A Guide to More Accurate Vehicle Appraisals

How to Maximize Profits and Minimize Losses

Whether you're determining the highest price to pay for a vehicle or understanding what you should accept as a floor for offers, finding out the true value of a car or truck can be a complicated business.

Fortunately, we've been doing this for a long time and have a strategy that can make it easier and help you avoid making bad purchases or sales. We call this process Source Triangulation. In order to accurately assess a vehicle's price, you need to consider the entire market. Dealers buying and selling at wholesale combined with the retail prices consumers are actually paying at the dealerships are the basis for understanding the market for a particular car.

Source Triangulation

Combining trusted sources of data to accurately determine market prices
Source Triangulation

Source Triangulation

Triangulating the 3 main sources of data for vehicle valuations is critical because it accounts for all aspects of the market. Limiting yourself to one source when valuing a vehicle leaves you with huge blind spots and vastly increases the likelihood of taking a loss on a deal.

Book Values

Book providers such as J.D. Power and Black Book® provide an incredibly valuable service. They are able to abstract away much of the complexity and give individuals a baseline for determining values.

While these book value providers are essential to determining price, there is often significant variation between the numbers they provide. Our valuation method involves cross-checking at least 2 of these appraisal sources to determine how reliable the data actually is.

While these providers are valuable, they represent only one dimension to the solution, as they don't often fully reflect market variables. We'll see a few examples of this shortly.


The retail market is the last piece of the puzzle when it comes to determining value. It's the ultimate ceiling on what a vehicle is worth once it reaches the end buyer. Overestimate this number and you can quickly find yourself upside down. Underestimate it and you'll miss the mark at wholesale or leave money on the table at retail. Just like we do with guide books, Carbly recommends multiple data points when assessing the retail market.

Historical sale comps are the best way to predict what the market will do next. Carbly provides actual historical retail transactions from almost 50% of dealers in the country, so you know what to expect out of a vehicle. To avoid being caught out in an ever fluctuating market though, it's equally important to understand live, local comps. Carbly performs in-depth analysis so you can quickly compare historical indicators to the live local market.

Average Prices Can Mislead

Average vs. median price

Be careful when relying upon average numbers provided by book values. In the above scenario, you can see that the sale comps are distributed across a fairly wide range of values. Just looking at the average price can result in a poor decision, because it is heavily influenced by the outlier sale prices.

In this case, using the average number as your price basis (vs. looking at the median price), could result in an overpayment of $1,800.

Optimizing Profit and Reducing Risk

Know Your Spread

The ideal scenario in most transactions is to buy at wholesale prices and sell at retail. The difference between these two prices is called the spread, and typically equates to profits (minus reconditioning and fees). Therefore, when evaluating whether an offer is good it is wise to consider where you typically fall in these ranges and hedge against the worst case scenario.

When purchasing you obviously want to pay as little as possible, but knowing what your upper bounds are and what you're likely to get out of a car can inform what your best possible offer is.

Avoid the Danger Zone

On the graph shown, we've designated anything above $15.5k to be the "Danger Zone". Based on wholesale and retail valuations, paying more than this could lead to being unable to get rid of a car without losing money. By avoiding this zone and playing it safe, you're unlikely to lose much money in a worst-case scenario.
Price spreads

Regional Price Differences

Vehicle values can vary greatly between geographical regions, and you should make sure to consider which market you plan on buying from and selling to. Some book values take this into account and will give you the price for your current region, while others provide national averages.

Price differences between, for example, the midwest and Southern California can be quite different. Make sure you don't get caught out because you were looking at the wrong data.

Assessing Vehicle Condition and Repair Costs

You can't appraise a vehicle's value unless you know its condition. This is possibly the most challenging aspect of the process, since knowing the cost of repairs and reconditioning are essential to knowing whether doing so is cost effective.

If you don't have the experience of being able to estimate repair costs, the best strategy is to develop a few relationships with local specialists in vehicle repair. Having trusted people you can get estimates from means you'll have a process for making quick determinations about how much of a deduction you should apply against a car or truck's value.

