I’ve been looking at Craigs List and Autotrader, pricing new and used cars. My question: What is a fair price? Edmunds has “True Market Value”, then there’s Kelly Blue Book and NADA Guides. I had a buddy of mine (a retired car salesman) tell me that a “good deal” is 10% below KBB trade-in value. He also said, “Oh, Kelly Blue Book prices are $2,000 to $3,000 more than the real value.” In other words, KBB retail of $10,000 is more like $7,000 to $8,000. So, how about it? What IS a fair price? And how far down can you bargain down folks? (IMHO $500 is the most). And why do sellers have asking prices that are, sometimes, thousands of dollars ABOVE private party bluebook? I thought, with the recession, that it was a “buyer’s market”!
A fair price for a car is a price at which the seller is willing to sell and the buyer is willing to buy. It’s as simple as that. With new cars, there’s a lot less wiggle room because there is definitely a floor price below which a dealer won’t sell you a certain car and competition between dealers keeps the price below a certain number on most models. It’s much more difficult to quantify with used cars, though, because each is a unique commodity. Price books try to quantify all the variables with the car, but there’s little they can do to account for the economic, regional and human variables.
The relationship between an asking price and how much someone will actually take for it also varies a lot. Typically, most people put a higher asking price to sort of gauge the interest in their car. If you’re the only one that calls about it, chances are they will be willing to go down quite a lot, whereas if they get a large response they’re probably not going to go down much. So, consequently, you are probably not going to see the “buyer’s market” reflected in asking prices, but you might in sales prices.
What are you specifically interested in? Are you buying or selling?
The last used car I started at the minimum trade in value vs asking price, but you really need to know the history and maintenance, Brakes could be 800, tires 500, fluid and filter changes 150, I got my last 700 over min trade as it needed brakes and fluid changes but had been well maintained and had new Michelin tires. Asking price 12,500 Blue book was ok with that, my sale price 10,200, min trade 9500. They can take it to carmax for the min trade, so my thought was anything better than that would beat the dealer, profit for them savings for me.
KBB is so far off the mark that I think they are in cahoots with the car dealers. Their wholesale prices are historically lower than the norm too. Look at it this way. If you’re buying a car and the price is much lower than “the book” you’ll think you got a bargain. If you’re trading one in and you get more than the book says you should, you’ll think you did well too. NADA is the one most dealers and banks use in my part of the country. They are also available at www.nada.com
Yes 10% below KBB trade in would be a GOOD DEAL. Just try finding a deal like that. KBB can’t possibly be $2000 to $3000 higher than “real value” on a car that’s worth $6000 or $7000 in their book. Do the math. Perhaps it would be best expressed as a percentage of greed error.
I recently spent quite a bit of time on the used market, and I always looked at both Edmunds TMV private seller and the KBB private seller values and used those as the upper limit. I used those to decide whether or not the seller was even on this planet and to decide whether or not to even look at a car. I then adjusted when I looked at it based on condition, maintenance history, repairs needed, etc.
The real problem is - as GreasyJack pointed out, there is no way to say what a car is worth until the moment it is sold. It is then worth exactly what is paid for that instant.
FYI: I was looking for a minivan and ended up with an Oldsmobile Silhoutte, garage kept, all maintenance records, nearly new tires and paid about 20% below KBB trade value. It had some issues, but I figured I had breathing room for the price. I didn’t even bother talking to people who charged near retail (KBB, NADA).
Take your time and watch out for the auction flippers (just buy at auction and toss on the lot - they try to do volume for cheap), and have a good shop you trust on hand to look over vehicles as you’re interested in them.
All of these published prices are ESTIMATES. None of them is applicable to a particular vehicle. They are averages, and should be used as guidelines only.
The fair price for a given vehicle is what someone is willing to pay for it. If someone is willing to pay more than you’re willing to pay, then that’s what the vehicle is worth.
You can negotiate the price of any car, new or used. The asking price is the starting point. How far you can negotiate depends on many things, such as:
New or used car
Dealer or private seller
Age, mileage, and condition of vehicle
Demand for similar vehicles
For instance, right now it is, indeed, a buyer’s market (or at least it should be), but if you’re trying to buy a vehicle that is in high demand, such as a Mini, you probably won’t get too much of a price break (Mini is one of only two brands that had an increase in sales last year).
If you want to know the “real” value of a car, find someone who can give you auction reports from one of the major used car auctions in the country. These places are where dealers buy and sell cars, and the prices they pay are a pretty good indicator of what vehicles are worth.
If you know someone with a dealer’s license they could possibly get you a car at auction price. I’ve done it. I paid a guy a few hundred bucks for his trouble, and still came out way ahead.
Private sellers ask high asking prices for many reasons. They may think the vehicle is worth more than it’s worth, or they may just be hoping that a sucker will come along, fall in love with the vehicle, and pay too much for it. Hey, it happens.
Dealer pricing is a whole different thing. I never pay much attention to the asking price on a dealer’s lot. On certain vehicles you can reduce it by a third, if not more.
The numbers you’re looking at are good information to have, but they are not cast in stone. Every vehicle has its own price.
What are you interested in buying?
People/dealers list a car very high so you come down and feel better. Usually higher than you really should.
Start just below a fair price come up a bit and walk and leave name. They will call back.
Thanks for all the cogent replies. The fact is, I’ve looked at EVERY kind of car: Honda Civic Hybrid, Mercedes G-Wagen, Mazda Miata, Geo Metro, Honda S-2000 (see a pattern? sports car versus suv versus economy/practical car). Of course, EVERY buyer insists that their car is in “excellent” condition… my experience: every car I’ve ever bought used, even the “perfect” cars driven by the proverbial little-old-ladies, has required between $2,000 and $3,000 in repairs and deferred maintenance, within the first year of ownership! And I SUCK at negotiating! (I have a son who is a salesman… maybe I should bring him along, next time a buy a car?).
Here is some food for thought. I know of an independant used car salesman. He owns his own lot and has no employees, so he has little overhead. He makes anywhere from $1,000 - $1,500 per car profit. He sometimes sells 30 cars a month. That is just an average. So do the math. Some used car dealers with a lot of overhead, have to mark the car up $1,000 just to break even, so they end up marking it up 2k-3K from what they’re in it at. It might be a “buyers market” with the economy and all, but remember, the car dealer is still trying to make a living in the same economy you are, so maybe he cannot get used cars as cheap as he used to be able to. Just a thought…
Think in reverse. If you were selling the vehicle on a personal basis how much would you hope to make…how much would you expect to make…and how little would you accept in the end ? With all of the above advice added together; condition of it now, the work you need to put into it now, the work you hope to put into it soon, and the fact that sellers need to make SOME profit. Bargain until you feel comfortable that the price paid feels right to you.