Photography courtesy of Auto Appraisal Network and Auto Appraisal Group.
In scenario one, you’ve decided to pull the trigger on buying the classic of your dreams. You researched it for months, maybe even years. Dreamt of the perfect model, trim level, and color. Looked at a local example or two, and picked out a couple of keepers on the Internet. You’ve even worked out the perfect justification, excuse, or downright lie to tell the significant other about why you need that sweet ride. All of that dreaming is about to become reality, and the excitement is building to the point where you’re not sure if you can wait even one more day. But before you give a good amount of money away with a quick click of a mouse, a phone call, or a handshake, ask yourself this: how well do I know this vehicle?
In scenario two, you are the proud owner of a couple of classic vehicles: one is a survivor still wearing its original paint, and the other is a wild street machine with tens of thousands of dollars in modifications. Though both are insured, ask yourself these questions: if your survivor is in an accident, will you get a true market value settlement? And if you go to sell your street machine for way more than book value, will you be able to get what you want for it – and will the buyer be able to finance the deal?
In recent years, interest in classic cars has skyrocketed. But amazingly, even though we can watch an auction in prime-time high-definition, many of us still don’t cover all the bases when shopping for a classic. And sadly, a large percentage of us don’t know the true value of the iron parked in our very garages. Both have the potential of leaving big money on the table in the case of an insurance claim or sale. Thankfully, there are ways to protect ourselves both before and after the sale; they’re called pre-purchase inspections and appraisals.
The pre-purchase inspection is a powerful tool in a classic car buyer’s arsenal. Before the advent of Internet sales, people rarely purchased vehicles from afar. In many cases, they were familiar with the car, and an in-person inspection was the rule. These days, the Internet has made car shopping a breeze, but it has also opened the door for everyone from the dreamer asking way too much for his unfinished project, to unscrupulous types who try to pass off beaters as beauties. And because these vehicles are often a long ways away, and usually it is cost-prohibitive to travel in order to personally inspect them, it makes sense to spend a few bucks for a professional to do an inspection for you.
“With lots of people doing Internet searches these days, we do a lot of pre-purchase inspections to help them weed out bad examples,” starts David Williams, vice-president of franchise development at Auto Appraisal Network. “Lots of guys are getting sentimental and looking online for the car they or their dads had years ago, but you must use caution. The best way to find a mechanically sound, good-driving vehicle is to have it inspected beforehand.”
“People selling cars are selling you,” adds Larry Batton, president of Auto Appraisal Group in Charlottesville, VA. “Sometimes the vehicle condition isn’t clear, so having it inspected is a way for them to understand what they are buying. After all, old cars are like old people: things that work today might not work tomorrow.”
To Mr. Batton’s point of a pre-purchase inspection informing potential buyers, an appraisal helps current owners – and their insurance companies – understand how much their vehicles are worth so there are no nasty surprises down the road.
“I would say that 80 percent of what we do is post-sale for the purpose of insurance,” Williams says. “In the appraisal business, you might be able to get your buddy to do one for $50, or get a guy to give you one sheet of info for $95. But any time insurance companies are involved, you need to have a solid, thorough appraisal done in case a claim comes up. A substantial amount of vehicle information is needed to be able to prove what you have.
“You need to break down the codes and options,” he continues. “Fender tags, body tags, and VIN tags need to be examined. As far as modified cars go, a 1932 Ford is a great example of a car that stock can be worth $30,000, but changed into a hot rod, can be worth $100,000-plus. Maybe you have crusty original paint that you want to change, but it may be worth much more in its original condition. The appraiser has the experience to let you know exactly what you have.”
And this information does more than just establish an accurate value.
“Consider this,” says Batton, “If you are in an accident in a fault state, you don’t want your insurance paying – you want the other guy’s to pay. But if it’s his fault, you don’t have an agreement with their insurance company about the value of your car. You might end up getting [a low settlement offer]. An appraisal will protect you.”
Here’s how the process works: an appraisal company will give a quote for the proposed service, and once a rate is agreed upon, they will book an appointment. In the interim, many appraisers will start researching your vehicle and its options. The vehicle will be inspected by a trained professional, who will come armed with the needed knowledge and tools like a camera and computer. The actual process could take several hours, and custom vehicles will need more research into the modifications. All documentation will be verified, as will the history from the original owner to the present and any awards, magazine articles, etc. Major engine and drivetrain options will be verified, and the entire vehicle will be photographed to document its condition. The VIN, cowl tag, odometer, and any other identifying numbers like block codes will be checked, and differences between originality and a restoration noted. Any major power options like a power top, etc. will be checked for operation, and the vehicle will be inspected for leaks. A test drive may also be performed.
Once the appraiser is finished, all of the information is sent back to the main office. There, the company organizes the photos and reviews the report. The VIN, chassis numbers, and engine numbers are checked to make sure they match up, and the options list is gone through for redundancies. Comparables are run on stock vehicles to establish a value, and a final report is created for the customer containing vehicle info, photos, details of the inspection, comparables, and a replacement value of the vehicle.
