How much does a mark on Car Fax change the value of a car?
Jan 31 2012 8:34PM
How much does a mark on Car Fax change the value of a car that is in play, being traded or sold? How much diminished value is there even for very minor things. The answer is actually irrational. In the vast majority of cases in the open market at the auction the affected unit becomes nearly sale-proof. The reason is that nobody wants to knowingly get involved with having to justify the item that is negative on the report. Therefore the desirability goes away and there is no activity on the auction block.
So imagine, you are sitting at a red light in your 2008 BMW 3 Series and someone taps you in the bumper from behind. You jump out semi-shook up and the driver of the other car sees there is a scuff on your bumper and says they are sorry, they weren’t paying attention. You do what you are supposed to do and ask to exchange information. Meanwhile a policeman shows up and asks what happened, Checks your driver’s license and insurance information, takes your info, makes sure everybody is OK, and hands you a report. No tickets, no damage to cars or drivers. No sweat! Off you go. Right? You might not even tell your spouse about it as who needs the grief, right?
Oh no daddy-o, are you wrong. You got married, are having a kid and go to trade that baby nine months later on a Escalade(need more space). The Cadillac dealer runs a TIM (smart cat)or checks the vehicle history report in the process of doing the appraisal and you are in for a shock. Your BMW that should have been worth $21,700, is now worth $17,500. And you are smart (but didn’t run it on Trade in marketplace, shame on you) and break in a full throated protest that, “you tell that used car manager that you checked Kelley Blue Book and it said that based on my cars miles and equipment that it was worth many thousands more”. The salesman takes that opportunity to inform you that “Kelley don’t buy no cars and you should try to sell it to the book”. He says this with a self-satisfying smirk (at this moment you realize what a dope you were for not running a TIM guaranteed value prior to coming out shopping, but it isn’t your fault, you only do this every three years and you forgot you about the product that is in house). You retaliate with the best accolades you can think of to forward the virtues of your sweat little BMW, “It’s never had paint work, I always serviced it, never smoked in it, It’s Arctic White with cream interior and the salesman told me that would make it have a higher re-sale value. And most important, it’s never been in an accident(?).
And now two years after the incident how to you get justice? Who do you call? It wasn’t your fault. You never made an insurance claim…but your well-kept no paint work car, is worthless…because it has a mark on Car false Fax. It can’t be sold certified. A BMW dealer will not buy it, period. When it goes to the auction to be sold, there is nobody in the lane to buy it. Because of the Car Fax it has to be sold to a different level of buyer, highly price adjusted, in a secondary market where the buyer is less sophisticated and is a price buyer.
Your no paint work, no real accident BMW shows up on Car Fax as a car that was in a rear end collision. Would you buy a used car that has a history report of being in a rear end collision. Why would a dealer buy it at fair market value knowing he is going to get agita trying justify the fact that the unit has no paint work and really wasn’t in a rear end collision.
Just a quick true story that happened to me this Fall. I was getting off the New Jersey Turnpike at the Meadowlands on the way to the Giants, Eagles game. Traffic was horrific, stop, start. I see it in the rear view mirror like it’s on TV. This lady ain’t stopping. “Everybody hold on,” I say, ”we’re going to get bumped”. Bingo. I jump out of the car. Bumper is pushed down a smidge. Deck lid is fine. I’m, hit $800. The lady that hit me is out of her mind, “I’m sooooo sorry. I was texting and didn’t see that you were stopped. Oh my God my husband is going to go nuts.
I look at the lady, I look at my $70,000, 2012 Escalade ESV, special something Edition I brought home from the auction to bring my crew to the game. I asked her if she was hurt. She said no. I told her, I got to go. She said “don’t you want my information, it was all my stupid fault?” I said no. I got to go. And I’m thinking to myself, if the cops come, we swap info, and my insurance pays for the wreck, and they fix it good, I loss $20,000. How you ask? Simple as pecan pie, Car Fax. The unit becomes unsellable I’d rather fix the bumper correctly for $800 and not have the unit smushed in value by a hit on Car False, I mean Fax.