Dealer glossary
Appraisal
Determining what a dealership should pay for a vehicle, whether taken in trade or bought at auction.
Definition
An appraisal answers one question: what is this car worth to us. That depends on the vehicle, its condition and history, what it will cost to recondition, and what comparable cars are actually selling for nearby.
It is a fast decision made under pressure, usually with a customer waiting, which is why the quality of the information available in the moment matters more than the sophistication of the method.
Getting it wrong is expensive in both directions. Overpay and the unit sits with no margin; underpay and the customer walks, often with the sale attached to the trade.
Related terms.
Book value →
A published estimate of what a vehicle is worth, from a valuation guide, used as a reference in appraisal and lending.
Trade equity →
The difference between what a trade-in is worth and what is still owed on it.
Reconditioning (recon) →
The work done to a vehicle between acquiring it and putting it on the front line, and the cost of that work.
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