How to Know What an RV Is Worth
The best way to find out how much a recreational vehicle is worth is to try to determine it's Fair Market Value. However, doing this easier said than done!
Fair Market Value is the amount of money a knowledgeable, willing, and non-pressured buyer would actually pay for a product that is being sold by a knowledgeable, willing and non-pressured seller.
What this means that a rational person who wants to buy something, but does not have to do so, and a rational seller who wants to but does not need to sell it should be able to come up with a price that is fair and reasonable for both parties based on specific circumstances.
It differs from intrinsic value, which is the worth an individual may place on a product based on their own situation, attitudes and interests.
These differences between fair market value and intrinsic value matter greatly when it comes to buying and selling RVs because a good number of people have absolutely no idea how much a coach is really worth!
For this reason, price is rarely a mirror of value, although most people assume it is. As a result, either the buyer or the seller loses money when a travel unit is sold.
Why Knowing RV Value and Using It Properly Matters
Knowing how much an RV is worth is what allows people to buy and sell coaches in a way that allows both buyer and seller to be treated fairly.
However, this rarely happens because
- people either have no clue about fair market value pricing
- or they try to get as much as they can, regardless of what the market says is fair.
Either of these issues can create problems for sellers because
- if they ask too much, people will not buy, and
- if they ask too little, they could lose money.
On the other hand, buyers who also don't know fair market value or who simply want to buy as cheaply as possible without regard to it will rarely find anybody who wants to sell to them!
Misguided Pricing Attitudes Ruin Sales
In the two scenarios mentioned above, the problems are both based on the concept of intrinsic value.
- In the first case, the seller simply is not knowledgeable, thinks his coach is worth more than it actually is or is pressured, for a number of reasons, by the need to get as much money for his coach as possible.
- In the second case, the buyer may not have done any research, thinks, for a variety of reasons, that the coach is worth less than it really is worth or simply wants to buy as cheaply as possible to save himself some money.
Unfortunately, using intrinsic value as the basis for negotiating a deal rarely works.
As a result, you have a seller who cannot get rid of his unit and a buyer who is never able to make a purchase!
When there is a large difference between the asking price of a coach and its real value, it is impossible for a successful negotiation to take place.
Factors That Determine an RV's Value
There are many factors that feed into the determination of value, but asking price is not one of them.
In fact, it is the total value of the other factors that should determine price, and not price that should determine value.
Unfortunately, most people simply go by price, which is the worst way anybody can approach the buying or selling of a recreational vehicle.
Since the cost of coaches, even those of the same year, make and model, can vary significantly, one should always examine issues such as
- current market conditions,
- supply and demand,
- geographic location,
- physical and mechanical condition
- and mileage
when trying to discover the how much one is worth.
For example, you can purchase a unit that is in mint condition and has low miles, or another one of the same model, year and brand that has many flaws and has been used and driven hard. Yet, sellers will ask the same price for both!
If you take the differences between the two into consideration, you will always be able to see that one of the two units clearly does not have the same value as the other.
This is why it is important to look at many similar vehicles and check their asking prices.
- If you do this, eventually you will be able to figure out which units are worth more.
- However, if you only look at just one, you have no way of knowing if the asking price is fair.
Other Factors That Determine Value
When you are investigating an RV and want to determine its worth, there are other things you can do in addition to those that have been mentioned here. For example, you can:
- Compare similar types, brands, models and years of a particular RV so that you can focus just on that and not become overwhelmed by trying to compare "apples to oranges."
- Pay particular attention to how well these units have held up over the years,
- Use VIN numbers to check accident and damage records so that you can discover problems that may be hidden.
- Review maintenance records carefully to make sure a coach has been cared for properly,
- Find the point of origin for an RV you wish to purchase. Those that come from northern areas are much more likely to have rust and other forms of damage from salt exposure, especially on the undercarriage.
The Importance of Depreciation
Just as with automobiles, recreational vehicles depreciate. The higher the initial cost, the bigger the first-year financial loss. It is permanent and continues to reduce for the life of the unit.
The chart shown below gives four examples that show how coaches of various types lose value over a five year period. Looking at it may be shocking, but it is very important to understand what happens and why it matters so much.
Every RV seller (and buyer) must take these figures into account when negotiating a deal. Those who try to sell for more or buy for less without substantiation from other value factors will never be able to bring closure to a potential sale.
One often hears sellers complaining about the fact that buyers are trying to "cheat" them, when in reality their coaches have depreciated to a level that is far lower than what they are trying to sell them for.
The country is littered with units that never did sell for this specific reason!
True Value Should Always Determine Selling Price
Estimating future financial returns on the sale or trade in value of a recreational vehicle is not as simple as it may seem because they are always based on the original Manufacturers Suggested Retail Price (MSRP) plus any additions or upgrades that were made to a travel unit.
However, it takes more than this information to determine real value.
A five year old motor home that has been well maintained, has all of its records and paperwork, is clean, has no odors and has appropriate mileage for its years should bring considerably more money than a similar year, type and model that is all banged up, has peeling paint, smells, is dirty, is lacking records of any kind and has inappropriate miles for its age.
How much more is subject to the knowledge and experience of the individuals involved in the sale.
It takes a lot of time, effort and research to figure out the how much a coach is worth, but it's well worth the effort.
If you own an RV, do you know its true value?
© 2012 TIMETRAVELER2