What is Diminished Value?

What is Diminished Value?So you’ve been in an accident that wasn’t your fault, and your vehicle was damaged. The other party’s insurance company agreed to pay the claim and repaired the car back to road worthy condition. In many ways, you don’t see any difference between the vehicle before the accident and the vehicle after the repair, but it’s still not the same. And in the eyes of appraisers, car dealerships, potential buyers and the IRS, it is most certainly not the same.

You may have seen advertisements discussing full background reports about vehicles for sale at dealerships. This is perhaps the best way to understand what inherent diminished value means to you. If you were shopping for a vehicle and found two cars of the exact same make and model at your dealership, with similar mileage and features, you would want to know if one of the cars had been in an accident and required substantial repairs. While the dealer assures you that the car is just as good as the vehicle that did not need repairs, you would likely prefer the car that had not been in an accident.

This is a common reaction. Most buyers report that they would not buy a car that had been in an accident, or would at least only consider purchasing the vehicle at a heavily discounted price. Some worry that repairs may not have been done properly, or that aftermarket parts were used in the repair. Others worry that some damage may have gone unnoticed, or that the car will need unexpected repairs in the future. Their worries may even extend to insurance companies – if this car is totaled, your insurance company will pay less because of the accident history.

What is Diminished Value?A certified appraisal can help clear up some of the mystery and confusion involved in these concerns. AAG compares recent sale prices of damaged and repaired vehicles to those that have not sustained damage or been in an accident. These comparables make it possible to determine a percentage of loss for an inherent diminished value claim and to assess the loss of value due. An appraiser can also accurately determine if repairs were done poorly or were not performed to industry standards which might lead to additional repairs. Certified appraisals consider frame damage or the use of non-OEM parts in repairs which could contribute to an even greater loss of value.

You may wonder how you will use this information, and what it means to you. The obvious effects of diminished value is the influence on price, whether you are buying or selling a vehicle. You may also need this information in court if you are not at fault and unable to reach an amicable settlement. Compensation for damages to personal property should include the difference between the vehicle’s original value and the post-repair value in addition to the cost of repairs. You may also be able to claim an amount of loss as a deduction using IRS tax form 4684. Acquiring an accurate assessment of diminished value can save you money and make sure you receive what you deserve in settlements and claim fulfillment.

To get the most accurate diminished value claim for your vehicle, contact the Auto Appraisal Group and get everything you’re entitled to receive.

Most Common Mistakes When Purchasing a Collector Car

Classic Car Purchase - Proof of OwnershipNo Proof of Ownership

When purchasing a vehicle the seller should produce documentation to prove ownership of the vehicle, that there are no liens on the vehicle, and that the ID number on the title documentation matches the ID number on the vehicle. Even the project car you buy from your neighbor to work on in your garage should be properly documented. You will also need proper documentation for tax purposes, to manage your estate properly, and in the event of a theft, accident, or divorce.

Especially in a cash sale, it is important to obtain the title, a bill of sale, and proper documentation about who the automobile belongs to and how it was purchased. A qualified appraiser can help you verify your documentation and make sure that all the information is accurate. Sellers are always asked to provide documentation during AAG’s pre-purchase inspections to help you feel confident about the information you are provided.

Classic Car PurchaseBelieving Everything the Seller Says

Once again, documentation is critical to prove that a seller is honest, or that they know anything about the collector car. A seller may not know whether the parts are original or when they were replaced. Without a careful pre-purchase inspection by a certified appraiser, it can be difficult to see rust or to be sure that rust has been treated and repaired properly. Was Bondo or another body filler used? Was the engine rebuilt? These are details the seller may not know and may only be visible to a qualified inspector, making your pre-purchase inspection a critical part of assessing the collector car.

Purchasing a Classic Car at AuctionPurchasing at Auction with no Test Drive

Just as it is unwise to assume that you will be able to choose a model without knowing what to look for in a test drive, it is a bad idea to buy any collector car without driving it first. It can be tempting to buy a collector car for a better-than-average price at an auction, but without driving the vehicle first, you can’t really be sure if the price you are paying is appropriate. A pre-purchase inspection by a certified inspector who is allowed a test ride in the vehicle will help you to make a more accurate assessment about the fairness of the price.

