Diminished Value?

Imagine two identical cars for sale on a dealers lot. Both cars have similar mileage, similar options and are in similar condition, and both have the same asking price. Now imagine finding out that one of those two vehicles had previously been involved in serious accident. Which one would you buy?

Would you expect to pay the same price for the vehicle that had been previously wrecked as you would for one that had NEVER been in an accident? Certainly not!

The difference between the amount of money that you could now expect the previously wrecked car to sell for, compared to what it would have sold for if it had NOT been involved in an accident is called the