What’s my Trade-in REALLY worth? And How can I Get the Most For my Trade?
Part 1 of a 2-part Article.
What’s my Trade-in worth? or How much will you give me for my Trade?
These are simple and very common questions coming from Customers that visit RV Dealerships every day. The answers they get however can be somewhat varied and a little confusing. How is it that one Dealership says my Trade is worth X, and another says it’s worth Y?
Let me break down a few of the reasons why the value of your Trade-in can change (sometimes drastically) from one Dealership to another.
First, let’s recognize that when you are trading in your RV you are essentially “selling” it to the Dealer. (We’ll come back to this in the 2nd part of this article and discuss how to get the most for your Trade.)
So how does each Dealership determine the Value to offer me for my Trade-in?
Well, there are a few factors at play here. Most RV’s (with some exceptions) will have what is called a “Book Value.” This is a Wholesale value that Dealerships will use (at least as a starting point) to appraise the value of your trade. The Book Value can come from a few different companies and sources that Dealerships’ have access to. It is usually a number comprised of either Used RV Sales Data, or by taking a certain percentage of the original Manufactures Listed Retail Price. Some Dealers will take this number as Gospel, and others use it only as a guide in their own process of evaluation.
Each Dealerships’ process could be completely different on this, though it is often based on some combination of factors like: what they think they will be able to “Sell” it for; what they think the cost of reconditioning or repairs will be; the amount of profit that a Dealer needs to make on resale; and risk assessment etc…
Risk you ask? What is their Risk? Simply put, the Dealer now takes on the Risk that your previous RV may not re-sell quickly enough. In a Seasonal industry such as RV, it may need to be carried in inventory and sold “Next” season for a lesser amount than the value was first calculated on. And although the Trade Values may look different as shown to you, the true value being invested into your RV when traded is often very similar from one Dealer to another.
Ok, enough about the Dealers. I understand why they may be a little different, but how can there be thousands of dollars difference between what Dealers’ are offering me for my Trade?
Great Question. Other than the appraisal process being varied, the biggest factor is usually based on what you are Buying. (and trading your RV in on.) When you are considering the purchase of either a New or Used RV, those RV’s will have a different Cost to the Dealers selling them, and a different Profit Margin for the Dealers that are selling it to you.
So, if you are getting a different Trade Value offered to you by two or more Dealerships:
- are they located in the Exact same City/Town? (local markets do vary, sometimes by quite a bit.)
- at the exact same time of Season? (even a few weeks in a Seasonal Industry makes a difference to risk.)
- are you trying to trade it in on the Exact Same RV? (same year/same manufacture/same model etc.)
If not, then we’re not really comparing apples to apples.
So, let’s take a look at a basic example:
(Quick note: High Sales volume/Low Profit Dealer = They sell lots of units, and make less profit per unit. Low Sales volume/High Profit Dealer = They don’t sell as many units, but make more profit per unit.)
Let’s say Dealer #1 is a High sales volume/Low profit Dealer, and offers you a $10,000 Trade Value on an RV they have priced to sell at $20,000.
Then Dealer #2 being a Lower sales volume/Higher profit Dealer, offers you a $12,000 Trade Value on a “Similar” RV that they have priced to sell at $20,000.
Did you really get offered an extra $2,000 from Dealer number 2 for your Trade-in? Well that was sure nice of them! Or……. Did both Dealerships actually “buy” your Trade-in for $10,000? It’s possible Dealer #2 just had an extra $2,000 profit in their RV (higher profit margin) and so they were able to show you $2,000 more for your Trade-in on a RV that is actually of lesser value (lower cost) than the one you looked at from Dealer #1.
In the example of numbers above, it’s quite possible both Dealerships would make the same amount of profit in this transaction. You would just pay $2,000 less on the difference buying from Dealer #2, and possibly be buying an RV of $2,000 less true value than the RV from Dealer #1.
I’m not trying to make this sounds like a shell game. I just want to help you be aware of the difference between number reality and number perception. Ultimately, the important thing is that you understand how the real Trade Value came about for your unit, and that the RV you are purchasing is the right one for you, and the one you’ll get the most enjoyment out of. That’s what the RV Lifestyle is really all about!
In a couple of days, we will be posting the 2nd part of this article: “How do I get more for my trade-in”, so make sure to add us to your favourites and come back to visit us soon.
In the meantime, if you are thinking about trading in your RV and would like to get a Free online Valuation (from a high volume/low profit Dealership), you can get a no-obligation appraisal here.