If you, a private seller, posted a vehicle and 5 minutes later you’ve got 10 calls – you underpriced it. Haven’t heard a word about your vehicle for a week? Consider lowering the price. Somewhere in between, there is a perfect balance, making the vehicle appealing to car shoppers.
How to price a used car for a private sale? Market-based value is the way to go. Once you determine the market value of the vehicle, it becomes the retail price that you are putting in your car ad. Read our Q&A to learn how to sell cars at top dollar fast.
The majority of cars are sold for 90% to 105% of their market value, depending on their condition, features, and demand versus supply in the region where the transaction will be taking place. Your old car can fetch a high price from a buyer who wants to upgrade their current transportation, whose wants, needs, and budget aligns exactly with the price, conditions, and features of your car. At any given moment, the retail value of a car is the price at which the vehicle will be sold by a willing seller to a willing and financially capable prospective buyer.
You might as well ask: “What makes up the price of the car?” The market value is based on the season, region, demand, supply, maintenance history, cosmetic and mechanical condition of your car, car loan offers available to car shoppers, year, make, model, trim level, mileage, CARFAX vehicle history report, features, and options installed on the vehicle. It is also worth considering the competition from a similar car in the market.
The market value of a used car increases if:
You are selling it in the right season. In the Indianapolis market, sports cars are more in demand during the spring-fall season, and winter is the perfect time to sell a 4WD truck or AWD SUV with a 3rd row, heated seats, and steering wheel.
The right car, right region. The region, just like the season, plays an important role in the car’s value. While an FWD truck will sell well in Florida, it will be almost impossible to sell one in Indiana due to the snow and freezing rain during the wintertime.
High demand and low supply will cause the car’s value to go up. When you think about demand and supply, think about the car prices during the tax season, when lots of Hoosiers are getting tax refunds. Car prices at the car dealership go up as more Hoosiers are willing and able to buy a vehicle with a down payment that they got from a tax refund. And vice versa, during the pre-Christmas season, everyone across the United States spent their bonus money on X-Mas presents for every single family member, leaving no budget for the car down payment. Demand drastically goes down, while supply stays the same. The only way to sell a car is to create a compelling offer that can’t be refused.
Impeccable maintenance history can be seen either on a vehicle history report or receipts collected from the mechanic shops that serviced the vehicle. A car that can show that an oil change was performed on a regular basis and is up-to-date on all recent maintenance will fetch a higher price. After all, all of us would rather buy a car (read our car buying guide) with a well-maintained engine, recent brake job, and new tires rather than a vehicle with no maintenance records, which makes it harder to believe that its maintenance will not add a few thousand dollars to the next few months to the price paid for the car.
The excellent cosmetic and mechanical condition of your vehicle will raise its retail market value. Naturally, a potential buyer will be attracted to vehicles without curb rash on rims; rock chips on the front bumper and hood of the vehicle from highway driving; rust on the undercarriage due to usage of the highly corrosive road salt to melt the ice, and show on the Indianapolis roads. Chicago-based car shoppers will appreciate the absence of door dings and destroyed bumpers caused by the lack of parking space. Should your car display signs of wear, remember, that car shoppers will ask a private seller to reduce the price if the damage was not disclosed in the car listing.
Great car loan offers. Car financing plays a big part in car shoppers’ ability to buy a car. When one buys a car, they need to budget not only for the monthly payment but also for out-of-pocket expenses such as registration fees from the local Motor Vehicle Department, Indiana sales tax, car insurance, and license plate fees, just to name a few. Part of the reason why cars over 10 years old and/or over 100,000 miles are cheaper is due to either loan availability or the higher interest rate and shorter loan terms available to the buyers of these vehicles. You are in a good spot if you are trying to sell a vehicle at the end of its lease when it is 3 years old and has fewer than 36,000 miles, making it a low-mileage vehicle. Banks are still offering lower rates and longer car loan terms, enabling buyers looking to buy a well-maintained pre-owned vehicle to pay a slightly premium price.
The ideal combination of year, make, model, and trim level can make or break the bank and the car deal. There are plenty of consumer review-driven sites that disclose the technical flaws of the vehicle associated with a particular make and model. Typically, it is an engine, transmission, or electrical issue that causes frustration, and typically it is being fixed by a manufacturer under the lemon law, within the next year, or via recall. Also, certain interior issues are associated with a particular year and make. Take, for example, the peeling finish on audio control buttons in 2004-2012 Audi or GM products of the same year.
