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#Determining an RV s Fair Market Value

by Charlie Kerekes, 5/26/2005

Whether buying a new or used RV. the exercise of determining the fair market value (FMV) is well worth the effort to avoid over-paying. Each transaction has a seller and a buyer with opposing financial goals this article provides information to help the buyer minimize the cost while allowing a reasonable profit for the seller.

For the most accurate FMV, use as many of the techniques described in this article as possible. Allow variance in the FMV for condition, options, mileage, upgrades, number of available units, etc.

NEW RV FMV

Fair market value for a new RV is derived by adding an acceptable margin of profit to the dealer's invoice price. Unless you have inside knowledge of the RV industry, the invoice price may be difficult to attain. Another way to determine FMV is by examining what other buyers have paid.

RVCG Ratings CD-ROM

The RV Consumer Group (RVCG) has compiled price statistics for most RV brands and models on their ratings CD-ROM (see our Must Read section). This information is invaluable to shoppers of new and used RV's alike. The CD-ROM contains a Price Guide section for each model with the following information:

• Average price paid for this brand/model as a percentage of the MSRP
• Average list price when new
• Depreciation schedule

Add Depreciation to Used RV FMV

Another way to determine the FMV for a new recreational vehicle is to find the FMV of a similar used model and add back the depreciation. If you do not have the RVCG's depreciation schedule, then adding back 25% to a 1-2 year old model should get you in the ballpark. For example, let's say you found a one-year-old model in excellent condition. By using the techniques described in the USED RV FMV section, you determine that the used model's fair market value is $48,000. To estimate the new FMV, divide the used FMV by the inverse of the depreciation percentage, like this: $48,000 / 0.75 = $64,000 .

Ballpark Estimate

In case you find yourself negotiating the price of a new RV without having determined the FMV in advance, at least remember this: MSRP's contain roughly a 30% markup for the dealer (actual markup can vary widely between brands and models). Let's say that as buyers we feel that a 15% markup is fair for both parties. In that case, take the MSRP and multiply it by the inverse of the markup, or 85%, to arrive at a target price. For example, if the MSRP is $72,000. our ballpark FMV formula looks like this: $72,000 * 0.85 = $61,200 .

USED RV FMV

You've heard it said that a fair price is the amount a buyer is willing to pay and a seller is willing accept. This is very true, but you also have to consider market conditions to bring the two sides together. These conditions are largely dictated by statistical data derived from completed sales. Let's look at a few techniques for determining FMV of a used recreational vehicle.

NADA Guides

Using the NADA Guides is the least reliable way to determine FMV, but many buyers turn to it first because it provides a quick answer.

You should consult the NADA Guides. but don't make it your only source. Its primary limitation for RV's is that the prices are statistically derived and not from actual selling prices. If you will be relying heavily on the NADA Guides as a buyer, I suggest you use the "Low Retail" number in the online guide or the "Used Wholesale" number in the printed guide as your target price.

Actual Selling Prices

By far the best way to determine FMV is by observing the actual selling prices of similar units. There are two online sources that provide this information:

PPL Motor Homes

PPL Motor Homes is a consigner in Houston, Texas. Having purchased a fifth wheel from them in 2004, I can tell you firsthand that my buying experience with PPL has been pleasant. They are nice enough to post their own selling prices on the following pages:

eBay Prices

Even if you have no interest in buying or selling on eBay, it is a valuable resource for determining selling prices. Examining final bid prices on RV's similar to the one you are considering will give you a good idea of what those units are worth. Here is how you look up the final prices on completed listings:

1. Go to the RV category on the eBay Motors web site .
2. Enter your search criteria, such as "monaco diesel", and put a check mark in the "Completed listings " box under "Search Options" on the left side of the page.
3. In the results ignore items that say "Reserve Not Met " and those with a zero in the "Bid " column these items did not sell.
4. Review the other items to find a model most similar to the one you are interested in and make a note of the final bid amount in the "Price " column.

Occasionally you will see asking prices far above the FMV for almost-new RV's. When you see this, chances are the seller paid too much for the new unit and, naturally, wants to recoup as much of their investment as possible. Unfortunately, the chances of these folks getting anywhere near their asking price is slim. The time to minimize resale losses was back when the new unit was purchased, by doing as much research as possible.