Method For Evaluation
Vehicle Value Justification Method
used to determine the value of a vehicle is a three step process. The
first step is to establish the base value. This initial base value is
established by consulting a vehicle value guide such as NADA Guides,
Gold Book, Old Car Price Guide and Hemmings Value Guide.
In this step
an average price is calculated (as we generally do not know the
original condition of the vehicle if it has been modified, upgraded,
restored etc) considering a vehicle price in fair, average or good
condition. The base value of an unrestored, original vehicle would be
determined by it's present condition.
base value is then calculated from this established value by
percentage. As an example, a vehicle with an established base vale of
$20,000.00 at 100% would attain an appraised base value of $18,400.00
at 92% which is calculated from the rating of all parts and
components on the vehicle.
step is then accomplished by listing any/all new, rebuilt, modified,
custom parts and components installed. The value of this new part or
component is then calculated by it's new price (Substantiated by an
owner receipt) less the cost of the original part cost and it's age.
As a simple example: a new installed bumper at the cost of $200.00 –
less the price of the original average rated bumper of $40.00 would
determine a price of $160.00 which would then be the listed price.
Also to be considered would be the age of this new bumper which could
be depreciated at up to 8% per year – meaning if the bumper has
been on the vehicle for 2 years it would be further devalued by up to
16% which would then establish a price of $134.40.
In most cases,
establishing the price of any newly installed parts or components is
determined only by the actual cost of the part. Installation (Labour)
is/will not be considered unless it is part of the process such as
bodywork/paint, upholstery or component building such as engine or
transmission. Devaluation is also applied (as outlined above) in
these area's as well as an average shop rate is determined by
estimated hourly rate from 3 different shops.
The third and
final step to determine a vehicle appraised value is established by
adding the averaged base value and the total optional value. In some
cases, value is also added using the 1% low mileage credit for low
In all cases,
it is important to ensure that when optional parts, components are
priced and listed, that the appropriate deductions are considered and
applied from the established original part cost so that in no event
would a part, component or labour fee cost/price be applied under