Trim level dovetails in the available features. For example, everyone who has researched Honda products will know that the LX model will come without a leather interior, while the EX-L and Touring will have a leather interior and most likely a sunroof. Watch out when you shop for a new car with a premium trim option that lacks features that are expected: leather seats, a sunroof, a remote start, an entertainment system, and a premium audio system, to name a few. From the experience of our Indianapolis-based car dealership, it is tough to sell the Chrysler 300 Touring without a sunroof, as this feature is expected.
Features and options go hand in hand. In-demand features and options will raise the value of your vehicle. While features of the vehicle depend on the year (many cars before 2015 did not have a backup camera), make (Infiniti packs more features into its cars than its German counterparts – Audi, BMW, and Mercedes), and model of the vehicle. Check the original window sticker of your car or obtain one from your favorite Indianapolis car dealer – Indy Auto Man is more than happy to run a CARFAX and provide you with a copy of the window sticker should one be available, just reach out to us.
Vehicle conditions for true market value pricing are fair, average, good, and excellent. Dealers use similar grading: rough, average, clean, and extra clean. Less than 3% of the used cars on the market are in excellent or extra clean condition.
Market conditions result in the difference between market and retail value. Retail values are set by car manufacturers, while market values are values based on the supply and demand economic factors resulting in cars being sold above or below retail values.
Fair market value, also referred to as car market price is a defining factor in determining the retail value of the used vehicle. When it comes to new cars retail value is the price set by the manufacturer, commonly referred to as MSRP – manufacturers suggested retail price. Take note that the price is suggested. Based on the market conditions new car dealers can charge over or below the suggested retail price. At this point, you can say that dealer is selling a car at the market price or fair market value.
Your car is worth as much as a willing and able private buyer or a car place near you is ready to pay for it. Most likely, your current car will be worth more on the dealer’s lot than on your driveway, so price your car accordingly to give an incentive to a prospective buyer to conduct business with you.
The base value of the car is the retail value of the vehicle with no additional options in the base trim level, with the cheapest options for the engine, transmission, and drivetrain. Typically, trucks that come with 4X4 and FWD drivetrains will be FWD, and when it comes to SUVs, they will be FWD instead of AWD. Sedans will most likely be RWD instead of AWD.
A good price for a used car is a price that is below 100% of the car’s market value.
The best way to sell a car depends on your objective – selling a car in the shortest period of time or getting every penny for your used car. Also, consider whether you want to sell it yourself or let someone else sell it for you. A trade-in is the fastest way to sell a car without doing it yourself. In order to get every single penny’s worth of your car, you will have to sell it yourself.
After determining a fair market value of your car you will have to list it on the vehicle listing site of your choice, field online inquiries, meet with potential buyers, and sign proper paperwork to transfer vehicle ownership from yourself to the car buyer.
When you trade in a car that is not paid off, the dealer will have to have your Driver’s License and a statement from the bank with your account number on it. The billing clerk will contact the bank to obtain a 10-day payoff amount and per diem amount. If you owe more than the trade value, you will have to pay the difference. The accounts payable clerk will attach your check to their check to get the vehicle paid off. In the event you owe less than the trade-in value, you will get a check and a check for loan payoff will be sent to the bank. There will be four documents that you will need to sign to finalize the sale: a bill of sale, an odometer statement, a limited power of attorney, and authorization for the car lot to talk to the bank on your behalf.
During a car sale of pre owned vehicles, you can get talked down as much as the cost of undisclosed repair found during the test drive and pre-sale inspection, plus any extra price on top of the fair market value that you tried to get on top.
Yes, car valuation will change based on where you live since the demand and supply of vehicles vary from region to region. Shoppers in Colorado will have more appreciation for Subaru, than the same audience in Kentucky, and Indiana car shoppers will be in need of 4WD SUVs more than their RWD counterparts.
Aside from the year (read how the value of a used car depends on its age), make, model, trim level, and mileage of the vehicle, three other major factors are: exterior, interior, and mechanical condition. The features, while important, are not as major a deciding factor as the condition of the vehicle.
