How to price your car when selling or trading-in your car.
So you’re thinking about selling or trading-in your vehicle? How do you price it? You’re not a professional appraiser but you know what you want to get for your vehicle. The tough part is, are you realistic? Should you be asking for more?
Selling your car shouldn’t be this difficult, so here are a few rookie mistakes people make when pricing their vehicle to sell.
1. Your car is worth whatever someone is willing to pay for it.
This is a hard truth for many people. Sometimes the market for a vehicle may not be as strong. You look up your vehicle on Canadian Black Book and you get an $18,000 appraisal. You look up dealership asking prices on Autotrader and you see they’re asking about $21,000. A safe asking price would be $19,000 right?
The problem is, how many people do you know who have $19,000 sitting in their bank account ready to buy a used vehicle? It might be a fair asking price but statistically, the average car buyer can only spend 10% of their annual income on a vehicle in cash. So your asking price may be fair but the number of potential buyers you have is limited since you don’t offer financing or trade-in options like a dealership.
At the end of the day, you still have to find someone looking for your car with thousands of dollars available.
2. You’re overvaluing your vehicle because you own it.
There’s something called the “Endowment Effect”. It means that you value something more because you own it. To you, your vehicle is ‘near mint’ but to many others, it appears as ‘used’. A chip on the windshield to you may not be a big deal, you might have forgotten about it, but to someone else, it’s the cost of replacing a new windshield. Perception plays a huge part in pricing your vehicle, you’re always pricing for the buyer, not yourself.
3. What you owe on your vehicle is not what it is worth.
Many vehicles devalue faster than they get paid off. With the exception of a few import brands such as Toyota and Honda, there’s a good chance your vehicle is depreciating faster than you’re paying it off. Your biggest hit comes when you drive it off the lot. Vehicles are a necessity in many people’s daily lives, but they are one of the fastest depreciating assets that can be purchased. Most people have to sell a vehicle at a loss within the first 2-3 years of ownership.
4. Your car is older thank you think.
Every year that your vehicle ages it takes a hit in value. As soon as a 2016 vehicle enters 2017 it becomes last year’s model. The biggest changes between years are features. Cars are becoming more technologically advanced every year and with those new features, vehicles depreciate faster than ever. Most new vehicles are coming with lane assist, adaptive cruise control, smartphone integration and more. The less technologically advanced your vehicle is, the harder it’s going to be to sell as it ages.
5. Mileage is only as good as your maintenance.
When comparing vehicles, most appraisal software assumes the vehicles are in exactly the same mechanical condition. Two identical vehicles of the same year with a 20,000km difference between them may get similar appraisals without considering mechanical and physical condition. The more maintenance history you can provide for your vehicle the more realistic a price you can ask. The higher the mileage on your vehicle, the more questionable it can appear to buyers. It may be in your best interest to get your vehicle pre-inspected so you have a document to certify its current state.
Pricing a vehicle when selling your car is more of a science than an art. It can be very time-consuming and not very rewarding. If you think you’d like to avoid this kind of a hassle, you can always use Flipped.ca which will give your car an appraisal from industry leading software.
Get a free vehicle appraisal when you list with Flipped.ca!
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