What Is Resale Value?
Resale value is the amount of money an original purchaser can expect to make from reselling an asset to another party. This is usually a topic of interest for large assets like boats, cars, and homes, although technically any asset can be bought and resold, and will have a specific resale value. With each resale, the asset's value tends to change, and this can be an important consideration when thinking about purchases of new and used assets.
For buyers who intend to make a resale in the future, resale value is particularly important, as they need to think ahead to the time when they will resell the asset. Before making a purchase, the buyer will need to consider the appreciation rate on similar assets, such as homes in the same neighborhood, or cars from the same manufacturer. Buyers will also need to evaluate the current condition of the asset, and must keep it in good shape while they own it to get the best resale price. With assets like cars, a decline in value can happen very quickly, particularly in the case of a car bought new and sold to a second owner, as cars depreciate rapidly when driven off the lot.
Other buyers may not think about resale value when they make purchases, but it can be a cause for concern. It may be necessary to liquidate assets to cover debts or prepare for moves, and low resale value can be an issue in these cases. Anyone making a big purchase should think about the potential for resale, even if they are not actively planning on selling the asset after purchase. Depreciation can play a role in the price buyers are willing to pay, and buyers should consider this when negotiating a sales price to make sure they get a fair deal.
In addition to resale value, another factor is trade-in value. Some assets have different trade and sale values, with buyers often receiving more if they are willing to trade. This is most commonly encountered in the case of car sales, where a buyer can trade in his old car to take money off the sales price of a new car. The buyer may get more in trade than he would if he sold the car directly to another buyer.
Factors that can influence resale value include current economic conditions, the age and condition of the asset, and the level of demand for that particular asset. Some assets can end up with a higher value because they appreciate over time; homes, for example, are often worth more at the time of a resale than they were at the time of purchase. Others, like cars, tend to depreciate as a general rule.
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