The Kelley Blue Book can be used as a guide, but never as a deciding factor in what the vehicle is worth. Oftentimes, this value is used by dealers as a starting point for negotiations. The Blue Book doesn’t take into consideration recent maintenance of the vehicle, the exact price of fixing the car’s defects to get it to the desired condition, and oftentimes available features. Research the prices of the vehicles listed on sites like Edmunds, TrueCar, and CARFAX to arrive at their fair market value.
In addition to listing your vehicle at no charge on Craigslist, Facebook Marketplace, and NextDoor consider listing it on CarGurus in case you want the most exposure. If you want to sell it for a top dollar and time is not an issue, upon researching the market value of your vehicle on the 3rd party listing sites, list it on the site where the market value of your vehicle is the highest. Your ad choices are vast. Keep credit card and VIN, vehicle identification number, handy, as it will be required on the majority of the sites to submit vehicle listing.
It depends on what the best is. Do you want to sell your car for free, at top dollar, or fast? CarGurus will help you to sell your car fast, while you will have to work on estimating the market value of your car on 3rd party aggregators to find out which one values it the most. If you are looking to sell for free then sites like NextDoor, FB Marketplace, and Craigslist would be the way to go. Often times we saw vehicles sold fast and for the unbelievably high dollar amount on NextDoor, as it offers a transfer of trust from one neighbor to the other.
The best car buying site is the site with the most listings, filters to browse through inventory, and mobile-first or the one that has an app you can download from Apple’s App Store or Android’s Play Store. The most popular car shopping sites are CarGurus, cars.com, Autotrader, CARFAX, and eBay Motors.
Dealers commonly use Black Book, Blue Book, and JD Powers (formerly NADA value) to determine the value of the vehicle. These values serve as a guide to dealers and banks as far as how much can be loaned against the vehicle. They are used to determine LTV – loan to value ratio. While these values make sense to the car dealer, do your own research to determine the fair market value of your vehicle.
Cars are priced above MSRP when demand exceeds supply. This way the car is going to the person willing to pay top dollar for it. Cars were sold well above MSRP during the chip shortage of 2021-2022.
Letting car buyers know that you are pressed for time will result in losing leverage during price negotiations.
Cars that are being loved and kept by their owners experience the highest rising values as their supply is lower than demand.
The Jeep Wrangler, Honda Accord, Honda Civic, Toyota Camry, and Toyota Corolla have the highest resale value.
Yes, leather seats add value to a car. Most car buyers prefer leather to cloth seats due to the ease of maintenance and aesthetic looks, especially as the vehicle is aging.
Trade in value is the market value determined by a dealer, less cost of reconditioning, dealers overhead cost associated with selling each unit, and dealers profit goal per unit. Risk is a factor during trade-in as a vehicle will first need to be bought from you before selling it. You can get more for the vehicle when consigning it as it eliminates the risk factor.
The value of the salvage vehicle is determined by the extent of damage and the fact that once it will be fixed it will be issued a rebuilt title, making the vehicle 30%-40% cheaper than its counterparts with clean titles.
Oftentimes, sellers on the FB Marketplace are trying to sell you a rebuilt vehicle or trick you into buying a vehicle for cash even though the title is not in their name, therefore invalidating the sale, and leaving you with no money and no car. But don’t get discouraged, cars under $20,000 do exist.
Current market value based on comparing prices on the same car across multiple car listing platforms results in the most accurate car valuation. As you evaluate car value, be objective, as you might want to prove to yourself that the vehicle is worth more when you are selling it and less when you are trying to buy one.
The Kelly Blue Book Instant Cash Offer is absolutely legit, as it is backed by Kelley Blue Books’ promise to a participating dealer to reimburse it the KBB ICO trade-in value given to the customer upon verifying the options and conditions of the vehicle.
Black Book is a wholesale value of the car updated on a weekly basis based on the past week’s auction and actual sales data throughout the country. It shows vehicles’ wholesale (auction), trade-in, and retail value. Each value has the following categories for the vehicle condition: extra clean, clean, average, and rough.
You can estimate this value by looking at a comparable vehicle that is 2 years older and has 24,000 more miles (on average, vehicles in the US are driven 12,000 miles per year). Make sure that you are comparing the same body styles of the model. In the case of body style changes, compare the difference between the former and latter body styles. For example, if you are buying a new body style of the car in 2022, compare the price difference between the same model in 2021 and 2019 respectively.