Updated: May 23
I got a question. Do you have antiques, collectibles, estate jewelry, firearms or family heirlooms? Do you have a rough idea of what they’re worth or think you know? How about in today’s market? And not, what grandma told you….
The reason I bring this up? I am often contacted when someone is looking to insure those special items or attempt to pre-determine a projected value before selling them. Also, there are those cases when a donation value is needed for tax purposes. In most of these instances you must seek out a personal property appraisal.
1) Would I need a personal property appraisal ? 2) What should I have appraised? 3) What kind of appraiser do I need? 4) How will an appraiser figure the value of my items? 5) Will the intent of my appraisal need affect the valuation? 6) Should I consider insuring my more valuable items or am I covered ?
Would I need a personal property appraisal ? Many believe they “already know” or have an educated guess, and they might, but that may not be enough. An experienced personal property appraiser is skilled in determining an item’s value using the current market trends, specialized tools you probably don’t have access to and other expert colleagues in the field. Plus, while your guess may be educated, they will not hold water with your insurance company, an estate attorney, or the IRS.
For these reasons, a professional appraiser can provide the proper documentation you need for:
• Estate settlements • Insurance purposes • Sales or charitable donations
If you've never had an appraisal in the past, you might not know what to expect, here’s a quick overview of the process, as well as how to choose an appraiser. Plus I want to cover what happens during and after the actual appraisal is conducted.
What Items Should I have Appraised? I am asked this often and I hate to see people waste money on an appraisal for something that is either, “A” covered in general insurance, without the need for an additional rider or “B” is just not worth paying for the additional coverage. So generally asking the right question of your insurance agent or the appraiser during the initial consultation should save you some valuable time (which is money) to an appraiser. Generally, it can’t hurt to ask about any item you believe may have significant value. Also, a little DIY research about your item or similar items online might help too.
The most often requested appraisals are for, expensive jewelry, antiques, valuable collections, sterling silver, vintage watches, porcelain, paintings and other works of art.
What kind of Appraiser do I need? Ideally, you want to select an appraiser specialized in providing they type of appraisal you need, specific to type of item. For example, someone with experience in valuing artwork, jewelry, or as specific as Civil War items. I am what is know as a generalist. I have a few specific areas of expertise I would “claim” but I am they type that would be called in for a full scope estate appraisal. If I would run in to an item that required a specialist, I would seek that out as part of my service or recommend 3rd party to the customer.
You can check out organizations such as the American Society of Appraisers or the Appraisers Association of America. Once you have identified a few items that you would like appraisals for, a visit of their websites will show you how you can find an appraisers' credentials and specialties. There are some amazing new online sites too, where you can ask an expert.
Don’t be shy and ask about a about price. Like an attorney most appraisers charge hourly. I find quite a range nationally, about $100 to $400 per hour, based on specialty, genre and expertise. Some charge a flat fee for an appraisal of many items. A lot of coins, jewelry and sports memorabilia appraisers are doing this now as it’s a systematized process for them. I know cost is always a factor for clients but remember, experience and expertise are what you really need to seek out first. For an example, if I had to do an appraisal on a 1959 Les Paul Electric Guitar and could handle it in about 2-3 hours where as a novice appraiser having never done an appraisal on what could be a 6 figure guitar might have to spend days (meaning hours) but charge by the hour less, but in the end, cost so much more. I have actually seen this happen to a lot of estates.
How will an appraiser figure the value of my items? Experienced appraisers use several tools to help assess an item’s value. Very important is past sales data. Appraisers have access to many “paid” and expensive databases that are constantly updating. Values are constantly shifting. Also condition and provenance (or history) of the item are very important and sometimes must be researched and carefully documented. (Just saying, Grandma had it for years, doesn’t count.)
Also, appraisers rely on standards and guidelines set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), which contains "Congressionally-authorized" valuation standards.
Will the intent of my appraisal need affect the valuation? Yes…. oh yes. Oddly, the value the appraiser assesses is also determined in part by the reason for the appraisal. I know this seems strange.
Let me explain. An insurance valuation would be based on the item's replacement cost with one of similar value. On the other hand, an item assessed for donation or resale value will be based on the current fair market value. Basically, how much the item would sell for at a well-publicized auction, resale gallery or other like venue. I usually say, insurance value is the retail (what would you pay for it today if you had to buy it today.) And fair market is I can shop around, haggle and take my time (or bid at auction.) A little crude and rudimentary but I say true. You had to see me try to have that conversation with a judge once. Then, I started using baseball player batting averages.
And remember, if your item has historical value, the appraiser may need to invite an expert who can authenticate your item before a value can be determined. These types of appraisals can be daunting but again, a good appraiser will let you know this before it too late (or too expensive.)
And always, always, always remember…the appraised value does not mean your item will sell for that amount. That comes from my retired auctioneer side. It could sell for more or less than the appraised value. Think of it as a benchmark to establish an initial bid or a sales price.
Should I consider insuring my more valuable items or am I covered ? So, what was the reason for your appraisal? If your appraisal was part of an insurance application, just forward copies of the appraiser’s findings to your insurance agent. They will determine if your general policy will cover you or whether you need to obtain an additional rider.
For a sale, the appraisal may assist you in determining your asking price. If you are contracting an auction service, they may (or may not) use the appraisal to determine the starting bid. Ask this very important question when using an auction.
At the end of the appraisal process, and if insurance was your motivation, you should have a report, detailing the identification of the item(s) that were appraised in addition to the appraisal value(s). This value is what will be used to determine the amount of insurance coverage you’ll need and therefor ensuring your item(s) are properly protected in case of loss or damage.
I cannot stress how important it is to make sure that all your valuables are scheduled on your insurance policy. If you are not sure ask. I can give you horror stories.
Until next time...
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