Fair Market Value vs. Price Paid
Do you know what your car is worth? You may know what you paid for your car, but that’s not necessarily what its worth.
How often have you watched the auctions and saw a nice car sold to at a value that you thought, “that guy got a great deal” you knew the car was worth more and in the right market would have sold for more, so does that mean if you buy insurance on that car you could replace it for what you paid for it? No.
If you have a stock vehicle you can go to any one of the value guide’s and determine what the Fair Market Value is either for trade in value or selling it private party, this amount is also typically adequate for insuring your car, but what if you have a custom or collectible car?
Our clients build some of the most beautiful custom cars and own perfectly restored to better than factory restored cars. They pour thousands of dollars into these cars and have an emotional connection to these cars that influence their estimation of the fair market value of their car. An objective third party like an appraiser can document the car, and compare it to similar cars while making allowances for the noted options and customization's.
The owner’s fair market value is not exactly the same as a potential buyer. The buyer has no appreciation for the Investment of time or money in the build project, he’s only concerned with the quality and reliability of his potential purchase. The buyers taste my not appreciate customization's the current owner has made and may even be considering redoing aspects of the car the owner put blood sweat and tears into.
If you want to know the real Fair Market Value of your vehicle as it is perceived by a potential buyer, for financing, to donate or to insure the car, get it appraised!!