I must be missing a fairly obvious reason for how used cars are being valued. Maybe someone can enlighten me? KBB and other websites give both dealer pricing and private party pricing on used vehicles. As a seller, it says I should be able to sell my car to a private party for significantly more than if I were to sell to a dealer. Why are private party prices significantly higher than dealer prices? In my estimation, sometimes $1500 - $2000+ more, if sold in a private party transaction.
From the perspective of a buyer, if I know a seller will get $10,000 from a dealer, why would I ever buy the car for more than $10,500? In essence, some nominal amount above dealer prices like $200-$600 more. In the past, there may have been a lack of available information, but now there's an abundant amount of pricing data for used cars on the internet.
Does anyone have a clue why there's such a significant gap between prices for dealer and private party sales? Is it just a lack of knowing this info is available? I doubt it's a low supply, high demand issue. Bidding wars for used cars can't be that frequent.
As an example, here's one data point.
2010 Altima 2.5S, 40K miles, Standard Package with optional sunroof.
KBB - Private Party:
Fair 11,364
Good 11,923
Very Good 12,318
Excellent 12,697
KBB - Dealer:
Fair 9,736
Good 10,253
Very Good 10,618
Excellent 10,698
Spread =
$1628
$1670
$1700
$1999
average = $1750