Effective Vehicle Valuation
"What’s your offer?" It’s something we hear quite often at the dealership. Sellers asking dealers how much they will pay for a vehicle sight unseen. We’ve seen dealerships manage through this question in a number of ways, with varying results.
Vehicle valuation is two parts science and one part art. Many of you will remember local auctions bringing a vehicle into an auction lane on an off day and having a number of used car managers, appraisers and wholesalers into the lane to “condition report” the vehicle. More times than not, results differed, sometimes the result was much different.
An effective valuation must take into account a number of factors, most can be determined using effective inventory management software while others must be assessed with the vehicle in front of us. A few of those valuation factors are:
- Proper determination of year, make, model and trim level.
- Correct assessment of option packages and equipment.
- Market days supply and cost to market.
- Physical condition of the vehicle; paint, metal, interior and mechanical.
- Vehicle history and evidence of major collision or other significant damage.
Today’s software can close the gap in efficient valuation to a matter of hundreds of dollars rather than thousands. In order to make the most effective valuation, you need to bring the vehicle to the dealership.
That doesn’t always make private sellers happy. Sellers want to know you are not completely wasting their time and in order to do that, you need to provide them with an estimate. We’ve seen dealers manage that approach in a number of ways.
- Clearly state that you need to set an appointment to appraise the vehicle.
- Provide the seller with estimated range based on the market value.
- Make an offer contingent upon the vehicle condition once it arrives.
Most importantly, the seller wants to know you are an advocate for selling their vehicle and you will provide value to their attempt to sell the vehicle regardless of whether you wind up buying it or not. You both want to make the process safe, fast and easy.
One of the key values of acquiring vehicles from private sellers, aside from sourcing the fastest turning and highest ROI inventory, is that you are developing consumer relationships in your primary market area that continue to pay off for years to come.