Have you ever gone to a classic car show and seen documents showing the appraised value of some of the cars you looked at? If so, do you know what those documents actually mean? A car appraisal is a valuation tool that is often important to car collectors, hobbyists, insurance companies, and auction houses.
Note that an appraisal is several steps above a generic estimate provided by Kelley Blue Book, Edmunds, or a similar organization. A genuine appraisal cannot be conducted sight unseen. It cannot truly determine a car’s value based solely on year and mileage.
Needless to say you do not need an appraisal to sell a used car. Unless your car is a collector’s item, the estimated Blue Book value is all you need to get things rolling. And technically, you don’t even need that much. We pay cash for cars in San Diego, Santa Barbara, and throughout Southern California just by working things out with the sellers.
A Detailed, Documented Estimate
Like Kelley Blue Book or Edmunds valuations, a car appraisal is an estimate. It is just a more detailed estimate. It is also a documented estimate offered only after an experienced appraiser has actually inspected the vehicle in question. The point of the appraisal is to give car owners a better understanding of what their cars are actually worth on the current market, based on a defined list of criteria.
A competent appraisal accounts for:
- Condition – A car’s current condition plays heavily into its value for the simple fact that buyers always have to consider how much money they will have to put into the vehicle after purchase. Poor condition equals lower value.
- History – Where car collectors and hobbyists are concerned, history is important. A car with a more remarkable history is generally valued at a higher price.
- Market Trends – Market trends are important because, ultimately, any car is worth only what people are willing to pay for it. An appraiser has to account for market demands and how they relate to the make and model of the car being appraised.
If you are looking at an appraisal prior to selling a used car, the appraiser would physically inspect the vehicle to understand its condition. They would also look over your service records and any receipts you have for parts and labor. It would be up to you to provide documentation pertaining to the history of the vehicle.
Why Cars Are Appraised
The level of detail you get with a car appraisal suggest that it is a type of valuation that isn’t appropriate for every used-car transaction. So, why are cars appraised?
Classic cars are usually appraised for two reasons. First, car collectors need to know the value so that they can purchase enough insurance to cover their vehicles. Second, classic cars are appraised for auction purposes. Auction houses want to know what they are working with before they even think about pricing.
Another reason for having an appraisal done is donating a car to charity. An appraisal offers an accurate value of the car at the time of donation, thereby giving the owner a dollar amount they can claim on their taxes.
Rarely do we deal with appraisals when we pay cash for cars. Most of the cars we buy throughout Los Angeles, Karen, and Ventura counties are run-of-the-mill passenger vehicles that will eventually be resold to consumers who have every intention of driving them. They are not collector pieces by any means.
What a Typical Appraisal Includes
A car appraisal is not complete until appraisal documents are submitted. A less formal appraisal done on a budget may result in the documents being furnished within minutes of inspection. A more thorough appraisal designed to be extremely detailed may require additional evaluation. Documents could take several days or weeks to produce.
Appraisal documents generally include:
- a complete and detailed description of the vehicle
- the appraiser’s methods of valuation
- the date and location of the physical inspection
- the date of the valuation itself
- the seller’s purpose for having the vehicle appraised
- a list of the appraiser certification qualifications.
A genuine appraisal also includes the appraiser’s signature. If an appraiser used an agent to handle the physical inspection on their behalf, that agent’s signature might also be included. Documents are normally produced on company letterhead that includes the appraiser’s physical address, phone number, and email address.
Not Set in Stone
At this point, you might be wondering why appraisals are not appropriate for every used car transaction. There are two reasons. The first is expense. You can get a cheap appraisal for about $50 in many places in the state. However, the most detailed appraisals can cost upwards of $500. You have to ask yourself whether getting an appraisal will add enough value to your car to cover the cost.
The second reason is that appraised values are not set in stone. An appraisal might be worthwhile if you are planning to sell in short order. But any plan to hold on to a car for more than 8-12 months suggests holding off on appraising it. Why? Because the value of the car 12 months from now is probably going to be higher or lower than its value today.
The only reason to have a car appraisal done on a vehicle that you intend to hold on to is to determine its insurance value. And in many cases, insurance companies will request an appraisal before they will write a policy for an expensive classic car.
Sell Without an Appraisal
If all you are looking to do is quickly sell an average used car in Southern California, you do not need an appraisal. You can sell it as-is. If you want a rough estimate, take a look at Edmunds or Kelley Blue Book. Once you have your asking price, give us a call. We pay cash for cars throughout Southern California.