How to Determine the Fair Market Value of a Carby Jason Unrau
Several methods can help you determine a vehicle's fair market value -- whether it's a new or used car, truck or van. Most options are available online and only require research to find what a vehicle is worth. The fair market value of a vehicle is an agreed-upon price that is mutually acceptable to a buyer and a seller, where neither is under any pressure to complete the transaction.
Fair market value is also known as true market value.
Several online sites have vehicle-pricing tools that will determine the fair market value for purchasing a new vehicle from a dealership. The information on these sites does not guarantee that the fair market value price -- should you offer it to the dealership -- will be accepted.
Kelley Blue Book
A comprehensive online tool for determining the fair market value of a vehicle is the Kelley Blue Book. For example, a 2015 Ford Fiesta ST hatchback, selecting the standard options button, shows the fair purchase price as $21,329, at the time of publication, and the fair market range of $21,130 to $21,527. The invoice price is shown as $21,428, while the MSRP is listed at $22,230.
Edmunds.com also offers a tool to determine the true market value on a vehicle. Enter your ZIP code, as well as the make, model and year of the vehicle you would like pricing on, and the site gives you the factory invoice price, average price paid and manufacturer's suggested retail price. It is less detailed than other websites; however, it is still valuable, as it details nearby vehicles equipped with the options you selected.
The NADA Guides website offers a detailed tool to calculate the dealer invoice pricing and the MSRP of a specific vehicle. You will need to select all the options and equipment you would like priced with your desired vehicle. After calculating the invoice price and the MSRP, this tool does not give you a fair market value price. It is assumed that the fair market value would be an agreed-upon number somewhere between invoice and MSRP.
Fair market value on a used vehicle can be used for researching a vehicle you would like to purchase or one you would like to sell. The tools are all designed to give you a range of pricing for similarly equipped vehicles in a similar condition.
NADAGuides, Kelley Blue Book and Edmunds have tools that allow you to calculate the fair market price of a used vehicle in way that is similar to what you do for new vehicles. Select the vehicle, options you are seeking and mileage. Listings of local vehicles equipped as selected are offered on all of the previously mentioned sites.
For example, suppose you are attempting to determine the fair market value for a used 2014 Ford Fiesta SE sedan on Kelley Blue Book's website. Selecting no added options, mileage of 22,000 miles and a vehicle in good condition would yield a fair purchase price of $12,601 , at the time of publication, according to the website. The fair market range is $11,197 to $14,004.
Checking local used car listings on sites like AutoTrader is another valuable way of determining fair market value. Once the vehicle you desire has been selected, you can browse the prices listed and get a sense of what others are retailing their vehicles for. The list price is not the fair market value in all instances. Some sellers, both private and dealers, mark up vehicles to allow room for negotiation.
If you are selling a vehicle, you can often take it to a local, reputable car dealership and have it appraised by a sales manager. In this instance, the manager will look over your vehicle's condition and compare it to online listings, dealer auctions and Kelley Book values. Essentially, the dealer does the legwork for you.
Many dealers are willing to offer you an appraisal as a way of keeping you happy as a customer. Take advantage of this service, which can give you valuable information to add to your own research.
Jason Unrau is an automotive writer with 15 years experience in the automotive dealer environment, including 10 years as and automotive service consultant. He is a Certified Technology Expert, a regular contributor to Gearheads.org, and operates AutomotiveCopywriter.com.