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About Hiring an Appraiser |
| Do you need to know the value of a necklace so you can sell it, or do you suspect that the IRS has overvalued and overbilled you? Or have you been watching the “Antiques Roadshow” and suspect that the antique clock you just inherited could finance your child’s college education? Appraisals are customized to meet the needs of a property owner, so examine your motives before seeking an appraisal. You may realize that you do not need a professional appraisal at all. For instance, if you’re simply curious about the value of your grandparents’ silverware or your aunt’s antique hairpin, an informal estimate from a knowledgeable professional—also known as a verbal appraisal—will probably suffice. Such estimates are significantly cheaper and quicker to obtain than true appraisals. If, however, your property needs to be valued for a specific transactional purpose such as an insurance policy, taxation, a pre-nuptial agreement, sale, donation or equitable distribution, you probably need a signed and binding appraisal from a professional. |
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What Kind of Appraiser Do I Need?
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Once you have determined that you need a professional appraiser, assess the size, nature and scope of the property that needs appraising. If an entire estate needs to be evaluated for insurance, probate or taxation purposes, your best option is probably either a generalist or a large appraisal firm with various specialists who together have the expertise needed to evaluate the diverse contents of the estate. On the other hand, if you need an appraisal for a single item or homogenous collection of like items—such as a manuscript or set of manuscripts that you contemplate donating to a museum—a specialist would be ideal.
The purpose of the appraisal usually dictates the kind of appraisal you should seek. Property can be evaluated for its fair market value (FMV), replacement value, income value, etc. There’s no such thing as intrinsic value, and sentimental value is in your eyes alone. Note that each kind of valuation will probably yield a different dollar figure and serve a different purpose. For instance, while replacement value might be most appropriate for an insurance policy, fair market value might be a more useful valuation if you want to sell an item. Discuss your requirements with the professional appraiser to ensure that he or she gets the right kind of valuation. |
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Keeping It Official
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Contrary to popular belief, professionals cannot produce appraisals upon a glance. While informal estimates may certainly be had in this fashion, as evidenced on the “Antiques Roadshow,” accredited professionals may require extensive research to do a thorough, official job. They must produce a signed and binding report presenting the appraiser’s objectivity, an account of the valuation process, the source of the data used and the methodology adopted and the limitations of the appraisal and the appraiser in relation to the item.
Valuations for legal transactions must be conducted by qualified, accredited appraisers who have no conflicting interest in the property, such as wanting to purchase it or to act as an agent for a potential sale. If appraisers seem to have an interest in the property they are appraising, the integrity of their appraisal may later be questioned and the property subsequently valued at a different rate. You then could become involved in lengthy negotiations and costly litigation in order to collect the money you expected. So if you’re looking to have a painting evaluated for insurance purposes, having an auction house conduct the appraisal would not be appropriate. If an item is to be auctioned, however, the auction house usually appraises it. This is because any potential conflict of the appraiser’s interest in the property is entirely transparent and can only work to the advantage of the property owner.
Pricing Systems: Appraisers usually charge either by the hour—sometimes stipulating to a minimum number of hours per project—or by the day, plus travel expenses. Daily rates average from $1,500 to $2,000. Typically, hourly rates range from $100 (a 1 on our cost scale) to $500 (a 5+ on our cost scale), depending on the reputation of the appraiser and the kind of valuation required. Informal estimates are considerably cheaper than formal appraisals and usually involve a flat rate. Auction houses often offer a discount on their appraisal rates if the property is to be consigned to them for sale.
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The Appraisal Profession
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| Appraisers of personal property are accredited by the American Society of Appraisers (ASA). To receive accreditation, appraisers must pass rigorous written and oral exams totaling a minimum of eight hours and submit sample appraisal reports for review. They are subject to local credit and background investigations and are screened by an ethics committee. Each appraiser earns a professional designation in one or more specialized areas, such as jewelry, fine art, manuscripts or antique silver. Hiring an accredited appraiser ensures high standards of knowledge, professionalism and experience. Owners seeking professional appraisals should contact their local ASA chapter to perform a preliminary background check; they can also file grievances about appraisers with this organization. The ASA can be reached at (703) 478-2228 or www.appraisers.org. |
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Understanding Appraisal Value Jargon
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Fair market value (FMV), also called fair value, is the price that an interested (but not desperate) party would be willing to pay for an item on the open market. The FMV method is generally used for appraising art, antiques and other valuables for the purpose of sale or equitable distribution.
Replacement value is the estimated cost of replacing an item. It includes the premium over FMV that an individual might be willing to pay in order to obtain a lost or destroyed item. Replacement value is used most frequently for insurance purposes.
Income value is the estimated value of income that an item will yield over time. Generally used with real estate, income value is also used to assess the value of items that are being loaned or rented, such as jewelry and works of art. Income value appraisals show up in New York divorce court, too. The income value of a professional degree earned during a marriage is assessed so that both parties may benefit equally from the income it will yield in the future.
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