Is your Appraiser working for you… or the Insurance Company?
So you’ve been in a wreck, and you have a diminished value claim. What’s next? In the last few years since I’ve been doing appraisals I’ve noticed that there are several types of appraisers and “claim experts” popping up on the interweb. First let’s talk about the “claim experts“. A lot of the so called “claim experts” are nothing but attorneys looking to pick up an easy buck at your expense. Wait, isn’t the Attorney the good guy? Normally they can be. But lately I’ve notice deep pocket attorneys spending thousands on advertising to lure unsuspecting claimants into contingency agreements that may give the attorney not only 40% of your claim, but also allow him to bill you for $1000. dollar appraisals, $500 inspections, copies at $10 per page and even $200 an hour automotive expert consultations. You may start off with a $10,000 claim, but even if they settle for 100%, you’re left with
$6000., oops, $5000, Wait! $4000 No, don’t forget about the 100 copied pages! $3000. Okay, $3,000 is still a nice payday, right? Not when your claim was settled at $10, 000 United States Dollars it’s not.
I’m all for a claimant using a good attorney, you can bet the insurance guys already have one. But, you have to be smart about who you hire. Read the fine print before signing a contingency. And remember, you don’t have to start off with an attorney. The vast majority of Diminished Value Claims are settled by ordinary people, who are informed and armed with a good appraisal to prove their loss of value. If you don’t settle yourself, you have the right to turn your claim over to an attorney.
Now let’s turn our focus on the appraiser and ask a very important question. Who are they working for? Most Auto Appraisers who develop diminished value reports or diminished value appraisals actually get a large majority of their business from Insurance companies. There are a few Independent auto appraisers who limit the number of appraisals they will do for a specific individual or company. If you’re claim is with XYZ insurance company and the appraiser you hire produces 100 appraisals a year for them at $250 a pop, could they possibly be just a little bit biased when preparing your appraisal/report? You can probably bet the insurance company isn’t going to hire someone who isn’t at least a
LOT “little” conservative on their valuations. I’ve seen appraisers state that there is no loss in value, even though the frame rails were completely replaced. Would you buy that car over a car that has never been wrecked?
Another type of appraiser on the scene is the “certified” appraiser. They’re “Certified” to appraise cars. Many of these “certified” appraisers picked up their certification from a company on the internet and have no actual experience in determining the value of a vehicle. It amazes me all the time when I find that an appraiser’s background is not in Vehicle sales, but in Collision repair, Insurance claims, Mechanical repair or even have no actual automotive experience at all. Appraisers are popping up that used to be mechanics, insurance adjusters, body shop painters, and one that I met who’s total automotive experience was the 3 months he worked for a used car lot. The funniest one was when I spoke to an appraiser who had a banner on his web site that said “Licensed Appraiser”. I knew that the state he was from that there was no licensing for Auto Appraisers, so I asked him who licensed him, and he said, “Oh, I have a business license”. Ahhhh, that’s not the same thing guy.
Licensed Auto Appraisers. There are actually very few states that have a licensing program for Auto Appraisers. If in doubt, ask for a copy of their license. It should be issued from a government entity, not some place in Timbucktoo, New Mexico. I’m licensed by the State of Oregon to Appraise Vehicles. Yep, you wouldn’t think that it would carry much clout anywhere else but Oregon, but it’s been my experience that having a license issued by a government entity trumps a certification issued by Maynard Igochamony, president of the U.S. federation of CarFleet Appraisers on the norm.
So here’s a loss value scenario for you. You tell me, how much discount would you need to buy car B?
Car A is a 2012 Honda Accord with 10,000 miles. Average retail sale price of the vehicle is $20,000.
Car B is an exact duplicate of Car A, except it was in a wreck 2 months ago and the frame rails were bent, but the body shop says they did an excellent job and it is in exactly the same condition as Car A.
Now, if car B had never been in a wreck, $100. would probably sway someone to take car B over car A. So $100 is a nice control number. Now the question is, knowing that car A has had previous repaired structural damage, how much plus the $100 would Car B need to be discounted in order for you to choose Car B instead of Car A?
Most people would want a substantial discount in order to buy Car B over Car A. Problem is, there are a lot of vehicles with structural damage being sold every day with only a small discount. Wait, what!!!???? A small discount? Who would buy a car with structural damage with only a small discount? Someone who didn’t know the vehicle had previous frame damage. This is happening every day. Used car dealers are using companies like Carfax and Autocheck to literally dupe people into paying as much as full retail for vehicles that have been wrecked and had repaired frame damage. It’s happening every day. How? Because when asked if the vehicle has ever been in a wreck, salespeople say, “The Carfax says it hasn’t”, and people take this at face value. “If Carfax says it’s okay, if must be okay otherwise they have to buy it back from me right? NO! They don’t. The Buy Back agreement is only if there is a problem that was reported to Carfax and Carfax didn’t report is on the vehicle’s Carfax report.
Are reporting agencies like Carfax and Autocheck helpful at all? Absolutely, but only in identifying a vehicle that has reported damage. If it doesn’t say there is a wreck, there still could be a chance that it just wasn’t reported. In my opinion, I estimate that there are less than 30% of vehicles with Moderate to Severe collision damage that are reported to either Carfax or Autocheck. I’ve even seen a Carfax where the vehicle had repaired structural damage and Carfax said the car was worth over $1,000 more than retail. How does that happen?