The Definition of Kelly Blue Book Value
Kelly Blue Book (KBB) is a car valuation publication which is also available online, meant to assist consumers and sellers with putting a cash value on automobiles. The Kelly Blue Book was originally an a trade publication used by auto industry insiders, but eventually the manual came to the consumer market. Since that time, KBB has become the most well-known vehicle valuation resource.
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KBB Value
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KBB publishes vehicle values that are suggested retail prices that dealers would ask for a vehicle based on the car's make, model, mileage, and other important features. More recently KBB also publishes values for suggested private party retail asking prices, to assist those buying and selling cars privately. The KBB value is not a set in stone, but rather an estimate of what the asking price of a vehicle would be.
Misconceptions
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KBB value is often though of as a fairly accurate approximation of the value of a car and essentially treat the KBB value as the fair selling price of the vehicle. This is a fallacious practice however, because KBB values are simply suggested asking prices, not estimations of the actual prices that vehicles will sell for. The actual selling price of a vehicle is likely to be much lower than the KBB value. For example, when selling a home, the final sale price is very rarely as high as the initial asking price.
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Negotiating
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Buying or selling a car can be a difficult experience for those who do not like negotiating about prices. For these types of people, the KBB value presents an easy way out, since the seller will almost surely cite the KBB value and be willing to sell it at that price. Many car buyers simply bay the KBB value, either to avoid negotiating, or because they don't know any better. It is preferable, however, to let the seller know that you are aware of how the KBB value works, and make a reasonable counter offer based on actual sale prices of similar vehicles. Simply by displaying that you know KBB values are not set in stone will likely save hundreds of dollars.
Limitations
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KBB values are also generally limited to common vehicles purchased for normal transportation needs. Specialty vehicles or collector cars will likely not have KBB values that are accurate, since the market for such vehicles can vary based on the tastes of a few wealthy buyers. Such cars are often sold on auctions where the final selling prices is unknown until the car actually sells.
Other Considerations
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As useful as KBB values are as a baseline estimate of retail value, for those looking to buy a new car, it is more important to know what people are actually paying for similar vehicles. In response to the shortcoming of their standard retail value estimate, KBB's website also displays a price which indicates, "what consumers are actually paying for this vehicle." This value is often a better price guide than the suggested MSRP. Other auto websites, such as Edmunds.com, have their own price tools that assist buyers with determining a good price on cars.
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