Whether you are in the used car market as a buyer or seller, the chances are that you’ve already taken a look at Kelley Blue Book (KBB as it is known). It is considered by many to be the most accurate and indispensable guide for both buyers and sellers when it comes to used cars. Which begs the question: Should it be?
Kelley Blue Book is offers a great value to the used vehicle marketplace, should in order to get the most out of it and truly take advantage of its value, it’s important to be fully informed and understand what Kelley Blue Book is – and isn’t – before you use it for a reference point in your purchase (or pricing) decisions.
Kelley Blue Book Doesn’t Set Vehicle Prices
This is probably the most common assumption people make. Kelley Blue Book doesn’t directly set car values or prices. Kelley Blue Book tracks pricing from several sources, including weekly auto auctions as well as online marketplaces such as AutoTrader. By using these data points over time, KBB is able to provide accurate pricing snapshots. But, as with many guide, it has some inherent weaknesses:
Because the prices Kelley Blue Book references aren’t real-time and are instead compiled and compared, their pricing can sometimes lag behind market changes. For example, when large SUVs suffered a price collapse in 2008, Kelley Blue Book didn’t update immediately to reflect the price drop in the marketplace, creating an “inflated” price in their analysis which impacted anyone looking at the price guide before KBB updated it to better show the current market trend.
The market’s interest in a vehicle impacts its resale price. There are times when KBB’s pricing doesn’t reflect the popularity of a vehicle. One example can be found in the pricing for a used Toyota Camry in excellent condition. KBB pricing had a list value over 30% below what the actual market price was indicated to be. Why was KBB’s pricing so far off the mark? Because of the perceived value of the Camry by the marketplace, sellers were able to get a premium price for their vehicle. But anyone who was trying to negotiate the purchase with the KBB pricing as their guide would be woefully misinformed and unable to convince a seller to drop their price. Even worse if you were the seller, and priced your vehicle so well below its worth you were leaving hundreds of dollars on the table!
How Do You Determine Used Car Value?
To get an accurate idea of what a used car price or value is, we recommend you look at the three main resources or price books: Edmunds.com, Kelley Blue Book and NADA.com. Each one of these sources use different data points and calculations to value cars, by using all three and comparing their assessments, you’ll be able to price your vehicle – whether you are looking to sell or to buy — much more accurately.
In The Market To Buy A Used Car
Most private sellers tend to wear rose tinted glasses when assessing their vehicle’s condition, so don’t be afraid to politely, but firmly, question a seller on the actual condition of their vehicle. It may help your cause to print out Kelley Blue Books car conditions definitions on what a vehicle in excellent, very good, good and fair condition is so you and the seller can be on the same page.
In the end, the real value of a vehicle is it’s overall quality. If you have to pay slightly above your ideal price to get a better condition vehicle, it is a worthwhile cost that over time will provide you with the longer term value of transportation that is safe and that you and your family can rely on.
Remember, good deals on bad cars and bad deals on good cars happen all the time. When you enter the market to buy, your goal should be to get a fair deal on a great car. And we hope this quick review of Kelley Blue Book will help you on your way there.