Classic Car PurchaseSending a Cash Deposit

Proper documentation protects the value of your collector car and your investment. In a similar fashion, paying your deposit in a way that is fully documented protects you from unscrupulous sellers. Cash deposits are hard to document and track, and in the event of a dispute, they are often lost and cannot be recovered. Always be sure to document any payments you make on a vehicle, and consider using a third party or an accounting service to handle deposits and payments to insure your safety.

Classic Car WarrantyAssuming There is a Warranty

Don’t assume that a collector car comes with a warranty. Even if you are purchasing a brand new vehicle, you need to check with the seller for warranty information and read all warranty documents carefully. Especially in the case of classic collector cars, there is no standard expectation that a vehicle will come with a warranty, and warranty terms may vary by seller.

Ignoring Conflicts of Interest

A pre-purchase inspection is crucial when buying a collector car, but not all appraisers are equal. Conflicts of interest occur when the appraiser is associated with the seller, mechanic, or restorer who is offering the vehicle for sale. Appraisals can vary significantly when performed by unqualified, non-certified agents, or by individuals associated with the sale of the vehicle. An independent, certified appraiser can provide an appraisal that is accurate and unbiased, helping you avoid biased or even fraudulent assessments.

Prepurchase InspectionThe best way to purchase a collector car is to hire an independent, certified company like AAG. We provide you with all the documentation necessary to make the right decision before you buy and to protect your investment after you buy. In addition, our appraisers have the knowledge, training, and experience to compare your choice to other cars of its make and model, helping you to make an informed decision. Call us today to schedule a pre-purchase inspection before buying a collector car.

Most Common Mistakes When Shopping for a Collector Car

Pre-purchase Inspections for Collector CarsNot Knowing What You Want

There are different types of collector cars just like there are different types of collectors. The collector who wants to spend time at car shows may be looking for a very different type of vehicle than the driver who merely wants to take friends and family out for a spin on a pretty Sunday afternoon. Knowing what you hope to get out of owning a collector car can help you determine where to shop and what kind of vehicle you want to buy. A pre-purchase inspection is more effective if you understand what type of collector experience you want to find.

Ask yourself what your dream of owning a collector car entails: Are you interested in showing at car shows? Will you be driving this car regularly to work? Are you hoping to buy an automobile that will increase in value and prove to be a wise investment? Or do you want to have something you can work on yourself and improve while enjoying the process of restoration and maintenance? Understanding your goals will narrow your focus and make it more likely that you will purchase the collector car you truly want, and can help you to discuss with an appraiser the specifics of your pre-purchase inspection.

Lack of Familiarity with a Qualified Mechanic

Collector Cars Pre-purchase InspectionClassic and collector cars come with their own needs, and a trusting, working relationship with a mechanic who is qualified to work on your collector car is a vital part of ownership. If the classic car you purchased is unrestored or an older restoration, the vehicle may need repairs or restoration as well. Even if you have purchased a restored car, the vehicle will need routine maintenance.

Maintenance, restoration and repair of a collector car require knowledge of authentic parts and methods to sustain the car’s originality. Not just any mechanic can be trusted – you need to know that your mechanic has experience with your auto’s special needs. If you have a reliable mechanic, you can discuss the findings from your pre-purchase inspection or certified appraisal and make a plan that will allow you to enjoy your new purchase sooner.

Unfamiliarity with the Driver Experience for a Specific Model

Prepurchase Auto Appraisal for Collector CarsOf course we all want to own a ’69 Ferrari GTO in racing red. Or you may think that a ’57 Chevy will provide the driving experience you’ve always wanted. But if you have never driven the vehicle you hope to purchase, you may not know enough for a test drive to give you an accurate idea of the condition of the vehicle. Without some knowledge and experience, it would be hard to determine if a collector car has stiff or poorly functioning controls, or if that is simply the nature of that particular model.

