There Is No Formula!
Do not be fooled into believing that a formula can accurately determine your vehicle’s diminished market value.
Diminished Value – It Takes Research….Lots Of It!
First of all, the reason formulas exist is to simplify the calculation of values. It is not simple to calculate diminished value in a reputable manner. It takes research, and a lot of it.
If an individual or company could prove that a formula would incorporate every factor that is relevant to diminished value, and if the formula would automatically adjust for past market trends and future market trends, then maybe (and I mean maybe) a formula might come close to determining an accurate diminished value on an automobile. There is simply no database that contains market trend data on every private passenger automobile from 10 years ago up to 10 years in the future. Unless one is a bonafide prophet and certifiable encyclopedia of past market trends, vehicle sales data and consumer mindsets, there is no way to create a formula that will reflect accurate diminished value.
How To Calculate Diminished Value Accurately
So how the heck is diminished value calculated, you say? It is calculated on a case by case basis by taking into consideration the exact market in which the vehicle is housed, the damage that the vehicle sustained, the quality of the repairs that were made to the vehicle and expert research into the methods used by purchasers to value the subject vehicle within the applicable market.
I know that’s a mouthful, but that is what it takes. Not to mention knowing the tendencies of the venue if litigation is required and taking into consideration all the specialty condition adjustments that need to be made to properly evaluate a vehicle’s desirability within any applicable market.
I guarantee that one person’s 2005 Ford F-150 will have different options, dings and nicks, and usage history than another person’s 2005 Ford F-150. I would also be surprised to see the exact same mileage or ownership history on two vehicles of the identical make and model.
In conclusion, formulas for calculating diminished value are acceptable only if the victim of diminished value agrees that the final value is acceptable compensation, but the formulas are never acceptable on their own merit and are ridiculously lacking on actual data to support values that are just “plugged into the formula”. If there is a base loss of value percentage to be used (like in the 17c formula), wouldn’t you like to know how that percentage was calculated and if the data that was used to calculate the percentage was based upon the market for your specific vehicle? I would.
Sometimes it’s just in the Petty Details! Good luck.