February 20, 2012

Finding the Market Value of a Used Car

Lets say that you own a bright yellow 2003 Dodge Neon SXT that you're just dying to sell.   How do you go about finding out how much the car is worth?    You could check the Kelly Blue Book value as that is one of the 'defacto standards' for car prices.   You could also just drive down to the dealer and ask them how much they'd give you as a trade in. 

I went to the Kelly Blue Book site and checked the private party sale price value for a Dodge 2003 Neon SXT with 90,000 miles.   KBB says that such a car would be worth $4,346 in 'good' condition via private party.

I also checked the price at the N.A.D.A. site.  They said that a 'clean trade in' value for the Neon would be $3,225.   The retail price they gave was a shocking $4,950.   They did not have a private party sale value listed that I could see so I'll go with the closest trade in value.

I then went to Edmunds and looked up the same '03 Neon and they said that the same car was worth just $2,909 via private party sale.

Lastly I went to Craigslist and searched for Neon's currently for sale.  I found a 2003 with 120k miles for $3,350 and one with 105k miles for $3,750.

Thats 4 different sources for prices with 4 quite different results.

Kelly Blue Book = $4,471 private party
NADA = $3,225  trade in
Edmunds = $2,909 private party
Craigslist  = $3,350 to $3,750 private party

How do we make sense of all this?    There isn't a single source for the 'right' price on a car.   The best you can do is get several sources and find a range of prices.

Personally I tend to think that KBB values run on the high side.   And as we see here they are the highest price quoted for private party value on the Neon in question.   Edmunds are both typically lower than KBB from what I've seen.   I'm not as familiar with NADA prices so I'm not sure where they usually fall.

The prices on Craigslist might be the most useful since that is the local market you're looking at.   If cars in your town routinely sell for $3000 then it doesn't really matter if KBB or Edmunds think the car is worth $4000 or $3500.  However with Craigslist prices you do have to look closely at what is being sold.  For the two prices I found both cars had significantly more miles than the theoretical car I'm trying to sell.   The cars listed had 105k and 120k miles while mine has only 90k.   My car should be worth more than the other cars based on my lower mileage.   I would also try and watch Craigslist for a  while and see how prices vary over time.   Its possible if you find a single price for a similar car that it may just be over priced or under priced.   You'll want to find a few prices for similar cars on Craigslist to get an idea of the typical selling prices.

Of course sometimes theres nobody selling a similar car in your market on Craigslist.   If you can't find the same model and year you might expand your search to look at the same model from a year before or after yours.   If I didn't find any 2003 Neons then I might look at a 2002 or 2004 model.   I would then assume that a 2003 would be worth a bit less than a 2003 and a 2004 would be worth a bit more.  If that doesn't work you can also try searching Craigslist in other cities.   Another city in your state may have prices pretty similar to your city.

You can also try looking for prices in your local newspaper.   People still do use the print newspapers and there is still a market there.    Another source of data is the Autotrader.com website.   They tend to have more dealer prices but do have some private party listings as well.

Once you've gotten prices from the various sources this gives you a range to work with.   From the four sources we have a price range of $2,909 to $4,471.   Its pretty save to say that the Neon is worth something in that range of prices.  This is a pretty wide range of prices, but we at least know we should stay within that range.   I would fine tune the prices by relying on Craigslist data more assuming we find several prices on Craigslist.    You wouldn't want to try and sell a car for much more or less than what others are selling them on Craigslist for.

Deciding on what you think the right price is will depend on your own situation.   If you want or need to sell faster then you may want to price on the lower end.   Ideally you can take your time to sell.  If you aren't in a rush then you should start with a higher price and then gradually lower the price if necessary.     Maybe you're in the market to buy instead of sell.   For buyers the opposite applies.  If you're in a rush to buy you may not want to be too picky and just settle for the best car you find quickly.    Hopefully you aren't in such a rush and can take your time and hunt for a good bargain.

Finding the market price on a used car is not necessarily an exact science.    The best way to go about it is to find as much data as you can from several sources and get a range of prices.   From there you want to pick the price that suits your needs, ideally preferring to buy low or sell high.

Photo of Neon by nateOne

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3 comments:

  1. Also, you have to consider the time of year. I've found that cars sell quicker (and higher priced) in spring. That's when people are getting their IRS Refund checks and they are looking to buy.

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  2. I want to know how much a dodge 1500 hemi truck is worth

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  3. Randy has a point. It's one of the factors that can change the price-tag of the car you want to sell, along with its age and current state of health. Anyways, you can also try your luck online. You might find interested buyers hanging around in Facebook or in various forums, for instance. Take the time to locate the most appropriate target market for your car. Through that, you will have a better chance of reeling in some buyers.

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