Collector Car Shopping and Prepurchase Inspection from Auto Appraisal Group, Inc.Furthermore, you might find that you don’t enjoy or simply can’t drive a vehicle with no power steering or power brakes. If you are short, you may not be able to see over the dashboard to drive safely, or if you are big and tall, you may not even fit into a tiny driver’s seat. Get to know the collector car you are hoping to purchase and make sure that the driving experience matches your expectations. Your pre-purchase inspection performed by an experienced appraiser can give you insight into a collector car’s condition and how well it represents the best possible driving experience for that vehicle.

Believing the Car Won’t Need Any Maintenance

All autos need maintenance, and in the case of collector cars, this can be particularly true. Whether you drive the vehicle or not, an old car will need routine maintenance. You may buy the vehicle in 5-star condition from a trusted seller, but what works on the car today may not work next week. Cars develop a wear pattern and when that pattern changes, it can develop problems that need attention. Plan for routine maintenance and inspections, and be prepared should the car need repairs. It is also a good idea to schedule an appraisal after major repairs or restoration to insure you have current documentation should you ever need to file an insurance claim.

Assuming You Won’t Need a Pre-Purchase Inspection

Prepurchase Inspection by Auto Appraisal Group, Inc.There are several details that are easy to miss, even if you are an experienced car collector with a garage full of successfully purchased automobiles. A pre-purchase inspection performed by a qualified appraisal company helps you to avoid missing important details, and ensures that you will receive the proper documentation to confirm the car’s value and condition. A certified appraiser, like those at AAG, can establish the value of the vehicle so that you can make an informed decision about whether or not you want to buy a particular collector car.

Make an appointment to have a pre-purchase inspection completed an independent appraisal service like AAG. We provide the documentation needed to make an informed decision before you buy a collector car. Our appraisers provide the knowledge, training, and experience to compare your choice with other collector cars of the same make and model, equipping you with the most information and the ability to shop with confidence. Call us today to schedule a pre-purchase inspection, and enjoy shopping for your next collector car!

Two Great Fall Events in Pennsylvania

Auto appraisers know that car auctions can be an indicator of market value trends. Motivated sellers by the hundreds will descend upon Carlisle Fairgrounds for the Annual Fall Carlisle Collector Car Swap Meet & Corral event on October 2nd through the 6th. Of special interest will be Thursday night’s & Friday night’s auctions. This is one of the best buying opportunities of the year. Look for great values as sellers are motivated to sell before winter sets in.  Don’t miss out.  Savvy shoppers could buy at Carlisle and sell the next week at the AACA Eastern Fall Nationals in Hershey on October 9th through the 12th. Both will present great buying opportunities with motivated sellers.  Let us help you negotiate the best deal.  AAG’s pre-purchase inspections and appraisal report can help you save money.  Stop by our tent and check out our appraisal specials.

See you there!

Larry

What’s the Difference Between AAG’s Pre-purchase Inspection and a Certified Appraisal?

What’s the Difference Between AAG’s Pre-purchase Inspection and a Certified Appraisal?A pre-purchase inspection’s purpose is to document the condition and features of a vehicle for a potential buyer who does not want to travel to the vehicle or who may not have the knowledge necessary to accurately assess its condition.  AAG agents are our client’s eyes and ears as they gather information during their inspection. 75-150 photographs are taken to document the details and condition of each automobile, inside and out.  A paint meter is used to determine areas where body filler has been used or repairs have been made.  Over 125 individual items of the auto are given a condition rating.  Additional information includes identifying numbers, copies of documentation, descriptions of options, aftermarket items, wheelbase measurements, drivetrain particulars, comments regarding the condition of components, operational and performance verification of features, as well as a test ride in the automobile to assess its roadworthiness.

AAG agents have a strong background of experience and knowledge and are tested and certified by the company before they start working with AAG.  They are available to speak with clients before and after the inspection.  Since we are appraising the condition of the auto we provide a condition report instead of an appraisal report.  However, the appraised value of the automobile is included in the verbal consultation that is part of every pre-purchase inspection that AAG provides.

