Is Kelly Blue Book Accurate?
Somewhere out there on Craigslist is a low mileage 2006 Toyota Camry SE (arguably one of the most reliable cars ever built) selling for Kelly Blue Book price. I want to buy that car. The reality is that it will be sold within hours. Unless I saw the ad immediately, it will be gone.
There is also someone selling (or trying to sell) their used late model sexy Mercedes Benz for “book” price. That ad will still be running for weeks with no buyers.
Below I will explain why this is so.
How is it that one car could sell for more than book price and another will sell for less? Isn’t it a fair playing field? Isn’t Kelly Blue Book supposed to be the definitive guide on car valuations? Is Kelly Blue Book accurate? According to the cars cited above, not really accurate at all. The Camry could and should sell for more than book price, whereas the Mercedes owner would be incredibly lucky to get the book price. Kelly Blue Book, as well as other price guides such as Edmunds and NADA do a good job of showing averages. However they do not take into account cars that are extremely desirable and “in demand” versus cars that are not. Let me explain what goes into these price guidelines.
What is Wrong with Kelly Blue Book
Dealers use various sources to establish the value of both the cars they are selling on their lots as well as trade-ins. Private sellers use Kelly Blue Book as the bible to sell their personal cars. It is by far the most popular and, dare I say, “trusted” guide. KBB has various algorithms that analyze pricing data, historical as well as popular trends, economic conditions, industry developments, geographical data and times of year in determining values. That’s a lot to track and often there are cars that slip through undervalued.
Supply and Demand
At the moment, and for the past couple years, there has been much more demand for used cars. Add to that the ever increasing quality of cars, which has made the used car option more reasonable than ever. The result has been an amped up demand for used cars and Kelley Blue Book is trying to track that uptick. Sometimes they lag behind, especially on older models. Keep in mind that the older the model, the broader the differences between Excellent and Fair. The older a car model, the fewer there will be in “Excellent” condition (supply). This in turn drives up the price (demand). That’s tricky to keep track of.
How to Determine the Price
If you are trying to determine the fair market value for a car you should check all three price guides and then check online for similar vehicles for sale. Dealers will often have the best knowledge of supply and demand as their profit margins depend on it. It takes a bit of research but you will find the sweet spot for your purchase or sale price. Bottom line; If you are selling your car and the phone does not ring then you have it priced too high. If the phone rings off the hook you have it priced too low. Adjust the price accordingly.
If you are a buyer you should always look for excellence first. Pay the premium, even if you are paying slightly above Blue Book. Just remember that you can get a good deal on a bad car all day long. The trick is to get a fair deal on a great car. After all, the bitterness of poor quality remains long after the sweetness of low price is forgotten.
So, in summary, KBB and Edmunds are just guides. They are not the be all and end all. Whatever the market will bear is what the prices will be. In the end it is all about the quality of the car rather than the accuracy of the price.
Greg Macke- Your Car Angel
Greg Macke is a car blogger and author of “My 7 Secrets to Buying a High Quality Used Car”. He is a professional car buyer and consumer advocate working closely in the industry to improve the buyer’s experience. His high quality car buying tutorials offer help to the car buying public. – See more at: https://carbuyingsupport.com