Value of Classic Car
To accurately find out how much a collector car is worth in value, there are many important factors to consider. Everything from the market value of the classic car to the provenance must be considered. Other important factors to consider include the overall condition of the vehicle and the classification of the car.
Before we get started, let's talk about some of the important terms you'll need to know in order to appropriately value a classic car, whether you're buying a classic car or you're selling a car that you own.
Image credit - Michel Curi : https://www.flickr.com/photos/119886413@N05/
Important Terms to Know
First, let's discuss the definition of the word value. For most people, value can be defined as "the monetary worth or marketable price of an object." However, other factors like relative worth also come into play and may add additional value to a vehicle.
Relative worth are the factors that make a vehicle more or less valuable to an individual, and/or buyer or seller. Relative worth includes the memories you share with the vehicle, the history of the car, your current financial state etc.
These things to the seller may not mean a thing to the buyer and vice versa. However, relative worth may lead an individual to believe the vehicle is worth more than it actually is.
Another important term you'll need to learn, to value your vehicle, is market value. The market value of a vehicle is the average estimated price a typical interested buyer would pay for a car and a typical seller would accept in an open and competitive market.
Matching numbers is another important term used to value a car. The matching numbers of a vehicle include the numbers on an engine, chassis, transmission and other significant components of a vehicle. When these numbers are all the same as when the vehicle was built, they can impact its value.
Determining the provenance of a vehicle is also important for determining a collector vehicle's worth. Provenance generally means "place of origin", but the definition is a bit different in the world of automobiles. In this case, provenance refers to the documented history that supports any claims made about the car, its accomplishments, or ownership.
Salability is defined as the ease with which a car may be sold. When a vehicle is suitable for sale, it is considered salable.
Now that we know some of the important terms used during the process of valuing your classic car, we can get started!
Throughout this article, you'll learn how to value a classic car in a series of three steps. We'll also provide you with information about where to consult for classic car insurance advice and we'll discuss several of the possible hurdles you may run into while determining the value of your car.
Three Steps for Valuing a Vehicle
The best way to value a vehicle involves following three simple steps. These steps include classification, condition, and comparables.
During the first step of classification, you must classify the vehicle, taking the following into consideration:
- What is the car, exactly? What is the make, model, and year?
- Does it have the proper markings and components?
During the second step of condition, you need to determine the condition of the vehicle:
- What physical state is the car in?
- How is the cosmetic appearance?
- How well does the vehicle operate mechanically?
- Is the vehicle historically accurate (and if not, are the changes meaningful to the value)?
The third step involves scoping out comparable vehicles:
- Which similar vehicles have sold in recent months?
- How much did similar vehicles sell for?
Whether you're the buyer or the seller of a classic car, it's important to know the classification, condition, and comparables of the vehicle you are pursuing.
Step One: Classifying the Vehicle
It may seem reasonable to list the make, model, and year of a vehicle and expect that it should sell at the same price as other vehicles of the same make, model, and year, but many other factors must come into play. This is where classification comes in.
As part of due diligence for the buyer, classifying a vehicle is meant to protect a buyer from purchasing a vehicle that is overpriced or even misrepresented. While it is fairly easy for car collectors to identify many different types of vehicles, it becomes a bit more difficult to classify limited production and one-off cars. It may be difficult to tell whether or not a vehicle is authentic or a clone.
Muscle cars, race cars, and larger classic cars must be accurately identified since these popular vehicles are more likely to attract replicas. In order to get your money's worth and ensure you're paying for an authentic vehicle, it's important to decide whether or not the vehicle you are pursuing is in fact the actual vehicle and not a clone or a fake.
When you're purchasing an authentic vehicle, you want to make sure that the vehicle is actually the same automobile that the seller is making it out to be. For example, if you are selling a Jaguar XJR and representing that it is the same vehicle raced on the track by Bob Tullius in the 1980's, then it really needs to be that exact original vehicle, not one of his backup cars and not something that was constructed to match that car's configuration from scavenged parts.
Additionally, classifying a car is so much more than spotting a fake (or 'tribute') version of a vehicle. As a buyer, you should be able to identify the model and equipment of the car--is it supercharged or not? Is the vehicle a rare form with a bigger engine and synchronized transmission? These may seem like minor details to someone who is outside of the car hobby, but they will impact the price of the vehicle.
Many cars may appear to be identical when they're side by side--but looking under the hood is just as important! To properly classify a vehicle, you or a marque expert should confirm several things, including the major components of the vehicle, the numbers (including the VIN), documentation and provenance of a vehicle.
Firstly, confirm that the major components are in line with the marque or model. Are the engine, rear end, transmission, interior, paint, trim, and other items in line with the marque?
