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Determining the Sales Price

The key to a quick and painless private sale!

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Trade price (Also referred to as: Book value)

The ‘trade price’ or ‘book value’ of a car represents the average price that a second hand auto dealer will pay you for a used vehicle. Depending on the condition of the car, they would offer ‘trade price, less X percent’ because they may have to service is, add new shocks or tyres etc. before the dealer can sell the trade-in. To make a profit, the dealer will then add a mark-up and sell the vehicle at a higher ‘retail price’ to another consumer.

Retail price

As explained above, the ‘retail price’ is the value that the car ‘retails’ for if you were to buy it from a car dealer on a showroom floor. (Every month Trans-Union receives this information from dealers nationwide and is then evaluated to arrive at the retail and trade values contained in their guide.)

Market price

Even though, this term is mostly used by the insurance industry and is generally the ‘average’ between trade and retail price at which they will ‘pay out’ a claim, it is also a term that can be effectively used when selling a vehicle privately.
Market value can be calculated with the following formula: Market value = (Trade value + Retail value) / 2
This calculated value can be very different to your perception of your car’s market value, but it can be a good starting point for pricing your car privately. The ‘trade price’ establishes the low point of your car’s value when trading it to a dealership, whereas the ‘retail price’ indicates the absolute highest value your car might be worth.
Due to the additional risks and effort involved, no savvy car buyer will pay the ‘retail price’ to a private individual, but in turn the reason for a seller to sell a car privately is to get a better price than the ‘trade’ value, and hence the ‘market price’ is a good middle ground.
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