A certified appraisal is a document that is created to establish the value of a vehicle for a specific purpose and is completed according to recognized standards within the industry.  Personal property appraisers are not regulated to the extent that real estate appraisers are. However, professional certified appraisers adhere to similar standards as applied to automobiles.  Certified appraisals are often requested by lenders, insurance companies, probate courts, families who are distributing property from estates, the IRS, individuals involved in claim settlements and a variety of other clients.  While an inspection should always be a part of the appraisal process, the appraiser’s report is the required outcome.

If a buyer is purchasing an automobile and needs an appraisal to secure funding or insurance, then both a pre-purchase inspection and a certified appraisal are required.  The pre-purchase inspection allows the buyer to make an informed decision and negotiate the best deal.  The certified appraisal allows the buyer to provide proof to their lender that they are funding a vehicle worthy of the loan amount. It can also provide insurers with documentation so they can arrange for the proper coverage to protect the buyer’s investment as it is being transported to its new home.

Central Virginia Welcomes New Concours Event

VA Festival of the WheelWhen we were first approached about sponsoring the Virginia Festival of the Wheel car show in Charlottesville Virginia, we thought “It’s about time!”  While there are a number of local car shows in the area and many of them support local non-profits, this event’s mission was to raise awareness and support for the UVA Cancer Center, which has made a difference in the lives of many people in Virginia and beyond.  While raising awareness and financial support for the Cancer Center, this show provided participants with a concours level event in a world-class venue with a program comprised of many local enthusiasts and supporters of the old car hobby.

The show made it possible for our office staff to meet fellow car lovers in person and combine their forces to make the event a success.  We were honored to have a 1936 Rolls Royce Phantom III Drophead Coupe as the featured automobile in our tent.  We have had the privilege of appraising this memorable automobile several times as time has passed.  It is owned by a local family who has been involved in local and national car clubs for many years.  Just one of the collectible autos in his stable, this one was purchased by his father in the early 1960’s and won Best in its Class at the Amelia Island Concours d ’Elegance a few years ago.

Other notable autos at the event included the following winners:

The Virginia National Bank Best in Show Trophy – Brant Halterman for his 1965 Shelby GT350 Mustang.

The Albemarle Co. Rotary Club People’s Choice Trophy was a tie – Louise McConnell for her 1964 Ferrari 250 Berlinetta Lusso and Allan Becker for his 1930 Packard 745 Roadster.

The Chairman’s Choice Trophy ­- William Alley, 1955 Jaguar D-Type Roadster

The Packards, Featured Marque of the 2019 VFOTW – 1st Place Allan Becker,1930 Packard 745 Roadster; 2nd Place, Allen Richards,1931 Packard 845 Convertible Coupe

Vintage Race Cars – 1st Place, Eric Anderson, 1932 Hudson-Martz Indy Car; 2nd Place, Phil Williams, 1960 MGA Racer Convertible

The Cadillacs – 1st Place, Frank Nave, 1959 Cadillac Coupe DeVille; 2nd Place, Joel Loving, 1975 Cadillac Eldorado Convertible

Brass Era Cars – 1st Place, Paul Wilson, 1899 Marot-Gardon Open Car

Post-War American Production Cars – 1st Place, Doug Caton, 1955 Chrysler New Yorker Convertible; 2nd Place, Zach Straits, 1961 Ford Starliner Fastback

Exotic Sports Cars – 1st Place, Brian Fox, 2004 Acura NSX Targa; 2nd Place, Tom Farley, 1999 Ferrari 550 Maranello 2 Dr. Coupe

German Sports Cars – 1st Place, Michael Copperthite, 1953 Porsche Type 356 Coupe; 2nd Place, Robert Guenther, 2016 Porsche 911 GTS Club Coupe

American Sports Cars – 1st Place, Daniel Miller, 1962 Chevrolet Corvette;                2nd Place, Edward Szeliga, 1964 Chevrolet Corvette

Pre-War Classic Cars – 1st Place, Jim Elliott, 1928 Auburn Convertible Sedan;

Post-War Foreign Production Cars – 1st Place, David Lowen, 1959 BMW 600 Sedan; 2nd Place, Christopher Thompson, 1959 Alfa Romeo Guilietta Sprint Coupe