Secondly, check the numbers. Make sure the VIN, parts numbers and build numbers are all appropriate to the car or model. Do these numbers match the engine numbers and chassis (assuming they should... a matching range could be just as authentic as a true match for some vehicles and your advance research should clue you into things like this)?
Thirdly, confirm documentation of the classic vehicle. Ensure the vehicle history and ownership are all documented with a paper trail, including all titles, registrations, photographs, bills, log book, and verbal history. Obviously, more documentation is always better than less and you can't have too much of it.
Step Two: Verify the Vehicle's Condition
While it may seem like a no-brainer to look into the condition of a vehicle, there's more to it than meets the eye. The condition of a vehicle cannot be determined by simply viewing its exterior. While it may appear to be in excellent condition, some of the most important factors are going to be hidden from view.
The seller may claim that the vehicle is in "good" condition, but what means "good" to him or her could mean something completely different to you. To ensure you're both on the same page, make sure you do your homework before you begin searching for a vehicle. Read all you can about a vehicle before you begin searching and meeting with sellers. Learn about the vehicle's weakest and strongest points and be sure to ask plenty of questions about the car you're looking into.
As we mentioned earlier, there's a lot to be said about a vehicle's overall condition in more places than just under the hood. Learn to spot costly hidden issues such as engine noises, excessive suspension movement or clunks, rust in locations known to be a problem in your target car, poor bodywork, chassis damage, and incorrect components. Hire professionals to check the condition of the vehicle if you aren't able to or if you don't know what to look for.
Never assume a vehicle is in good condition from photos alone--always view it in person or hire an expert who can look at it for you. Refer to a number of price guides for rating criteria and price range (they will vary by source so averaging from the lot can be helpful). By doing all of your homework and learning as much as possible about the vehicle you're interested in, you'll save yourself plenty of headaches further down the road.
Step Three: Consider the Comparables
You would never purchase a new house without first checking out the comparables, right? In fact, your broker wouldn't even let you make an offer without researching comparable sales in the area. The same goes for purchasing a classic car. You may think a vehicle is worth a certain amount of money until you check out comparable sales. Considering comparable sales ensures your offer is in line with fair market value.
To determine the market value of a vehicle, past sales must be reviewed. Going over the selling prices of vehicles tells you what other cars are selling for and which direction the market is headed. Sellers will point to advertisements with asking prices. Anyone can ask for a price, but what matters is what was actually paid. The two numbers seldom are the same, and a buyer should weigh asking prices accordingly.
In this day and age, a wealth of market information is generally at your fingertips. You should compare price guides (most are available online now), online ad listings (restricting your results to completed sales is usually accomplished by checking a box on the search form), auction and private sales results (web sites that aggregate all the major auction houses' results make this easy), and seek out the opinions of other car collectors (taking a bit of care as the enthusiasm of fellow experts on web forums may exceed actual experience).
Determining the market value of a vehicle can be a tedious and time-consuming task. However given the amount of money involved, it is always worth the effort. It's very important to review information in as many places as possible to ensure you're making the most educated decisions possible.
Steps to Determine the Market Value of a Vehicle
We have several recommendations for making this as smooth of a process as possible. Let's discuss these strategies in more detail.
As stated already, interested buyers should take the time to obtain information from other collectors and look into price guides, auction results, and if you can find and verify them private sales results. Buyers should never rely solely on one resource since results may be skewed, so it's important to look in as many places as possible and base their conclusion on the resulting bigger picture.
How to Use Price Guides
Price guides are great resources because they're hugely accessible and tend to be very detailed for many makes and models of vehicles. However, they don't cover every variation of the more limited or esoteric vehicles throughout history, which is a definite downside.
Fortunately, these guides make great starting points for beginning your investigation. We recommend using several price guides and not just one since each guide prices vehicles differently. Multiple guides help to give you a better idea of what the vehicle is worth.
Some examples of price guides you may be interested in using include:
- National Appraisal Guides, Inc.
- Old Cars Weekly
- Kelley Blue Book
- Collector Car Market Review
- Cars of Particular Interest (CPI)
Using Auction Results to Determine a Vehicle's Value
Auction results are another great resource for determining a vehicle's market value. In order to find a good comparison, you should look for cars that are similar to the vehicle you're looking to value. Many auction websites take the time to post results on their websites which makes them hugely accessible. Car collector magazines and newspapers also publish sale prices.
Unfortunately, not all vehicles show up at an auction, so finding a perfectly comparable vehicle may be a long shot. Auction results are a great starting point but aren't the best way to determine the market value of a vehicle.
It's important to remember that you should avoid relying solely on auction results for conducting market research--many factors could come into play before a vehicle finally sells, including the time the vehicle was run through the sale, the weather during the time of the auction (for outdoor auctions), the condition of the vehicle, and even the color of the car. Auction websites may not include any information other than the sale price, so you don't always know the condition or history of the vehicle.
