Is Kelley Blue Book A Reliable Method for Researching Diminished Value?

Recently, I had a case where an adjuster was negotiating an inherent lost market value claim based on values and condition descriptions found in Kelley Blue Book.

The amount of inherent lost value, or diminished value or DV as it is common to call it, that the adjuster was willing to pay was about $4000 less than what my research and opinion came out to.

Obviously, I argued that KBB was not accurate.

Naturally, the adjuster requested a synopsis on why I believed that using Kelley Blue Book was not a reliable method for researching diminished value.

I happily obliged the adjuster.

Here in this article, I will re-cap why I think using Kelley Blue Book (or any other online valuation guide) to calculate diminished value is a severely lacking and inaccurate method.

– No disclosed methodology.   

Kelley (& Edmunds & NADA) declares that they base their values on market data they gather but they don’t disclose how they gather their data, so there can be no comparison between how they evaluate “stigma” losses and how an independent expert appraiser (like myself) does it.

– The class of vehicle seems to be omitted as a factor as evidenced by the largely flat percentage that is used in Kelley (14%) to account for prior frame damage.   

An old pickup and a luxury sport coupe show to lose the same percentage of value due to prior frame damages.

– Kelley only has 4 condition levels for vehicles and in the real market, no two vehicles are ever in the exact same condition.

Kelley does not have the capability of actually seeing a vehicle in person to evaluate it’s condition.

– Kelley lumps all major repairs into the “fair” condition bracket regardless of severity or complexity. 

They generalize by saying “minor prior paint and body work” or “major prior paint and body work” or “prior frame repair or alteration”.  These descriptions cannot fully describe the extent of damages vehicles sustain in collisions.

Conclusion

I have to say that the only way I was able to figure out some of these percentages was to go into Kelley and reverse engineer some valuations.

You can see for yourself how Kelley is very hit or miss on devaluing vehicles properly due to prior repairs. 

At least we can say the Kelley Blue Book supports the idea of lost market value due to repair stigma, and that’s a step in the right direction. 

We aren’t saying that Kelley Blue Book can’t help you make a determination as to what your diminished value should be but it shouldn’t be the sole source of research when it comes to valuing a vehicle.

I don’t think an online guide will ever replace a flesh and blood appraiser in thoroughness and accuracy.

If you want to find out what a real expert says about your lost value AKA diminished value, fill out our form below for a FREE claim consultation.