Vehicle's Fair Market Value reduced by needed repairs?

[delphinus317]

I just had my vehicle in to get checked out & it needs $3,000 worth of work in order to pass inspection (transmission problems, all brakes/rotors bad, needs tires, balljoints, lights out, window motor, wipers, etc.). Of course, I can't afford to pay to have it fixed, so I intend to sell it. I've gotten the OK from my attorney to sell it before filing (CH7), as long as I get "fair market value" for it. Can I sell it for $3,000 less than what KBB says it's value is ($9,800) because of the estimate for work it needs? I have a copy of the estimate to back it up. Thanks!

[LadyInTheRed]

The best way to determine fair market value is to put the car up for sale and see what offers you get. If KBB says your car is worth $9,800, but you put it up for sale and the highest offer you get after a few weeks is $5,000, then the fair market value is $5,000. If you advertise it publicly for sale and then sell it to somebody who is not an insider for the best price you can get, you shouldn't run into any problem.

KBB takes the condition of the car into consideration. Is $9,800 the value in Excellent, Good or Fair condition? It sounds like you should be using "fair". At least some of the needed repairs, like new tires, are taken into account in the valuation.

[keepsmiling]

I'd suspect that with estimate in hand, you'd be fine. KBB quote doesn't represent "fair market" if it needs that much work. Sounds like it's barely running.

HOWEVER... here in NJ they changed the rules so that inspection is ONLY for emissions. I'm not so sure that's such a great idea, but if it's true in PA as well, that might make a difference to you.

[delphinus317]

Ah, gotcha... $9,800 is "good" condition. I had it listed on craigslist with the understanding it was just that... good, but I got NO offers on it. After getting the estimate, it definitely falls under the "fair" category, which is $9,000. I didn't think about tires being included in the valuation, I'll take another look at KBB, but I can't imagine anyone paying that much for it. Thanks!

[delphinus317]

keepsmiling... He said he couldn't even inspect it for emissions in it's current condition. It's still at the garage too, I'm not even sure I want to drive it home now.

[DYLAN150]

Determining fair market value is an art, not a science. Condition and the economy where you live play a large role in making this determination. Fair market value is what an interested buyer would be willing to pay an interested seller. KBB is just a guide.

[delphinus317]

Thank you, Dylan150!

[DYLAN150]

delphinus317: You are most welcome!