Unfortunately, there's no real shortcut here apart from either gaining the expertise or talking to someone who has it.

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Case Study #1

A Simple Example

Let's take a look at an example appraisal process to help clarify what we mean by some of the above points. The following data was generated by Carbly for a 2016 Honda Civic.

Our appraisal summary shows that we should expect to pay around $11,520 at wholesale, and could reasonably anticipate a retail selling price of $14,640. This is a good profit margin, and so far, all signs point to this being a good vehicle to purchase at the right price.

We also see the vehicle highlights section which points out both postives and negatives to be aware of. This car has a clean CARFAX, a great possible profit number and a low market days supply (days on lot).

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A slightly more detailed summary of the CARFAX shows that it's not only clear of accidents and damage but has also only had 2 owners, which is good for resale.

A full report can be opened by clicking the link at the bottom.

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It's time to look at some of the details supporting these numbers, and we start with Black Book®. The prices show that a vehicle in average condition maps closely to what we've seen thus far.

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Kelley Blue Book® also tracks quite closely to what the appraisal summary shows. On the wholesale side, Kelley Blue Book® indicates that we can expect to pay $11,562 while in the lanes at auction.

Retail pricing is also very similar to what we have seen so far. The Typical Listing Price on Kelley Blue Book® is $14,813 and the Fair Purchase Price is $14,408.

The lending value is encouraging too, showing that most lenders will finance more than the average sale price.

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Now let's crosscheck our values with what J.D. Power (formerly NADA) reports in Carbly to see if values are still consistent.

J.D. Power shows an auction value of $11,209 which is a little lower that what we have seen so far but is still within the range.

Again, retail is very similar with at $14,450 for a car with similar mileage.

If your lender happens to use J.D. Power for their underwriting rather than Kelley Blue Book®, you won't be able to finance as much. Their loan value of $11,175 is indeed lower but at 120% LTV it doesn't leave a potential buyer with too much of a necessary downpayment so things are still looking promisng for our Civic.

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Let's move on to Manheim Market Report to see if the auction report differs from what we have seen in the guidebooks.

Again, both wholesale and retail numbers are very close to what we have seen up until now. So far, we have very good data consistency between the auction report and guidebooks.

The bottom section shows price history and projections for the wholesale and retail car markets. The projected price drop for both is pretty low, which gives us confidence that even if we don't sell the Civic in a short amount of time, it's going to hold its value well.

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It's always important to properly understand your local market place when you're appraising. Live Local Market, shows us some incredibly powerful data with comprehensive live retail coverage.

The suggested retail price for our Civic is in keeping with all of the values we have seen so far and the mileage on our car is slightly lower than the average; things are still looking positive.

Note the distribution graph for retail asking prices. We can see that the bulk of dealers are also pricing within the range of values that we have seen.

The trim table below shows that there are a fair few similar vehicles within 200 miles but the median days on lot of 28 indicates that demand is strong enough to support supply.

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A detailed examination of the individual local retail comps make this Civic even more appealing.

Most of the closest competitor vehicles either have higher miles of a bad vehicle history which makes our lower mile and clean history example that much more saleable.

There are some competitor vehicles that have been on the market for much longer than we would like to see but they either have a bad history or are over-priced for their mileage. As long as we price our car appropriately these comps suggest that we will turn the car quickly.

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Real Retail, shows us some incredibly powerful data by listing actual retail sale prices. These are not asking prices, but final sale numbers as reported by dealerships.

This is fantastic data that gives accurate context to the Live Local Market; after all, we all know that we rarely close a deal at asking price.

The retail sale prices are again consistent and encouraging.

Note the distribution graph for market days supply. Carbly shows you the median number, not the average. An average MDS would be heavily biased by that outliier of 1,235 days which might lead to seeing a misleading number.

