Pricing reconditioning before you bid

The most expensive habit in wholesale buying is not paying too much. It is deciding the number first and discovering the work afterwards, because from that moment every estimate you make is chosen to defend a bid you have already made in your head.

Pricing the work first inverts that. Here is how to do it from photographs, and where the method stops being reliable.

Price by panel, not by impression

A car does not have a condition. It has a list of panels, each in its own state, and the cost is the sum of that list rather than a feeling about the car as a whole.

The bands most buyers carry in their head, roughly and in ascending order:

• Scuffs and light scratches. The cheapest thing on the list, sometimes polishing out entirely. What matters is whether the scratch has gone through the clear coat, which a photograph will often show as a white line rather than a coloured one.
• A bumper cover needing refinish. More than a scuff, and predictable, because a bumper cover is a part with a price rather than a repair with a range.
• A creased door or fender. Several times a scuff. This is bodywork and paint rather than paint alone, and the labour is the larger half.
• A quarter panel. The expensive one, and the one most often underestimated from a photograph. It is welded to the car, so it is repaired rather than replaced, and blending the paint pulls in the panels either side of it.
• Wheels, glass and lamps. Individually small, collectively significant. Four kerbed wheels and a cracked headlamp add up faster than buyers expect, and they are the items most often waved through as cosmetic.

The question that sets the price

For any damaged panel, ask one thing first: does this bolt on, or is it welded on?

Doors, hoods, bumper covers, fenders and trunk lids bolt on. They have a part price, a labour figure, and a fairly narrow range. Quarter panels, roof panels and structural rails are part of the body. They are cut, pulled or repaired in place, and the range is wide because it depends on what is behind the panel.

That single distinction explains most of the difference between two cars that look equivalently damaged in a photograph.

What photographs systematically miss

A photo-based estimate is an estimate of visible work. Some categories are invisible by nature, and pretending otherwise is how a number turns out wrong:

• Mechanical condition. An engine or transmission fault has no appearance.
• What is behind a repaired panel, including how well it was repaired.
• Corrosion under trim, in seams, or on the underside.
• Electrical faults, which usually announce themselves only on the lot.
• Anything on an angle the seller chose not to photograph.

None of these are reasons to stop estimating. They are the reason the estimate needs a contingency rather than a single number.

The contingency, and the discipline around it

Carry a fixed allowance for what the photographs cannot show. Buyers who have done this a while set it before they look at the car, as a policy rather than a per-vehicle judgment.

The size of it matters less than the rule attached to it: the allowance does not get spent in advance. The moment you find yourself reasoning that this particular car probably will not need it, the contingency has stopped being a contingency and has become part of the money you are willing to pay.

Build the number backwards

The estimate is not the bid. Work from realistic retail, which is what the car sells for on your lot, in your market, in the time you are willing to hold it. Then subtract, in order:

1. reconditioning, priced panel by panel
2. the contingency, unspent
3. transport
4. auction fees and buyer premium
5. floorplan for the days you expect to hold it
6. the gross the deal has to make to be worth doing

What is left is your maximum, not your target. Write it down before the lane runs, because bidding is fast and competitive and your judgment inside it is worse than your judgment outside it. The written number is the only part of this method that has to survive contact with the auction.

The short version

• Price the work before you decide the number, never after.
• Cost by panel and severity, not by overall impression.
• Ask whether each damaged panel bolts on or is welded on.
• Assume photographs miss mechanical, structural and hidden corrosion entirely.
• Carry a fixed contingency, and refuse to spend it in advance.
• Subtract everything from realistic retail, and write the maximum down.