Pre-Owned F150 Offer Price vs. Dealer Asking Price. Why so different?

atxsonicatxsonic Member Posts: 6
edited April 2018 in Ford
I am about to buy my first Pre-Owned F150 and I need someone smart people to tell me what I am missing as I complete my analysis to determine my offer price. I am using actual MSRP, Estimated 2014 discounts and 2018 "residual values" to come up with my offer price on the 2014 F150 Lariat. I am trying to figure out why my analysis is so off from their starting asking price. Sure we will negotiate, but my estimated value is 66% of their asking price ($10K difference). Well here it goes. Let me know if I am missing something in my analysis.

For this example, let's say I am purchasing a 2014 PRE-Owned F150 Lariat with 42K miles (assume the truck is in above average to excellent condition).

MSRP 2014 = $49K (fact)

Est Discounts = $12K. It was sold in Nov 2014 (late in the model year), which was the last year of that body style with the old steel frame, so I assume high discounts off MSRP. I see $10-$18K discounts off F150 in some other Edmunds forums. Yes, these are 2018 discounts, but I am assuming no one pays MSRP for an F150. I am using $12K and it feels reasonable/conservative as est of the discounts give in 2014 to the original owner.

Est. original 2014 Purchase Price = $49K MSRP - $12K Discounts= $37K

Who knows, but assume in 2014 there were similar residual values as the "60-53%" I have see quoted for 2018 F150s in edmunds forms. That means after a 36months/12miles per year or 48months/12miles per year "Ford" would have a used 2014 with 36 to 48K miles worth 60-53% of the original Purchase Price. Well I am looking at a 2014 with 42K miles, so we are in that ballpark. I apply a 55% residual value on the $37K est Purchase Price, which gets me to a $20K "value" in 2018 for the used 2014. Yes, I am applying lease residual value concept on a purchase, but RV is Ford's determination of vehicle value in the future. We are now in that future.

This analysis seems reasonable to me. Sure some of the figures could move around, like higher discounts or higher RV given the excellent condition of the vehicle. My question for this forum is more about -- is this a reasonable approach to determine my offer price for a Pre-owned F150? Is it missing anything or flawed? More this example, the dealer is asking $30K for the 2014 which feels insane give my analysis. Their $30K price implies only 19% of depreciated value after 4 YEARS and 42K mile. That is an implied 81% "residual value". No way ... come Mr. Ford Dealer in Texas. Yes, I know there is room to negotiate, but 1/3 off starting asking price?

I am going to offer something around my number ($20K), but wanted to know what I am missing in my analysis? This example is NOT unique. It seems all the Pre-Owned F150s in Texas have asking prices that are at these insanely high prices relative to their estimated original purchase price (aka implied 80% "residual value" after 3-4 years and 36-48K miles). I should point out, I am not taking the current dealer's purchase price into account here, but why should I? That's not my problem. I am trying to determine MY value for the vehicle. It's not my issue if they made a good or bad buy at the wholesale auction. Sure if I was purchasing a rare Ferrari then my analysis does not work as well, as prices can rise for rare vehicles. A 2014 F150 is not rare, especially in Texas. The foundation of my analysis is what FORD determined as the residual value of an F150 after 3-4 years and 36-48K miles. Logic seems to say 55% makes more sense than 80% after 3-4 years, right?

Hope to get some general feedback on the reasonableness of my analytical approach. I want to be ready for the discussion with the dealer. What is wrong with the analysis? I don't see anything wrong with it. Also how do you expect the dealer to counter my analytical approach?

All the best,


  • isellhondasisellhondas Member Posts: 20,341
    I appreciate all of your hard work but you can throw all of your data out the window.

    None of those numbers you have anything to do with the VALUE of the truck. It's always the MARKET that determines pricing. If a car is in in high demand it'll sell for a premium price which may be quite a bit more than the "books" say they are worth. Your dealer won't be impressed with your research or your analytical approach. If you make an acceptable offer, you'll be a buyer and if he knows the next shopper will pay the going rate he will walk you. Residuals are often inflated to move a lot of vehicles during times of excess inventory so those numbers aren't going to help you.

    It's not uncommon for a dealer's buyer to pay well over book at an auction for a unit they know will sell quickl at a good profit.

    But, can always make an offer! It just has to make sense!
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