Preservation Class Cars – 1st Place, Louise McConnell, 1964 Ferrari 250 Berlinetta Lusso;  Tie for 2nd Place, Chris Overcash,1946 Packard Sedan – 2nd Place, Michael Chiavetta, 1965 Chevrolet Chevelle Convertible

American Hot Rods – 1st Place, Don Cullen, 1935 Ford Cabriolet Roadster; 2nd Place, Bobby Hilton, 1931 Ford Roadster

British Sports Cars – 1st Place. Jim Ellis, 1956 Austin Healey 100M; 2nd Place, Jim Cheatham, 1957 MGA Coupe

Fundraising totals have yet to be finalized, but the result is expected to be very close to this year’s goal of $30,000.  The success of the event is a testimony to the dedication and efforts of the event’s organizers under the leadership of Mike Baldauf. His vision of combining an interesting and informative program with a nice venue to create a positive experience for all participants was superbly realized. We are looking forward to next year’s event during Labor Day weekend 2020. Great job Mike!

VA Festival of the Wheel

1969 Corvette Value Trends Seminar – Hosted by AAG

1969 Corvette Value Trends Seminar – hosted by Auto Appraisal GroupHaving just celebrated the 50th anniversary of Woodstock, many of us have turned to someone and said “Can you believe it has been 50 years since 1969?”  This weekend at Corvettes at Carlisle, we will be celebrating the 50th anniversary of the 1969 Corvette.  This Stingray was well-received with its new larger 350 CID 300-hp engine as standard with a 350-hp version available.

AAG will be hosting two seminars at the show this weekend on Friday & Saturday mornings at 9:00 AM.  Play along with our Trivia and Fact or Fiction review of recent 1969 Corvette sales to see how current your value trend skills are.  Stop by the booth on the Midway to check on our show specials.  We look forward to seeing you at one of the largest Corvette events in the country!

Paint Color Price Inflation

Paint Color Price InflationAs an appraiser I am constantly looking at options, values and the many variables that make each auto we appraise unique. Most people probably think that color does not affect the value. What do you think?  Would you rather have a red sports car or a brown sports car?  Do you prefer white cars with red, blue or beige interiors?  What color is the last car to sell? Over the years, the cost of special colors has definitely increased. Check out this short article written by one of our Oklahoma agents, Joe Smith.

Optional Paint Color Price Inflation

When we visited the STUDEBAKER Museum about 20 years ago they had a mid-1930’s rumble seat roadster in a yellow color on display and it stated the yellow color was a $10.00 option. When we were researching 1948 to 1953 CHEVROLET pick-ups we discovered they had only one standard color, Forest Green. The other six colors were a $10.00 option. I was doing research on a 1970 DODGE Challenger to do an appraisal. They had 13 standard colors and 8 High Impact colors that cost an extra $14.05 such as Plum Crazy, Panther Pink, etc. Inflation from the 1950’s to 1970 about 40%. In 2019 a CADILLAC Escalade has two standard colors and six optional colors. The optional colors range from $695.00 to $1,225.00. The same colors on a 2019 CHEVROLET Suburban are about $200-300 less than the Cadillac. In 1950 the optional color on a CHEVROLET was $10.00 and in 2019 $995.00, about 100 times more.

Forest Green Chevy PickupWhen completing an auto appraisal report, the color is considered because popularity affects the value.  You’ve heard the phrase “that car has eyes” meaning it’s a really good looking car.  Buyers want the colors they like.  You’ll find a lot of collector cars have been repainted Red, White or Blue whether that was the original color or not. Car salesman refer to some of these repaints as “resale red”.  Few are repainted green or brown unless that was the correct color and type for the period.  The 1958 Corvette’s most popular color was Snowcrest White but by 1968 the most popular Corvette color was British Green. In 1978 the most popular Corvette color was a custom two-tone Silver Anniversary paint scheme. If you look ahead one more decade by 1988 the most popular Corvette color was Bright Red.  So yes, an auto appraiser does consider color but it’s not always measurable and typically has a minimal effect.  When completing the appraisal report, the condition of the paint and the body underneath will have a greater effect on the value than the color.