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Next is a look at actual recent retail sale comps from Real Retail. For vehicles with a similar mileage of 33,000 miles, we see that dealers are reporting good profit margins for this Honda.


Based on the above analysis, we can realistically expect to acquire this vehicle for around $11,500 and sell it for approximately $3,000 more than we paid. Taking into account reconditioning costs, this looks like a great candidate to buy at the right price.

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Case Study #2

A More Ambiguous Example

Now let's consider a more complicated appraisal, a 2013 Porsche Boxster.

At first glance, seeing the spread between the wholesale and retail price might have some dealers licking their chops. But let's look a little closer at the data, and we'll see where the true power of Carbly comes into play.

While the CARFAX report shows clean, and a large possible spread is flagged, we need to be aware of a few things:

  • This car has significantly lower mileage than other examples.
  • With a median turn of 26 days, this Boxster should sell relatively quickly but Porsche customers are known for being very particular about the spec of their car so a quick turn cannot be guaranteed.
  • As we mentioned, the spread between wholesale and retail looks great but if you look more closely you will notice that the ranges for both values are broad and also overlap. This certainly requires further evaluation.

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One of the first steps we take when we're suspicious about a valuation is to compare the data providers. We can see immediately that something is amiss.

  • Black Book® has a value of $26,300 for wholesale and $30,300 for retail.
  • J.D. Power shows $26,639 for wholesale and a significantly higher retail value of $35,550.

Although both books provide very similar wholesale numbers they are $5,000 apart on retail. Making a $5,000 error could seriously jeopardize a dealer's business.

At this point we still don't know which of the books is correct. This is highly concerning, and means that we have to be very cautious.

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When you encounter inconsistencies in data, it's always wise to consult more books to see if they align with either of the two that we have already looked at.

Kelley Blue Book® has a wholesale price of $30,983 and a retail price of $34,340.

  • The Kelley Blue Book® wholesale value is higher than the retail value in Black Book® which only causes more confusion.
  • Their retail number of $34,340 is similar to the retail value we saw in J.D. Power.

Maybe we are getting closer to establishing an accurate value.

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Let's see what Manheim Market Report says about our Boxster.

  • MMR shows $34,400 at wholesale and $40,700 at retail.

There is almost no overlap between Manheim Market Report and the other the valuation books we have looked at so far! You can see here where relying on a single provider for data can be dangerous.

In situations like this, turning to retail market data can provide the context we need.

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Let's look at the live retail market first in Live Local Market.

  • It shows us higher average market days supply than we saw earlier with 39 days.
  • A closer look at some of the individual comps below show some alarmingly high days on market too, so it's imperative that we price this car correctly to optimize turn.
  • The average retail asking price of $33,023 and a mielage specific suggest asking price of $37,240 are closer to the values shown in Kelley Blue Book® and J.D. Power so we are starting to see a pattern.

The wide distribution of retail prices still make it hard to get close to an accurate number for our Boxster though.

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Let's finish our appraisal by seeing what Real Retail can tell us using historical retail transactions from other dealers.

  • Real Retail shows us the lower market days supply we saw earlier.
  • Average price is shown as $33,826 based on an average mileage of 32,905.
  • The mileage adjusted retail price suggests that our Boxster could fetch $40,242 because of its low miles.
  • Closer inspection of individual comps though reveals that most cars with the same miles have all sold in the $35,000s.

Note the $748 loss. This could very well be the result of someone relying on a single data source for their initial appraisal, resulting in far too high of a ceiling value at purchase time.


The data in the case of this Boxster is far from crystal clear. A seasoned buyer wouldn't want to be in this Boxster for any more than $29,000. This is a conclusion that could not have been reached by relying on a single book value.

Carbly Has You Covered!

All of the above appraisal work was done using Carbly, our complete tool for not only running accurate appraisals, but also sourcing and selling used vehicles on a dealer-to-dealer marketplace. It's free to get started, so get going today.

Have questions about Carbly or appraising vehicles? Give us a ring at (800) 996-4028.

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