However, you must also be prepared for the possibility that you don’t have the vehicle that you thought you did. “I’m not in the happy business,” Batton states. “I can’t always tell people what they want to hear. They are hiring us to give them a professional opinion of what their car is worth. Good appraisers don’t sell values.”
But regardless of the determined value, you have taken a major step in protecting your current – or future – investment. And speaking of the future, be sure to check out the next story in our “Buy a Classic” series, covering financing for classic vehicles.
Appraise your Vehicle
Whether you need a pre-purchase inspection for a potential purchase or an appraisal to accurately determine your current vehicle’s value, these tips will help you make the best choice.
Pre-purchase Inspection or Appraisal?
A pre-purchase inspection deals with the condition; it protects a potential buyer from vehicles in poor condition or of dubious provenance. An appraisal deals with the value; it protects a current owner by allowing them to get the vehicle insured and covered at an agreed amount.
Stock or Modified?
The type of vehicle that you have may affect the type of appraisal you can receive. For instance, modifieds or customs may require an in-person appraisal.
Online or in Person?
Online appraisals are usually more affordable than in-person appraisals and a good resource for owners in remote areas who don’t mind taking their own photos. But if your vehicle is worth $60,000 or more, an in-person appraisal should be done. Many companies have a network of appraisers, so you should ask if there is one in your area. Appraisers recommend or require an in-person when possible; areas like paint quality are hard to determine with a photo. Also, in cases where a vehicle received an engine replacement or other hard-to-spot changes, a trained appraiser has a better shot at uncovering it.
Do your Research
Though it is easy to ask your local bodyshop or an insurance company for recommendations, be sure that they have no vested interest in the companies that they are recommending. Some good questions to ask potential appraisers are if they have any connection to the car or owner you are dealing with, if they are licensed/bonded/insured, how many years of experience they have, what kind of cars they have appraised, and which insurance companies they have worked with. You will want to check with your insurance company to make sure they will honor an appraisal, and from which companies. Because of the data-intensive nature of appraising, many good appraisers will still have to do research on your vehicle. Be wary of appraisers who claim to be experts in every make and model.
Make a Connection
“The interview process is critical,” says Roy Da Silva of Source One Services, an Illinois-based appraiser. “Getting to know the client and what they are looking for is very important to us, and a potential customer should have a good feeling about us. There is a code of ethics that appraisers should adhere to; mine is based upon a theory of law called Uniform Standards of Professional Appraisal [Practice] (USPAP) stemming from personal property. We should be unbiased consultants here to help you through this process.”
Speak with your chosen appraisers to get a cost estimate, or fill out an online request form. Be sure to keep your information exactly the same for each. Be specific about your vehicle type, level of modification (if any), and timeframe, and ask about any additional fees like mileage, etc. that may be factored into your quote.
Choose your Appraiser
Go with a company that has intimate knowledge of your particular make and model if possible, has given you good customer service to this point, and will give you an objective appraisal. Work with company reps to schedule your appointment.
Prepare for your Appointment
Most appraisals are done at an owner’s location, but some appraisers can do them at their locations. Assemble all pertinent documentation like license, registration (title), tank stickers, Protect-O-Plate, manuals, keys, etc. for the appraiser. You may want to show them the service records and discuss the vehicle’s history. A location with uniform light is preferable for the photos; avoid mixed sunlight and shade areas. Though it’s okay to wash and shine your ride up, it’s not necessary. However, clean out the car so it is presentable.
Though payment is handled differently depending on the company, most require payment after the on-site appraisal.
Get your Report
Time to sit back and wait for your hard copy or electronic version of the report to arrive. You are now more informed about your future or current baby, and in a much better position from a legal and insurance standpoint. However, keep in mind that neither are in-depth mechanical checks, so at this point you may want to have a mechanic inspect the vehicle in question.
One of the most important aspects of any pre-purchase inspection or appraisal is verifying that all of the numbers are correct. VINs, trim tags, and the like are treasure troves of information that the appraiser decodes.
In addition to the information contained on a VIN or trim tag, a good appraiser can tell if the tag is all-original or not. “We can even tell by the type of rivet and paint quality around it if it is original, or if someone has tampered with it,” reveals Dave Williams of Auto Appraisal Network.
On the mechanical side, things like block and head codes can be checked to ensure that the correct, original drivetrain still resides in that particular vehicle.
Once all of the information has been gathered, Auto Appraisal Network appraisers submit it to the home office, where it is organized and analyzed. When all of the information is reviewed and verified, comparables are run, and a value is established, a report is printed and either mailed or emailed to the customer.
Auto Appraisal Group Inc.
4734 Wild Orchid Ridge
Charlottesville, VA 22903
Auto Appraisal Network
17845 Sky Park Circle, Suite F
Irvine, CA 92614
Source One Services