A couple of publications that are likely to share sales prices include:
This site aggregates all auction results from the major auction houses, and archives the results over time
Believe it or not, EBay is now a mainstream sales forum for many classic and exotic cars. Restrict your search to "Completed Listings Only". You can also expand your search to include auctions where there were bids but the reserve was not met. The high price reached is what buyers were willing to pay. As such these are worth considering as data points in your overall evaluation.
How to Use Private Sales Data
If you can get it, private sales data is useful but, as its name implies, private sales are generally unreported and kept 'under the radar'. Note that reading ads in the back of your favorite car magazine is useful to give you an idea of what sellers are asking, but it doesn't tell you what the cars actually sold for once the negotiation started.
When looking at ads with asking prices, it's best to look at the ads over a series of several months to see which cars have sold and which ones are still listed. If a car has been listed for several months and still hasn't sold, it may indicate that the asking price is too high, or too high for that vehicle's condition.
When a car does sell, feel free to contact the seller to ask for additional information. Ask them about the selling price, condition of the vehicle, and about any unique features that the vehicle may have had. Don't expect a response but if you can get one, and you trust what you are told, its more information you can use.
Obtain Information from Other Collectors
Other classic car collectors hold the key to valuable information that can make the selling or buying process a whole lot easier for you. When you speak to other car collectors who share the same car collecting interests, you can combine their knowledge with your own to help you come up with a ballpark estimate of the market value of your car.
Other car collectors are paying attention to the same data as you, but they might know something you don't. Maybe they know to look in places you haven't checked yet or maybe they've been collecting cars for years and have more experience than you do. You never know--they may know someone who has previously sold a car similar to the one you're inquiring about! However, don't forget that if that sale is private, its also unknown to the world at large. Use this knowledge as the basis for further exploration to try and find public justification for your price.
The next time you attend a car show, consider chatting with other event attendees. Networking is another useful tool..
How Relative Worth Comes Into Play
As we discussed earlier, relative worth are the factors that make a vehicle more or less valuable, but may or may not affect the overall selling price of the vehicle. Relative worth is impacted by the motivation of the buyer and the seller and their reasons for pursuing a sale, including the buyer or seller's personal finances, time, and health status. Additionally, relative worth includes nostalgia and the history of the vehicle.
All of these factors are important to buyers and sellers and it's nearly impossible to avoid assigning relative worth to a vehicle. However, just because a car is worth more in your eyes, doesn't mean it's going to actually sell for that price.
Relative worth may also tempt you to make a spontaneous purchase if your dream car just so happens to appear before your eyes. To avoid losing the car, you may be willing to pay a price well over the market value of the vehicle.
However, you should know that the car's relative worth may be greater than market value and you may not be able to recover any premium you paid. If the vehicle has sentimental value to you, you may be willing to overpay for the vehicle. Maybe you picked up your wife for your first date together in the same car or maybe your dad had that same classic car growing up.
Whatever the case, not everyone will agree with your relative value or see things from your perspective.
Consider the Restoration Cost
If you think you can restore a vehicle and then sell it with the classic vehicle restoration fees factored in, think again. Even if you spent thousands of dollars restoring a vehicle, you cannot expect a buyer to pay a price that includes additional restoration fees. Especially since a fully functional unrestored, original vehicle is worth more than a picture-perfect restored example.
Instead of purchasing the restored vehicle for more than the buyer thinks it's worth, the buyer may end up waiting for a vehicle being sold at market value.
The Bottom Line
Since there are no list prices for classic cars, buying and selling isn't always easy. However, using these tips will help you to make a more educated decision before selling your collector car or purchasing one of your own.
A fair selling price is a price that makes sense to both the buyer and seller, and you can do your part by participating in the three-step process of classifying the vehicle, determining its condition, and comparing the sales of similar vehicles.
When you do finally make the decision to purchase a vehicle and the headache is over, Leland-West can help you to insure your classic car, exotic car, vintage car, race car, street rod, muscle car, antique car, or other type of vehicle. Our insurance rates fit your desired budget--we get that you shouldn't pay more for a vehicle that isn't intended for daily use. Our pricing structure recognizes that.
At Leland-West, we offer you low premiums, agreed value auto insurance coverage, deductible options, flexible usage, a personalized claims service, more than 25 years of experience, and superior ratings from our customers.
We get that owning a classic vehicle is your dream and that you shouldn't have to pay more for insuring your collector car. Why pay coverage for services and features you don't want or even need? We're here to help you insure your car for only the services you'll be using.
To learn more about the ways in which we can help you, please contact us today.