Frequently Asked Questions

What is the difference between an auto appraisal and a pre-purchase inspection?

The general public often uses auto appraisals and pre-purchase vehicle inspections interchangeably. However, they are two unique forms of vehicle exams used for different purposes. Auto appraisals are used for valuation market value analysis, insurance purposes, civil disputes or litigation, diminished value, charitable donations and a number of other reasons. Auto appraisals, in essence determine a vehicles present market value and its general condition, but not its overall operational condition.

A pre-purchase vehicle inspection (PVI) can tell you whether the frame is rusted, what kind of condition the engine is in, and/or whether all of the accessories work. What a PVI cannot do is determine if a part or drive train component is about to fail. Like an appraiser, the PVI cannot authenticate the vehicle, or determine odometer mileage beyond a reasonable doubt.

Most people want to trust a seller’s statement; so when it comes to the vehicles condition, why not just take the seller’s word for it? Most sellers are forthright, but there can be differences of opinion when words, phrases and terminology are used with describing a vehicle.

A PVI examiner takes an objective point of view; they use all their senses (sight, sound, touch, smell… sorry taste is not included) to analyze the vehicles present operational condition and then document their findings. Quite often an inspection will reveal something about the vehicle that either the seller/buyer did not know or they were hoping would not be discovered. This examination ultimately helps protects both the buyer and the seller from pre-purchase and post-purchase surprises.

Many car buyers can do pre-purchase inspection on your own, but independent third-party inspections can be an excellent investment, especially when buying a car from many miles away. It’s all too common for a buyer to be disappointed when a car turns out to be in worse condition than photographs and a seller’s assurances led them to believe. Remember the old cliche, “looks good from far, but far from good up close.”

From personal experience, about 10 years ago I found a Porsche 911SC at a dealership in Nebraska. The pictures were okay, but not great. I took the dealers sales rep at his word and the price we negotiated via the phone was fair. I flew there with the intent to drive the Porsche back to Oregon.

Once I arrived, I began to look over the car. I was immediately displeased with the car and the sales rep’s integrity. The car ran okay, but contrary to what was described the car had rust, cracking paint, and not only that, many of the cars components did not work, like the A/C, stereo, S/R, electric windows. Yes, I backed out of the deal and took the next flight home. This cost me days off of work and over $600 in airline travel expenses. Needless to say, an independent PVI would have saved me both time and money!

While there is no real substitute for seeing the car with your own eyes, having a state licensed independent PVI to conduct the exam will give you the peace of mind in whether or not to make the purchase. Have a good friend or members of the local chapter of a marque club will often be willing to help. Club members can bring enormous amounts of knowledge about a particular car, but don’t make the mistake of relying on them to place a value on a car, because not to many enthusiasts monitor market values. Hire a licensed professional for a pre-purchase vehicle inspection.

What information should be in an appraisal or pre-purchase report?

Appraisals and pre-purchase reports provide written evaluations with information compiled from a wide range of sources by professional appraisers. Factors such as mechanical condition, physical condition, maintenance, performance, mileage, previous use, and market factors all have a impact on a vehicle’s real value.

Common Terms in the Automotive Industry

(abbreviated from Edmonds)

ACV: Actual Cash Value. A method of valuing insured property that is computed by subtracting depreciation (based on the property’s age and condition) from its replacement cost. Compare “Replacement cost.”

Monrony: Window Sticker Price

MSRP: Manufacturers suggested retail price. Also referred to as “sticker price.”

Invoice: Also referred to as “Invoice Price.” The price that appears on the invoice that the manufacturer sends to the dealer when the dealer receives a vehicle from the factory.

Branded Title: A permanent designation on a vehicles title, registration or permit documents that indicates that a vehicle has incurred damage the repair of which is not possible or would cost more than the vehicle is worth, or that the vehicle has been sold for scrap. While branding designations vary by state, typical branding titles include rebuilt, salvage, irreparable and theft recovery.

Wholesale Value: The price at which dealers purchase vehicles from other dealers or from lender, usually at auction

Vehicle Identification Number: A Vehicle Identification Number, or “VIN,” is the unique 17 digit code that is assigned to an individual vehicle by its manufacturer and that distinguishes it from all other vehicles. No two vehicles can have the same VIN. Typically, the VIN is stamped into a plate or printed on a sticker and affixed to the vehicle in several different places, including inside the engine bay and on the driver’s side doorjamb.

Upside-down: A vehicle loan when the loan amount is greater than the current value of the vehicle.

Residual Value: A vehicle leasing company’s estimate of what a vehicle will be worth at the end of the lease, which is a factor used to determine the monthly lease payment. (The higher the residual value, the lower the monthly payment.)

Replacement Cost: A method of valuing insured property that uses the cost of replacing the property at current prices and does not take into consideration the property’s condition or whether it has depreciated since first acquired. Compare “Actual cash value.”

Lemon: A vehicle that is found to have numerous or severe defects not readily apparent before its purchase. Used both informally to mean a vehicle that proves to be defective, imperfect or unsatisfactory, and with more precise meaning in various states “lemon laws” that provide vehicle purchasers certain rights.

Factory-Installed: Vehicle equipment that is installed by the manufacturer (in contrast to equipment that may be installed by the dealer or the owner).

Certified Pre-Owned Vehicle: A used vehicle offered for sale by a franchised dealer for that vehicle make and who follows the manufacturers requirements for “certifying” the vehicle (including inspection and service) and which, upon sale, is accompanied by a manufacturer-backed warranty.