How reliable is CARFAX?

When I sell a used car to a customer,  one of the most common questions is..."Does it have a clean Carfax?" or "Do you have the Carfax?"
Carfax is an important tool that can give a buyer or seller some good information ,but it is not always accurate. Carfax is only as good as who or what is reporting to it.
As a used car dealership, it is a great tool when we buy a car wholesale or take in a trade to see the possible number of owners, service history, accidents or open recalls. It can affect the value of a trade. Some dealers don't even want to have cars on their lots anymore if there is a "BAD" Carfax! Meaning that an accident has been reported.

Here is what I find to be ironic about this whole process. In the past couple of years I have found that Carfax does not know all!!! I knew a customer that wanted to trade in a car to me. It was a high end car that looked to be in pretty good shape. This customer disclosed to me that it had been in an accident that had caused about $12000.00 in damage. I would have never known that because it had a clean Carfax. Meaning the accident was not reported. I was wholesaling the car and I mentioned to the dealer that the customer disclosed the accident. The dealer said "I don't care as long as it has a clean Carfax!" This has happened on a number of  occasions. How reliable is Carfax?

Perspective is so key. Here is another side to Carfax that is frustrating. A car may be in one of those accidents where there is NO damage. Everyone walks away and nothing happens to the car. This will get reported to Carfax. Those cars now have a BAD Carfax and are worth less on trade or selling because of that. Sometimes they will report to Carfax that there was "very minor damage". This is helpful because it will not scare people as much when they go to purchase or a dealer takes it in on trade.

We all want to be protected from the bad car deal, buying a lemon or getting scammed. I think that when we run on fear, we end up over thinking and letting our fear make financial decisions. Slow down and use this information as a tool. Carfax is a tool that can help you, but at the end of the day if your buying any used car, have it inspected by your mechanic and a body shop. It will take more time and maybe a few bucks, but will be so worth it over the long term!