JDM_Hamster Posted April 20, 2006 Share Posted April 20, 2006 The KBB tells you what you SHOULD pay for the car...If you want to pay more thats your dumb mistake... I only paid 700 for my car Link to comment Share on other sites More sharing options...
TS John Posted April 20, 2006 Share Posted April 20, 2006 Well, thanks for reading my post and then totally disregarding it. All I'm saying is that personal tastes may dictate behavior that is slightly out of line with common buyer decisions. In other words, sometimes it does make sense for someone to pay a little bit more. That's why there are still people in a market willing to pay higher than market price (see the supply/demand curve here). The two curves meet at market price, which is where KBB is situated as a resource to the common car buyer. Those on the AD curve left of this may be willing to go above KBB for a vehicle they love if they deem the specific item in question as rare or in some other way desirable. Those to the right of market price on the AD curve would people like me when shopping for SUVs, cuz there's no way in hell I'd pay even market price (KBB value) for anything bigger than a sedan. The market would have to stoop to my price to meet my lower demand. Nukka. Link to comment Share on other sites More sharing options...
CleanGSR Posted April 20, 2006 Share Posted April 20, 2006 Most people aren't willing to pay more than suggested retail price. There's just some that don't know any better. That's why if you pay over KBB price on a used car, your going to get burned even worse on an already depreciating product. Trust me, there is not a short supply of used honda's for sale, so your supply demand example doesn't really apply. That would only apply if it was hard to get ahold of a used honda, which would cause the price to increase. (And KBB would show that change if it happened). You can disagree with me all you want, but if everybody else pays $3.00 for a gallon of milk and I get stuck paying $5.00, I'm getting screwed. Link to comment Share on other sites More sharing options...
TS John Posted April 20, 2006 Share Posted April 20, 2006 That's correct. I'm only referring to specific instances where conditions of rarity/uniqueness can be met. Even if I absolutely love the sol and am willing to pay more than market price for it, the current market conditions, as you point out, mean that I would still be a fool to pay over them. Link to comment Share on other sites More sharing options...
CleanGSR Posted April 20, 2006 Share Posted April 20, 2006 I guess I would say it would be a mistake to buy one unless you plan to drive it until it falls apart. If you ever plan to re-sell the car, then you shouldn't even consider buying one over KBB. For example, my dad's thinking about getting a used NSX. He would probably over pay a some to get the exact car he wants, but if he gets one, he'll never get rid of it. Link to comment Share on other sites More sharing options...
TS John Posted April 20, 2006 Share Posted April 20, 2006 That's a good point. Just because you love that specific car and are willing to pay more doesn't mean the next guy will, which means you won't be able to recover nearly enough on your resale. Non-resellers are really the only people who should fall into the category of those willing to pay above market price. Then again, people consistently pay over the private-party KBB value of a car by going to a dealership because they don't have to spend as much time looking and they think that a dealer is a more reputable seller so they're taking less risk. In this case, time/place utility and less perceived risk account for the added value of the car to them. If I had an NSX, I'd never sell it either. Then again, I ain't never getting rid of the sol. Link to comment Share on other sites More sharing options...
TS John Posted April 20, 2006 Share Posted April 20, 2006 I'd like to clarify some of the things I said, so that people won't think that my point about supply/demand doesn't line up with HungGSR's, who's nobody's fool. Uniqueness and rarity (in other words, supply) matched up with the market level of demand is what determines the market price (see the intersecting supply/demand curve I linked to earlier). One of the nice things about the KBB is that it adjusts the value of the car in question based off determining factors like condition, mileage, accessories, and location, yielding a very accurate reading of the supply of those vehicles. This way, you're not comparing a sol s with 200k on it and bad paint to a mint VTEC sol that’s barely been driven. As HungGSR stated, it would be foolish to pay 5 bucks for the same gallon of milk that everyone else is paying $3 for. However, sometimes there are conditions that make it reasonable to do exactly that. For example, say you need the milk fast and it's two minutes to 7-11 and ten to the nearest grocery store. We all know that 7-11 is a little more expensive because of it's convenience factor (time/place utility). This is exactly why the dealership KBB value of a car is higher than the private-party value, which is in turn higher than the trade-in value. People who want to sell their car fast can count on a dealership to buy it, but they sacrifice some potential revenue by not undergoing the uncertain waiting period while that "For Sale" sign sits in the window. In turn, dealerships can get away with charging more for their cars than private parties for two reasons. One: They have a wide selection of vehicles on hand, thus significantly dimishing the inconvenience of a long search for the right car by going through the classifieds. Two: As long as the dealer is not a shady one, customers have a higher assurance that they're not getting ripped off with a lemon, since the reputation of the dealership is at risk every time they sell a car. Private parties