Selling a damaged car: residual value, not the scrapyard

The term is used in two very different senses. In a listing it usually means a car with substantial damage, unrepaired or not fully repaired. In the description of a repaired car it refers to its history — and that is where the expensive part begins, because repaired accident damage remains disclosable, even years later.

The line to trivial damage is not sharply drawn, but the direction is clear: paint and small dents on bolt-on outer panels do not count as disclosable accident damage, while anything touching structural parts, the frame, the side members or the airbags certainly does. When in doubt: what you would want to know as a buyer, you disclose as a seller.

That duty cannot be contracted away. A warranty exclusion covers the defect you did not know about — not the accident you knew about and concealed. That holds in Switzerland as in Germany, and it is the most common reason a private sale is unwound years later.

The sum has three numbers: the car's undamaged value, the repair cost and its value as damaged. Repairing pays if the repair costs clearly less than the difference between those two values — clearly less, because a repaired accident car never achieves the price of one with no history.

The discount for the history is the item sellers forget in their sums. It depends on age: on a young car a properly repaired quarter panel weighs heavily, on a fifteen-year-old car hardly anyone cares. So repairing almost never pays on old cars and more often does on young ones.

A third option is checked too rarely: the partial repair. A car that drives safely and passes a test but is visibly dented brings considerably more than one that cannot be driven — and making it roadworthy is often the cheapest part of the whole repair.

A technical write-off is a car that cannot sensibly be repaired — a bent frame, a burnt-out shell, structural rust all the way through. An economic write-off is something quite different: the car could be repaired, it just does not pay. The distinction matters for the sale, because an economic write-off is frequently a fully usable vehicle.

The buyer of such a car does a different sum from yours. A business that changes parts itself, uses second-hand parts and need not bill labour arrives at a repair figure bearing little relation to a franchised workshop's invoice. That is precisely why a market for damaged cars exists at all.

Where an insurer is involved, the residual value appears in an assessment. It is an estimate of what the damaged car would still fetch on the market, and it is deducted when the claim is settled: you receive the difference between replacement value and residual value, and you keep the car.

Whether you are bound by that figure depends on who is paying, and the constellations differ here. What follows describes German practice: in a third-party claim settled by the other driver's insurer, the case law generally allows the injured party to sell at the residual value an assessor determined on the general market available to him. He need not wait unbidden for residual-value bids from specialised auction platforms that the other insurer produces afterwards.

In a comprehensive claim settled by your own insurer, by contrast, your policy governs, and it may provide for disposal through a particular residual-value platform. In Switzerland both sides — liability and comprehensive — follow primarily the individual insurer's claims terms; being bound to a residual-value bid is a matter of contract there, not of general case law. In both countries the same step pays: read the policy and the assessment before accepting any offer.

The market is larger than it looks from outside, and the buyer groups pay very differently. Ring only the first dealer you find and you sell to the one who can do least with the car.

So get at least three offers and describe the car the same way each time, with the same photos and the same details. The spread between lowest and highest bid is wider on damaged cars than on drivable ones, because every buyer has a different use in mind — and only the comparison tells you which.

With a damaged car nobody is looking for a pretty one. The prospects are doing sums, and for that they need facts, not mood. The more precisely you describe the damage, the more serious the enquiries and the fewer viewings end in nothing.

Photograph the damage from several angles, plus the engine bay, the underside where possible, and the interior showing whether the airbags have deployed. Say whether the car still drives, whether it starts, whether the cooling system holds and whether it rolls and steers. Those four points determine the transport effort and with it the price.

If an assessment exists, say so in the listing and hand it over on request. It is the only document a stranger accepts as independent, and it shortens every negotiation — including where you think the stated residual value is too low.

Here two lines matter more than all the rest. First, the description of the damage in the contract, as specific as in the listing, referring to the assessment where there is one. Second, a line stating that the car is sold as a damaged vehicle and is not, or cannot be, licensed for the road, where that is the case.

The warranty exclusion belongs in there too, but it only carries the unknown. Someone who knows about the frame damage and writes it into the contract is protected; someone who knows and omits it is not — and on a car expressly sold as damaged, an omission stands out especially.

Also record how the car will be collected and who arranges transport. A damaged car the buyer leaves behind after paying is a problem your contract does not mention and your parking space does.

With a damaged car the buyer is paying for certainty. Anything that makes his sums easier raises his bid, because he has less risk to price in. The assessment is the most valuable document, but not the only one.

Gather what proves the condition before the damage: service book, the last inspection report, invoices for recent work, photos from before. An engine with documented servicing is worth more to a dismantler than one with an unknown history, and a car that passed its test three weeks before the crash is not a mystery box.

And keep what is yours and not part of the car: the second set of wheels, the roof bars, the retrofitted tow bar, the navigation unit. Sold separately these often bring more than in the package — and a trade buyer does not count them in his bid anyway.