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Kelley Blue Book has become the go-to platform for many people when trying to put a concrete number on their car’s value.

While Kelley Blue Book is acknowledged as a trustworthy guide for automotive pricing, can we be sure that they are accurate? Let’s take a dive down into how exactly Kelley Blue Book determines their prices.

How Kelley Blue Book Determines Their Values

In understanding how Kelley Blue Book determines the values on their platform we have to understand where they get their data from.

They receive actual used car prices from wholesale auctions, rental fleets, independent and franchised dealers, private party transactions, and lessors on a daily basis.

After amassing this pricing data, their proprietary algorithm analyzes it alongside historical trends, the current state of the economy, industry developments, the time of year, and location to zero in on the best value for Kelley Blue Book.

This results yield several different values for used cars:

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Private-Party Value - the amount a buyer will have to pay a private seller for a particular used car.

Trade-In Value - the amount you’ll probably get when you trade your car in to a dealer.

Suggested Retail Value - the asking price most dealers have for a specific used car.

Certified Pre-Owned (CPO) Value - dictates how much cars covered by the CPO program are worth.

Now, while KBB’s platform is considered a trustworthy and reliable source by many, it does not come without its own share of issues. KBB’s accuracy is, first, affected by lag time; when accumulating and analyzing data, it is not instantaneous.

The prices listed, therefore, may not truly represent the latest economic environment or trends.

Consumer bias also impacts the values presented. The average person believes that the car they are selling or trading in is in better condition and, therefore, worth more than it actually is.

This mindset causes a discrepancy between expectation of their car’s value and the reality of the KBB pricing.

Mismatched data is also an issue because the majority of dealers don’t use KBB for their wholesale trade-in values. They utilize National Auto Research’s Black Book or the Manheim Market Report, neither of which is accessible by the public. They also skew lower than KBB more often than not when it comes to wholesale pricing.

Workarounds For Customers

Even with these issues, Kelley Blue Book still serves as an extremely reliable source for vehicle valuation. In order to maximize KBB and circumvent some of its drawbacks, there are a few things you can do.

Negotiate - The name of the game is negotiation. KBB’s valuations tend to lean in the favor of dealers (aka retail prices may be listed higher than other sources). Take the listed price and bargain your way on down. They can’t go any higher than the listing, so do your best to find a middle ground you’re both comfortable with.

Definitions - Have the condition definitions from KBB on hand when you’re buying from a private seller. Having clear cut definitions available will help in your negotiation process if you believe the vehicle is priced too highly.

Ultimately, KBB is a phenomenal tool to utilize, but it’s still just that: a tool. Having one tool is cool, but having a bunch of them is even better. Make use of other car valuation guides, along with various online calculators to get a grasp on what a car of the make and model you’re interested in buying/selling is going for on the market.

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Do Dealers Go Off Kelley Blue Book?

Dealerships are always looking to turn a profit on the cars they sell. Therefore, the answer is no, you will likely not get the same type of price point that you find on Kelley Blue Book.

Which Is More Accurate: KBB or NADA?

Kelley Blue Book takes more factors into account, like vehicle condition, local market conditions, vehicle popularity, etc. Their prices tend to trend lower than NADA’s because of this. NADA assumes cars are in good condition, so their prices will likely be higher.