If you are attempting to recover damages as a result of diminished value, you will undoubtedly be required to prove your loss.
This can be very difficult for the average accident victim. Can you just call around and get auto dealer quotes to prove your loss? Knowledge of the proper methodologies and form for presenting valid supporting data eludes most laymen. As a former licensed adjuster and current owner of a claim services company, I can attest to how hard it is to document diminished value in a credible manner.
Spill The Beans! How Do I Prove My Diminished Value?
Let’s face it, the only way to document diminished value on a vehicle that has been in a collision and then repaired is to research the market for that vehicle and gather as much data as possible about how an accident history affects the value of the vehicle as seen by consumers and retail auto dealers. Adjusters will ask you for real data that supports your claim, not just the “opinion” of some so called “expert”. That should be easy enough, right?
You can bet that if you take your vehicle in to a dealer to trade-in on a new vehicle, the dealer will run a title history check and will physically inspect the vehicle for signs or evidence that the vehicle has been in an accident and repaired. If it is discovered that your vehicle has an accident history, the dealer will surely reduce their trade-in offer when giving you an auto dealer quote.
They will cite problems such as their inability to certify the vehicle due to repaired parts, or the fact that they are required by law to disclose accident history to prospective purchasers, or issues relating to the voiding of manufacturer’s warranties due to damaged and repaired components, or safety related components such as air bag modules which cannot be economically tested for reliability after being replaced or repaired. The dealer will reduce your vehicle’s value dramatically if it has been in a wreck.
You know what is strange, though?
They don’t want to admit that they do that in writing.
They will verbally tell you all day that they will reduce the value of a vehicle and can tell you exactly how much they will reduce the value. I have even had dealers discuss diminished value with me on specific vehicles for 30 minutes or more and detail to me the manner in which they determine trade-in values on a previously wrecked vehicle. They are very familiar with the concept of diminished value and commonly utilize it to make great deals on trade-ins, but most won’t put their auto dealer quote in writing!
This is where the documentation problem comes in. Auto dealer quotes would be great documentation for diminished value, but it is almost impossible to get enough dealers to quote a diminished value so that an average can be determined. I understand that dealers don’t want to look bad, but they have to pick a side, you know? On one hand, you can’t reduce vehicle values because of damage histories when giving auto dealer quotes if you don’t publicly want to admit that you do it. At the very least, I think that if the dealer is going to reduce your vehicle’s value due to an auto accident, they should also document their decision in writing. It seems like common sense, but in my experience, it is like pulling teeth to get a dealer to go on record about diminished value. In fact, I have had dealers give me information and opinions on vehicles with the understanding that I was going to use that information in official appraisals, then when they see the information in the report with the threat that they will have to testify in court, they retract or dispute their statements.
Seriously, as soon as it seemed like they might be called in to testify on a court case, they began to backpedal and make statements like “I didn’t give specifics”, or “I only discussed diminished value in general and didn’t give a quote”.
Why Auto Dealer Quotes Are Hard To Get
One reason for this is that the dealer’s opinion of actual diminished value is almost always less than what they will actually reduce from a trade in.
Example: I recently had a case where a Range Rover was damaged. The damage was limited to cosmetic issues with the front bumper and one fender. The total damage was barely $1500.00 and most of the cost was for labor. When I spoke with dealers, they advised me that a cosmetic issue like that would reduce the value of the vehicle, but not so much that it would be a huge loss. Out of 7 dealers, the highest amount one would likely deduct because of this damage was about $3000.00. After documenting the average diminished value and writing the official report that incorporated some of the opinions, the owner of the vehicle was not happy and felt the diminished value was much more because when they actually tried to trade in the vehicle, the dealers they dealt with wanted to deduct between $4K and $7K because of the damage history.
What the owner doesn’t know is that they have to negotiate!
The real diminished value is much less than the dealers are quoting them. Come on guys! It’s the rule of negotiation: start high, settle in the middle, you know? The point is that dealers won’t put their opinions in writing; they don’t want it to be exposed that they start way higher than they actually believe when it comes to deducting for diminished value. The dealer will do whatever they have to in order to avoid being put in the spotlight when it comes to quoting how they determine diminished value.
So what’s the solution?
How do you use and document auto dealer quotes to prove your diminished value? Here’s the solution we came up with and why our appraisals are the most credible around…
1. We contact dealers and discuss diminished value on specific subject vehicles.
2. Since we’ve had some unhappy dealers because of litigation threats (no real suits), we now advise the dealers that we will not disclose their name or where we have obtained our data unless the data is subpoenaed as part of an officially filed lawsuit.
3. We agree that the data we obtain from the dealer is just that, data, not quotes.
4. We agree that if litigation results that includes our official report, then we will testify that the report is our opinion based on actual market research, but will not testify that the dealer quoted us any specific value, just a diminished value range.
5. We explain the litigation process in detail to dealers. They normally do not understand that even if they are required to testify as to their opinion, the opinion is not a quote and that they are not going to be held responsible for actually purchasing a vehicle based on our report findings.
6. We certify our findings on an official appraisal written by a claims expert and former adjuster/recovery specialist in accordance with accepted practices and submitted in the most widely accepted form by insurance companies.
It is time consuming and hard work to get around the dealers’ anxiety about providing written diminished value quotes. A lot of times, it requires some begging for information and a lot of slick talking to convince dealers to assist consumers by providing market data to our company. We also maintain our market data and update it as necessary, but many times, we have already conducted research on your specific model of vehicle and have ready-to-use data for our appraisals. Sometimes you can use these tricks to document your diminished value, and you may be able to get paid without employing a professional appraiser like me. If you are informed, then you are a threat!
Sometimes, it’s just in the Petty Details!