@Dave1442397 and @Xlar
Thanks, these are very helpful. Are these websites the best tools for finding cars in a specific area? How do you know if you're getting a decent deal or not? Do you just compare the offerings to KBB value? Wouldn't it be better to look at the specific dealerships? Also, I'm fairly skeptical of these programs like Carvana where they just drop off a car at your door. Is it really that simple?
Sorry for so many questions, but I'd really prefer to get it right this time :)
Archipelago answered this, but I would add that sites like Carvana seem to be the online equivalent of Carmax.
I looked at Carvana when I was buying a car two years ago, and I found their photos and descriptions to be almost useless. They managed to take tons of photos that didn't show the switchgear, so I couldn't tell whether the car had the options I wanted or not. The descriptions listing the options were also useless, basically repeating manufacturer descriptions of available options, as opposed to listing the actual options on the car. They do offer convenience, but you're paying for it.
As for Carmax, my mechanic's shop is the repair shop for our local Carmax, so any car with a Carmax warranty goes to him. He said most of the issues he sees are minor, but that people are definitely overpaying for what they get. Also, he doesn't think much of their inspection process. There are a lot of obvious minor things that weren't fixed before the sale, and also some major issues that weren't caught, like blown head gaskets.
KBB is owned by Cox Automotive, and I'd say is more geared toward supporting dealers than consumers.
From wiki: "Cox Automotive brands include Manheim, Clutch Technologies, Dealer-Auction Ltd, AutoTrader, Kelley Blue Book, vAuto, Dealer.com, Dealertrack, NextGear Capital, Xtime, Vinsolutions and a host of global businesses and brands serving auto dealers, manufacturers and financial institutions."
If you can find someone on the car forums to give you Manheim auction data on used cars, that gives you an idea of what used cars are going for before dealer markup. Some cars get marked up more than others, but at least you get an idea of the base price.
You'll probably get the best price buying from a private owner, not a dealer. Some owners will try to sell their cars for more than the trade-in value a dealer offered them, and may be happy with a extra few hundred bucks over that estimate.
Pricing varies by area. If you look at enough similar listings, you'll see where prices are trending. I spent a few months tracking prices for my current car, so when it popped up a local dealer, I called right away. I was there at 3:30pm the day after it was listed, and as I was signing the paperwork, the salesman excused himself to go tell the next guy waiting for a test drive that the car was sold.
I think the most important thing to do is to take the car to a trusted mechanic and pay (usually $150 or so) for a thorough inspection. A good mechanic will know what to look for.
My mechanic will sell cars for customers. He doesn't bother with anything over $10k. He's mostly selling cars around the $5k mark that are in good shape and will make for happy customers.
Another thing you may be able to do, depending on what brand you're looking at, is see the service history on the manufacturer's website. You can do this for any Lexus as long as you have the VIN. I looked at one car that was traded in after the customer "ran over a ladder that fell off a truck on the highway", which trashed the suspension. Yeah, no thanks!
A Carfax report may also list service history, but only if the shop reports to Carfax, and it's not very detailed.