Vehicle Color ChartWhat auto colors are trending now? Sources say that the most universally useful and popular color for 2019 is DuPont’s “Saharan Bronze”, a color that does nicely on a Ford F150 or Chevy Suburban, while still looking polished and sophisticated on a BMW or a Fiat. Gunmetal grey and “Gunmetal Pearl” are equally universal favorites and can be seen on a wide variety of makes and models. The new “power” colors have shifted from primarily red, white or blue color to dynamic yellows and greens. The Chevrolet Corvette has found a new generation of “wow” in Racing Yellow, while sports standbys like Dodge and Lamborghini are showing off nearly neon greens. The once iconic red or silver Porsche 911 can now be seen in brilliant Lava Orange, a “power” color that has maintained its appeal for nearly 5 years. When it comes to “cars with eyes”, the key factor in current trends seems to be bright, bold, non-traditional color, with Jeeps, Fiats, and sports cars appearing in bright teal, brilliant blues, and dramatic, vivid purples.

Happy Motoring!
Larry

Too Good to be True

It is something that occurs all too frequently.  You see that ad for your dream car.  You know the one – you and your pals always talked about it, but it was always just out of reach.  Now, one shows up that meets all of the criteria and look at the price!  Woohoo!  You’ve got this; you can make it work!  Better hurry up and contact the seller before someone else snags it up.

Okay, you have contacted the seller and want to get some more information.  What’s that?  Lots of people calling and wanting it?  You’ll need to make a deposit and they will hold it for you until you can arrange full payment.  And they will arrange for transportation also?  Great, because you live out of state (or country).  Also, you will need to arrange for someone to come check it out, give it an in-person inspection.

They know all of the right words to use, how to use your emotions against you.  They want to keep you talking and telling them all about what it means to you and how you have always wanted one.  It is a great way to keep the stars in your eyes that don’t let you see the true condition of the vehicle until after you have bought it, gotten it home, and started really looking at it.

About that deposit – they do have a lot of people wanting this car, but you are the first to contact them so they will give you first dibs – they just need a little money down to hold it.  Everything is in order and – oh, did they tell you it is a matching numbers car? Very hard to come by.  Did you see all of the pictures they put on the ad? They show every angle and any imperfections.  This car is going quick and they are not sure there is enough time to have someone come look at it, but you are welcome to do so.

They are always accommodating and agree with you about everything.  They will even tell you that someone else had just bought it, but their financing fell through.

These are just a few of the many scenarios that occur on a regular basis in the collector and used car markets.  Sometimes you’ll end up paying more than you had planned, and sometimes there is no actual car for sale.  It was just a trick to get your deposit money.

Go ahead and keep looking for that dream classic you have always wanted.  Just slow down a little, take your time and think it through.  Most of the time if it sounds too good to be true, it probably is.  If there is a sense that you need to hurry to get this vehicle, it should set up a caution flag for you.  Sure it will cost you a few extra dollars to arrange for an independent pre-purchase inspection.  That inspection can save you large sums of money and root out some dishonest sellers, some of whom do not have a car to sell.  Another thing it can do is show you through someone else’s independent and unemotional eyes and ears the true condition of that vehicle that may have been overlooked through your starry eyes.

There are people out there that only want to separate you from your money.  There is no car, the ad was made from taking stock photos off of the internet, and all of the popular catch phrases have been used to grab and keep your attention. That does not mean that there are not some very decent cars and sellers out there.  It just goes to show you that you need to be vigilant in the search and those you are dealing with – especially through the internet.  A pre-purchase inspection from a professional is well worth the cost.

Happy hunting!

Written by AAG Agent, Gary Goldsberry, Parker, Colorado

AAG at Spring Carlisle

AAG Carlise Auction AprilCome and see AAG at Spring Carlisle and let us help you check out your next great buy! Spring Carlisle Auction takes place April 25th and 26th in Carlisle, PA which offers something for everyone. Reasonable cars at reasonable prices. Attend the show and stop by the auction to find your first collector car or one more to add to your collection. The Carlisle Auctions provide a great opportunity to get into the hobby at an affordable level.

AAG will be in Spaces P18- P21 and can provide prepurchase inspection on vehicles in the auction or car coral.

Let the season begin!

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