Understanding how and why a classic car appraisal is done and what to expect
What's the difference from a newer car? The most important part of any appraisal is that they fall within ethical guidelines. You will see a lot of online appraisals offered, "call us for an instant appraisal", send us some pictures tell us about the car, etc. They are usually cheap or designed to sell you something, as in not the car you're looking at in the first example. They are looking up the make and model and giving you the lowest price that they think they can get away with. They're more than happy to take that piece of junk off your hands because they aready have it sold, no joke. It's as simple as that, and that in and of itself is unethical.
It also will be rejected by the State, the Bank, and the insurance company. You are simply out the money and still in need. So, your options are getting another appraisal, allow the lender, insurer or State "Assess" the value for you or get another certified appraisal.
Now, there are plenty of exceptions with online appraisals, and I do them periodically, but I typically will not certify it. Remember that we're talking about Antique and Classic Cars. I'm not going to certify the value on a $50,000 plus car without seeing it in person. There are plenty of other appraisers out there happy to take your money for that and not stand behind it. I've seen it happen, and I've seen both honest buyers and sellers end up in court suffering the consequences.
Guide Pricing
Cars less than about 20 years old are usually priced straight out of the KBB, NADA guide, Edmunds, or Carfax. These guides now go back to 1991 now and probably not by choice. KBB is very much slanted towards the dealer as is NADA.
You will notice that KBB prices tend to be very low for trade in and private party values and then double or even triple for Dealer values. This is because it assumes that all dealer retail cars are fully reconditioned and everyone follows the rules (sure, uh-huh), especially because there is no such thing as a shady used car dealer, we all know that. KBB is designed more for new car dealers where it is primarily Bank funded lending and rolling over loan deficits on trade in is much easier.
NADA guides are designed more for the used car dealer and are essentially garage sale prices partially based on reported sales. It is probably the most commonly used guide. When using these guides, the procedure is flip the book to the make and model, guess on the condition and throw out a number in the range. Perfectly fine when there's 80,000 units in play and they're all the same.
Edmunds and Carfax fit right in here, and it's not difficult to price a vehicle. Once a car reaches the 20 year mark, it has usually hit rock bottom on depreciation and it's going to be sink or swim from this point forward. This is because they are becoming collectible and are often bought with pure emotion. They are the cars we grew up with.
Is there a guide for pricing Classic Cars?
The Cars of Particular Interest or Automotive Black book is better suited. It is based on actual sales. wholesale prices and auctions It's updated monthly it's expensive and most consumers have no use or even knowledge of it.
Now you've stepped out of the realm of book pricing. Banks and insurers are much more reluctant to loan or insure for higher amounts without some assurance because they have no idea what the current condition is. They wouldn't know that a 40 year old car in the picture was in fact the car they were lending or insuring. Hence the need for certified appraisers.
It is not to your benefit to use the bank's appraiser; they assess the value of their financial interest. The State D.O.L. picks the highest value they can find and dare you to prove them wrong. They only want the sales tax. If you give them an uncontestable certified appraisal, they will most always accept it.
Now with Classic Car pricing you have Hagerty and Hemmings, who perform two different functions. Hagerty uses auction sale prices and Hemmings uses asking price. There are others also. I look at all of them and work out an average. This is the first step in collector car pricing. You get a range of each value and an idea of what price you're looking for.
Inspection and Assessment
The next step is examining and inspecting the car. A lot of people view this as 'the appraisal'. It's not, this is to assess the condition and verify that it is what it is. I find fakes all the time. You can buy SS and GT stickers and emblems all day long and plaster them all over the car. That doesn't make it a GT, or an SS.
A knowledgeable appraiser will know what the car really is. A lot of cars are wrecked also and sold as restored or have been restored. This is where a paint meter will tell you absolutely nothing. Of course, the paint will be of similar thickness, the whole car got painted. A knowledgeable appraiser will know where to look and how to determine the effect on the value.
I've found unreported accident damage with painted over weld slag nearly as small as a pen tip. It's ok if a car has been wrecked at some point, as long as it was properly repaired. Unfortunately, most aren't. A good appraiser can feel the body filler with their hands. It's all about experience. These cars can be safe, but never a #1 car, and probably not a #2 car.
The next factor which is very important is use, and this often falls in line with the grade.#1 - Never driven, #2 - Car shows and weekend cruises #3 - driven pretty regularly. It doesn't matter so much how many grades there are, just that the car fits into the range. I use the 4-5 point system, commentary and explanation is more important.
Calculating Value
Final steps are comparable cars, price range, grade assessment, additions and deductions and final value. I give two values. Actual Cash Value, and the average price for this specific car. So, if you fix the listed items, the car would be worth the higher value. I do one adjustment free upon verification of repair.
Comparable sales should include at least 4 similar or identical vehicles of different grades with the sale date and pictues included. When there is little sales history. I also account for inflation and current trends.
As you can probably see, there is a lot to a Classic Car appraisal. It typically takes about 10 hours per car and the appraisal is complete within a couple of days. The premise here is to obtain the correct value and know that it is uncontestable and accurate. As I tend to say; Get someone who knows and get it right the first time.
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