lack this assurance, because it's very little skin off their nose if you aren't satisfied -- neither you nor any of the friends you might complain to are likely to buy another car from them in the future. So that still leaves the question of, "Why pay more than KBB if don't need the car now (time utility)?" The only answer to that is rarity, and as said before, the KBB already adjusts to rarity by condition, region, etc. That's why their readings are such a good guide for the average car-buyer. This leaves only one reason I can see to pay higher than blue book for a car (assuming you have the time to devote to the search). That's uniqueness. If the car in question is significantly unique to fall outside the ranges allowed by the KBB sorting system (that is, it has enough modifications to it that aren't even considered when computing the KBB value, since such a low percentage of vehicles have them their effect on the market supply would be negligible). So, if there's a car you want that has specific work done to it that you desire, yet cannot replicate yourself, then paying above KBB is totally reasonable. This sort of enters into the realm of branding, which explains why people are willing to pay more for Nike shorts than Wal-Mart shorts. There's a difference in perceived quality, even if there is no difference in actual quality. When all the sellers in a market have identical products, they cannot justify charging higher than market price for their goods, which is why companies make every effort to differentiate their products from the others and move out of pure competition markets (an example of these would be fruit sellers at a farmer’s market). More accurately, in my opinion, it closer resembles pricing of artwork, which has widely varying value due to its subjective nature. In this case, the extra money is going towards the quality of workmanship, which can, in the case of valuable art, only be replicated with great skill. If I think a body kit looks ugly on a sol, its value will be lower to me. Some ricer, on the other hand, might be willing to pay a little more for the body kit since it makes the car unique, and thus rarer than the cars considered when computing the KBB value, which does not, to my knowledge, take into account after-market modifications. Same goes for difficult engine work -- if I don't have the technical know-how to replicate a certain setup, it would be reasonable for me to value it higher than someone who could. Of course, that's not to say that you'll get all your money back on car mods when you try to resell. And it's not to say that you should go out and pay more than KBB for a car, provided you have the time to devote to the search and the skills required to get it up to your personal tastes, aesthetics or engine wise. As you can see, if you stuck with me through all that, the situations in which it is reasonable to pay more than KBB are pretty rare. I was only trying to dispell some of the rumors about pricing that seem to prevail. I also like intellectual discussions, so I tend to get a bit long-winded. Sorry. If anyone has any questions, I'll do my best to answer. Also, if anyone spots any problems with my reasoning, please tell. I don't like it when people are mistaken in their reasoning, but I like it even less when I am. Link to comment Share on other sites More sharing options...
skateelements16 Posted April 20, 2006 Author Share Posted April 20, 2006 that crap is long... who ever reads that last post.... ill give them a cookie Link to comment Share on other sites More sharing options...
SolLesHonda Posted April 20, 2006 Share Posted April 20, 2006 I guess I get a cookie then. Link to comment Share on other sites More sharing options...
TS John Posted April 21, 2006 Share Posted April 21, 2006 that crap is long... who ever reads that last post.... ill give them a cookie Yeah. For those who look at it and then don't read it -- it's about the economics of car buying. If you're interested in that, then read it if you want. If not, s'okay with me. I was only trying to help. And who knows, maybe it'll help someone on these boards. I guess I get a cookie then. Sorry, SolLes, I hope I didn't totally bore you there. I don't know if you were actually that inquisitive about car buying economics, but hopefully you got something out of it. Link to comment Share on other sites More sharing options...
skateelements16 Posted April 21, 2006 Author Share Posted April 21, 2006 i read it and i think its pretty interesting sense i am a salesmen for verizonwireless lol it was just like super long haha Link to comment Share on other sites More sharing options...
SolLesHonda Posted April 21, 2006 Share Posted April 21, 2006 If you consider that super long, then you haven't read my turbo thread lol. Link to comment Share on other sites More sharing options...
babykansas04 Posted April 21, 2006 Share Posted April 21, 2006 wow TS John....that was a great post..... it was long but really good Link to comment Share on other sites More sharing options...
TS John Posted April 21, 2006 Share Posted April 21, 2006 Thanks. SolLes, you have a turbo thread? I guess I'll have to add that to my list of threads to read when I have the time. How an engine works How VTEC works SolLes' Turbo thread Any more things I should read to increase my general knowledge around these parts? Link to comment Share on other sites More sharing options...
SolLesHonda Posted April 21, 2006 Share Posted April 21, 2006 Yeah, I'll bump it up for you so when you go on your "View new posts", it'll be there. Link to comment Share on other sites More sharing options...
TS John Posted April 21, 2006 Share Posted April 21, 2006 Cool. I'll look at it tonight when I'm being a creepy loner. Link to comment Share on other sites More sharing options...
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