As we review each vehicle, we determine an anticipated return or essentially a fair market auction value. This value is driven by various variables, including vehicle make and model, buyer demand, geographic market strength, and overall condition. With a fair market value recorded for each vehicle before the auction, we can make effective and calculated sell or no sell decisions during each auction run.
Every vehicle has a fair market value regardless of its pre-loss actual cash value or its current condition. The MAST process to assess salvage dives beyond the specifics of the vehicle, condition, and loss type by factoring in market volatility. We track several data points that impact our marketplace to understand external variables and impact buyer behavior.
Additionally, our philosophy is to review and set expectations on 100% of the inventory. The bulk of an insurance company’s salvage inventory is valued closer to the overall average ACV. Rather than concentrating on just the small percentage of high ACV vehicles, it only makes sense to assess fair market value on each unit and record that amount as a minimum acceptable bid to maximize returns.
Historical data indicates that 25% of the time, the auction underperforms on the initial run. Setting a reserve with a fair market value in advance of auction day automatically flags initial bids that fall short and identifies when it makes sense to step in and negotiate a sale price closer to fair market value.