How to negotiate buying a car from a private seller

Your goal is to take a starting price and subtract everything that detracts value from it. You don't have to be perfectly exact, but you should try to use reasonable numbers that are backed up by some basic research on the car.

Find Your Starting Price

Go to Kelley Blue Book and get the highest Private Party price using “excellent” condition. This will be your starting point and you'll subtract the cost of repairs and other factors from this price. Why use “excellent” if the car isn't in excellent condition? We use “excellent” as the starting point because everyone judges condition a little differently and we don't want to double-count any damage by starting with a “good” condition price.

Subtract Upcoming Maintenance Costs

Ask the seller for maintenance records. They may not have any actual records, but should be able to tell you if any big ticket maintenance items have been performed recently. Next, find the maintenance schedule for the car. A maintenance schedule is typically published by manufacturers for each car. Try googling the car name followed by “maintenance schedule”, for example, “BMW X3 maintenance schedule”. Take a look at what maintenance is recommended by the manufacturer, especially big ticket items that are coming up based on the current mileage. Big ticket items can include spark plugs, brakes, and tires. Write down any maintenance items that you want to subtract from your starting price.

Subtract Cost of Major Repairs

If something is noticeably wrong with how the car drives, you'll want to subtract the cost of that repair from your starting price. The best way to do this is by getting a pre-purchase inspection by a trusted mechanic. The inspection will include estimates of all repairs that need to be performed. If you don't want to get an inspection, look online for estimated repair costs for the items you are aware of. It really is best to just get the inspection though. Add each major repair cost to your notes.

Subtract Cosmetic Damage

Cosmetic damage is often very expensive to fix and the value is more subjective compared to mechanical repairs. I usually use a ballpark value of about $300 per body panel that is damaged. The actual cost to repaint one body panel is around $1,000, but most sellers will balk at that being deducted from the price. It depends on the car, though, if you're buying a classic Porsche 911, you may be able to deduct the full cost of cosmetic repairs. Add your cosmetic damage estimates to your notes.

Vehicle History Can Have a Huge Impact on Price

Vehicle history reports are very important when buying from a private seller. If the title has been branded, such as a car with flood damage, the value is far lower than a car without any brands. KeySavvy includes a title report that will check for salvage records, mileage records, and 60+ title brands. You should also get a CARFAX or AutoCheck report to check for accident records. If any of these issues are shown on a title report, do more research to see if you really want to purchase the vehicle. Not all title brands are deal-breakers, but at the very least you should use this information to negotiate.

Consider the Market

At KeySavvy, we have seen vehicles sell for more than the Kelley Blue Book price. For example, a well-maintained Subaru in the Seattle, Washington area will be highly sought after and may sell for 10-15% more than the highest KBB price. If you are in a hurry to buy a car, you will need to factor in how competitive the market is. In theory, KBB has these dynamics included in their valuation since they are based on actual sales, but the reality is that there are so many variables in used car sales that KBB valuations cannot be used as a definitive measure of an individual car's value.

In addition to variables like vehicle condition and your local market, how closely a particular car matches your preferences impacts its value as well. If the paint color and options are exactly what you're looking for, the value of the car to you is higher than what Kelley Blue Book reports. This is a fine reason to offer more for a car. To summarize, if you pay more than KBB value you aren't necessarily getting a "bad deal". Likewise, if you pay less than KBB value you aren't always getting a "good deal", either. Used car values are simply more complicated than that.