Beyond the eye of the beholder

How objective is your appraisal process?

Customers are often wary of trading in their vehicle at a dealership, but trade-ins are important to dealerships because they can be necessary to make a sale. So, when a customer walks in your door inquiring about a trade-in, handle the proposition carefully.

Steps to a fair assessment

The appraisal process at many dealerships is informal. The used car manager walks around the vehicle, takes it for a test drive and checks the Black Book or Kelley Blue Book price. Skeptical customers think value is pulled out of thin air.

But, if you formalize the appraisal process, you can negate a perception of unfairness while being true to your store’s bottom line. Begin by creating an appraisal checklist to ensure every inch of the car is reviewed by your store. Also obtain a vehicle history report.

Then ask customers to fill out a questionnaire that lists missing or broken parts and accessories — for instance, a defective glove box door or dysfunctional cup holder. Replacing such simple items eats away at your profits when you resell. Finally, add credibility with a computer-generated appraisal report that explains how you arrived at the trade-in offer.

Homework that customers do

Today customers can easily check comparable vehicle prices at or get a trade-in estimate at Kelley Blue Book ( So, it’s important to address this data when quoting trade-ins.

Suppose a customer prints out a quote of $9,500 for her car, as well as three comparable listings in Autotrader ranging from $10,000 to $12,000. You offer $8,000, and the customer is insulted.

But a strong appraisal report will explain why this vehicle is worth less than the data suggests. It might have excessive mileage or need repairs. Also relevant is the vehicle’s desirability index and average days’ supply in your geographic market. These metrics gauge local supply and demand, which affect how much you’re willing to spend.

Objective tools

You can take away the guesswork with appraisal software, such as NADA Appraisal Suite or Dealertrack AAX. These databases compile information from reputable third-party sources, including J.D. Power and Associates, AutoCheck and the NADA Used Car Guide. They also provide in-depth details about comparable vehicles, including days on the market, mileage, condition and vehicle history.

In short, appraisal software products — though sometimes costly — can help dealers quickly implement a formal appraisal process. But they’re never a substitute for management’s professional judgment.

A documented offer

Be aware that savvy shoppers who are unhappy with an appraisal from one of your used car managers might return later when another manager is on duty — or request a second opinion from your store across town.

So keep a computerized log of all used car appraisals, sorted by VIN — and if you operate more than one store, share the database with the others. Before inspecting a vehicle, your managers should always cross-reference your list to avoid rework and appraisals that contradict what you’ve offered in the past.

PR value

Plain and simple, auto buyers care about trade-in offers. In fact, 57% of shoppers rated their vehicle’s trade-in value as a “major” or “determining” factor in their decision to buy, according to results of an Autotrader survey of new and used car buyers.

There are many things to keep tabs on in the used car appraisal process, starting with the market in your area. As you work to arrive at a price, don’t lose sight of the public relations value of a fair offer and well-explained trade-in process. If your customers are happy with the price they’re quoted, word is likely to spread.

© 2015