What is an appraisal?
An appraisal is an educated monetary evaluation of an item or items by a professional who has experience selling, handling, and/or brokering the items that are being examined.
The are several different types of appraisals. The two most common are fair market and replacement. A fair market appraisal places a value on an item that is to be offered at public auction, the value being determined by the condition of the item, the strength of the market, and the desire for the item by a willing buyer who has reasonable knowledge regarding the current market. A replacement value is derived by calculating the cost of replacing an item should it be lost, stolen, or damaged.
Other appraisal types may be employed depending upon the circumstances. A knowledgeable and well trained appraiser will know which type of appraisal is needed for any given situation.
When do I need an appraisal?
You could need an appraisal for the IRS if you inherit an estate or receive a gift, if you are donating an item to charity, if you or your business is filing for bankruptcy, if you are looking to insure your valuables, if you are going through a divorce, if you are applying for a loan, or if you have lost or damaged goods due to a natural catastrophe or some other casualty occurrence.
What should I expect from an appraiser?
Someone who is going to appraise your goods should be well qualified and experienced. Many appraisers have taken educational courses and are certified in conducting valuations. Equally important to certification is experience. An appraiser should have experience buying and/or selling goods in the current market, so as to better place a realistic value on the items being examined.
CAUTION: Do not let someone who is interested in buying your goods conduct an appraisal for you. An appraiser should only be interested in selling the items for you through a consignment agreement. An appraiser should never be interested in purchasing the items from you.
What should an appraisal report look like?
A comprehensive appraisal report should include the following:
- A cover sheet that includes the name of the appraiser and the name of the person or entity for whom the appraisal is being conducted.
- A list of the appraiser’s qualifications, experience, and/or certifications.
- A definition of the type of appraisal given and an explanation of any circumstances or conditions that affect the values of the items appraised.
- A list of the items examined with clear descriptions and values placed on each of the said items.
- Pictures of the items examined.
- A conclusion that states the total value of all the items appraised.
An appraisal report should always be easy to understand, logical, and concise. You should never feel confused or unclear when reading an appraisal report.
What if an appraisal report is disputed by another party?
Sometimes disagreements arise regarding an appraiser’s valuations. Should this occur, the appraiser should be able and willing to back up the appraisal report with information as to how values were determined. When called upon, an appraiser should also be able and willing to testify in a court of law.
How much should I expect to pay for an appraisal?
Rates vary between appraisers. Some charge by the hour, some charge per item appraised, and some charge a flat fee.
CAUTION: The cost of an appraisal should never be a percentage of the total value of the items appraised.
CAGA members are professionals who have completed the certification process and who have made a commitment to the CAGA’s Code of Professional Ethics. John C. Savo is the Senior Auctioneer and Appraiser of the Savo Auctioneers, and a current member of the Certified Appraisers Guild of America. Combining over 30 years of experience with his CAGA training, he is qualified to handle all your appraisal needs.