehicle whereas you the consumer need to make an educated guess where it falls on their spectrum. Variations of your quote can span thousands of dollars.
To start with the origin where vehicle pricing begins it falls upon current market values. For example, if you buy stock, the value upon purchase may be $100 per share. One month from now bad economic data comes forth and now the stock is worth $75. In this scenario although only 1 month, the value of your investment has fallen by 25 %. The automotive market kind of works the same way.
A vehicles resale value is based on market desirability for a specific model. Typically an older domestic vehicle, even though operable, may only be worth scrap money as no dealer wants to lot that specific model. On the other hand, certain foreign vehicles such as Toyota hold great residuals as there is still a market for those cars. In the past fuel pricing can cause a vehicles value to drop or even increase. A few years ago smaller 4 cylinder vehicles were in high demand and held great resale value whereas big trucks were worthless. The gas pricing plummets and the price on big trucks increased and nobody wanted the smaller eco cars.
Also a dealer retailing a vehicle to the public can always command higher values than a private party selling a vehicle. This is because you can walk into a dealership with a small down payment and the bank can finance the rest. As a private seller, banks wont work with you so the people looking to buy that vehicle from you are only looking for a great deal.
Typically all market pricing is assessed by what dealers are paying for these vehicle. The origins of this data are provided by dealer only auctions. What dealers pay for inventory set forth the current market values. Ultimately pricing guides get hold of this data and spin it in a way where they can give estimates. Data can sometime be behind by more than 1 month.
When we assess a vehicle we use real time data. We also get as much information about the vehicles condition which will affect the value. Prior accidents, paintwork, mechanical issues, and prior owner history can negatively impact a vehicles value versus a 1 owner, no accident low mileage, well maintained car.
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