Unseen Factors Determining the Price of Used Motorhomes - Our Experiences

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Saturday 24 January 2015

Unseen Factors Determining the Price of Used Motorhomes - Our Experiences

Whilst searching for our first motorhome it seemed to us that the asking prices for apparently similar motorhomes were very inconsistent. We accepted that in this relatively small 'luxury' item market there is huge product variability (with many motorhomes originally built to order), but still we found the prices of motorhomes even of similar size, age, condition and mileage to be very confusing. Over time we came to realise that beyond these superficial price factors, which determine the broad price bracket for a motorhome, there were other much less tangible factors which refined the actual asking price. Factors such as the type of seller, how much the seller needed the money, what the seller had paid, the time of year and the sellers own personal preferences seemed to have a disproportionate influence over the price that motorhomes were bought to market at, all of which contributed to the difficulties of working out what was and what wasn't a fair market price.

The difficulties of working out the fair market value of a used motorhome

For instance, with large dealerships usually offering some sort of after sales service, perhaps a free service at the end of the first year and either their own or a third party warranty of some kind, a motorhome on a dealer's forecourt was often £4000 - £5000 more expensive than a similar motorhome being advertised by a private seller. One dealership in the south of England even told us explicitly that they acted as agents for private sellers and that their fee was £4000, which they simply added to the price the private seller was willing to accept. The more apparent 'after sales service' on offer and the larger the dealership was, the more the 'dealership premium' seemed to be. As a buyer, it was up to us to decide how much value we placed on the extras the dealer offered (which made it very important that we always read the small print).

Different types of seller that we encountered

Whatever the type of seller was, we also came to realise that the price a seller will accept, within a motorhomes broad price bracket, was primarily determined by how much they need or want the money for something else. We were actually told this explicitly by several different sellers while we were looking for our first motorhome. A second hand dealer we met even told us he snapped up the best private deals within minutes of an advert appearing from sellers who were desperate to release the cash in their motorhome which he then sold on himself for a profit.  His information backed up things we had read elsewhere, which also suggested that the key determinant of used motorhome prices was how desperate the seller was to release the cash.

This was equally as valid for either private sellers as for some trade sellers.  Just as some private sellers might want a quick sale, some of the smaller trade sellers wanting a quick turnover might, we were told, accept a smaller profit margin in exchange for a quick sale, releasing cash for reinvestment into new stock.  Some of the larger traders might also want to get rid of certain motorhomes from their forecourts (particularly those taken in for part exchange) to make room for more desirable or profitable models.

This also helped to explain why we had been told there is so much seasonal variation in motorhome pricing. At the end of the summer season in October time, we were told to expect more flexibility in pricing from both trade and private sellers who want to avoid storage costs and release their capital as demand for motorhomes dropped off through winter.  Another dealer told us, which fitted what we read in books and forums, that the Easter bank holiday weekend is the first holiday opportunity in the year that people consider suitable for giving motorhoming a try, leading to demand restarting a few weeks prior to the Easter weekend around March/April time and hence prices rising again and / or sellers becoming less flexible on their prices through to the start of summer.

Unfortunately, for us, we were looking at exactly that time of year but despite this, after several weeks of intensive searching we did feel we reached a point where we could quite quickly sift through the used motorhomes available online and assess which ones were priced low, fairly, or overpriced given their specifications. (At any time of year there will always be some people who want a quick sale).

Our online searching strategy and first motorhome preferences

Finally, with private sellers in particular but also some trade sellers, the price which they had paid for their motorhome originally (even if it was many years ago) had a strong bearing on the price they were willing to accept now.  Sellers who themselves had paid top prices from dealer forecourts were in our experience, far more inflexible on their prices and had set asking prices at the upper end of the price bracket.  In contrast, sellers who had picked up a good deal themselves seemed more inclined to negotiate.  Our observation was that the loss people were prepared to accept (due to depreciation) seemed to strongly outweigh any impartial evaluation of the rest of the market.

Similarly with trade sellers, we were told, that if they'd picked up a motorhome cheap at an auction or had a good part exchange deal (where their profit margin had already been made on the new motorhome they had sold), they were more likely to be flexible or set a lower asking price for a quick turnover. (Unless of course we were looking for a part exchange deal ourselves when it became harder to get a good price.  Two dealers offered us a deal on our car but the total price of the motorhome was higher than if we were willing to pay cash.  As with any part exchange offer you won't get as good a price as cash but would need to balance the inconvenience of selling and what overall deal best for you).

We also found that a private sellers own personal motorhome preferences had a big influence on their price flexibility, even if we didn't have the same preferences as them.  Anything that the seller had spent money on themselves seemed to have a disproportionate weighting on the price.  For example, if a seller really valued the fact their motorhome had additional external storage boxes, a bigger TV or a satellite dish which they'd had installed, they were less likely to drop the overall price even though we didn't really value those particular extras.

There may, of course, be other intangible pricing factors to add to this list, but these are the ones we encountered directly while trying to find our own first motorhome. Even though a dealership did once show us a trade pricing guide for used motorhomes taking into account model, age, mileage and condition, the reality of motorhome pricing was much more confusing.  Over time we found that speaking to lots of different sellers and particularly asking why they were selling and how long they'd had / been trying to sell the motorhome was the best way to build up a picture of how they'd arrived at their asking price and whether they'd be open to negotiation once we'd made our own valuation.

The difficulties of working out the fair market value of a used motorhome

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