The words “if the price is right” always signal the climax of every episode of The Price Is Right . If you're like me, you have probably spent time evaluating the cost of the showcases right along with the contestants. Of course, we always get it right at home. If only we could call in our estimates, we would beat the contestants on the show every time and be millionsaires. We are obsessed with what things cost. When you price your vehicle for sale, you have to be especially careful. People will only buy it “if the price is right.”
Before we get into the practical aspects of pricing your car for sale, there are two core concepts that you always have to keep in mind. First and foremost, your car is worth what someone is willing to pay to buy it. You can draw from many But the only one that counts is the value assigned to it by the person with his wallet open. So it pays to price it in a way that will invite people to come to you with open wallets. Price it too high, and nobody will want to look. Price it too low, and people will question your integrity and the quality of the vehicle. You read that right. There is such a thing as pricing your vehicle too low. Trying to undercut the entire market rarely works, because most people have learned through painful experience to beware of too-good-to-be-true offers. So the trick is to find that critical middle ground and price it high enough to reflect its true quality and value but not to the realm of the ridiculous.
The other thing to always keep in mind is that nobody loves your vehicle more than you do. In other words, nobody is going to value it as much as you. You have to try to set emotions next and look at the quality and market of your vehicle as objectively as possible. This is especially true if you have placed a great deal of sentimental value on it. I remember trading someone out of a 2005 Ford F250 4×4 Harley Davidson Edition truck. He no longer needed it; he was getting a Lexus. But when it came time to sign the paper giving up the truck, it literally took him 15 minutes to sign it – and this was after already agreeing to terms. When he finally did sign, his hand was trembling the whole time. I could barely read his name. He had such an emotional attachment to his truck that he almost could not part with it, even though he had long stopped driving it. If you've named your car and set a place for it at the dinner table, you are going to have to work extra hard to set those emotions as long enough to price it. Otherwise, you will price yourself out of the market.
With these principals in mind, the first thing you have to do to price your vehicle for sale is determine the market for your vehicle. You have to find out how many other vehicles like yours there are out there; you have to see what your competition is. Let's say you're trying to sell a 2009 Chevy Cobalt. If there are 75 other ones out there in a 10 mile radius, it will greatly impact how much you can ask for yours. If you have the only one for hundreds of miles, it will also affect your pricing. It's a question of supply and demand. If there is a huge supply out there, you will not be able to ask as much for yours. On the other hand, if nobody else has one but you, you can ask a lot more and reasonably expect to get it – because you have the only one. Where else are they going to go?
These days, it is relatively simple to determine your market. The internet, of course, can provide a wealth of information. Auto Trader, Cars.com, and similar sites have search tools that allow you to enter a distance in your search. Simply search for a vehicle like yours and put the distance at 100 miles (very few people are willing to drive farther than that to buy a car). This will give you a feel for how many other vehicles like yours are out there in your area. You can search your vehicle on your local edition of Craigslist. Craigslist will not only tell you how many vehicle like yours are out there, but also give you a feel for how long cars like yours have been on the market. Also, do not forget to look up auction sites like E-Bay Motors. Another great resource is local classified ads in newspapers and sale journals. All of this should give you an excellent feel for how many other vehicles there are out there like yours and how many people are asking for them.
Once you have a feel for the market, it is time to get specific with your pricing. To further refine your pricing, look up your vehicle on Edmunds, Kelley Blue Book, and NADA. Edmunds's claim to fame is their True Market Value. To determine this value, they interview people and dealers to find out what people are actually spending for a particular vehicle nationwide and then adjust for a particular area. Kelley Blue Book uses west-coast auction prices as a control and adjusts for regions. NADA is what lenders uses to determine vehicle values. I will say more about the critical value of that site in a moment.
What you find in each case is that the private-party sale price is less than the dealer retail price. Because of this, your customers will expect to pay less than retail for your car. That is what these resources have trained people to expect. To price your vehicle for your market, you are going to have to ask less than what dealers are advertising similar vehicles for, if you want to price it to sell. For example, if a dealer has a 2009 Chevy Cobalt with the same equipment and mileage as yours on sale for $ 13990, you will have to price yours for less than that, if you want it to sell.
Also, if you are selling a vehicle that the average person would have to borrow money to get, you have to pay attention to NADA. As I said earlier, these values are what lenders use to determine how much to lend on a car. And the most important value is “Clean Trade”. Let me say that again, the most important value on NADA is “Clean Trade”. Almost all lenders use that value as their control measure for the value of the car. They lend money as a percentage of that value. So if you are selling a car that the average person will have to finance, you can not price it ridiculously higher than NADA “Clean Trade”, or your customers will not be able to get enough money to finance it. It is perfectly fine to price it above that value. But do not go crazy, or people will not be able to buy your car, even if they wanted to.
All of this assures that you have prepared your vehicle for sale (see my article “Wash Me”: Preparing Your Vehicle for Sale). On The Price Is Right , Bob Barker always used to ask the first showcase contestant, “Are you a-bidding or a-passing?” They almost always passed the first showcase. They did not want the living room furniture; they wanted the trip to Aruba and the ski boat. They held out to bid big money for the more attractive showcase. When it comes to your car, if you want people to be “a-bidding” instead of “a-passing”, you have to make it the more attractive showcase. Prepare it; maintain it; repair it; shine it! Then ask for all the money. People will come to you a-bidding, because “the price is right.”