Tips for Obtaining and Using Appraisals - By: blog.RubyLane.com

Shop owners sometimes feel the need to have an appraisal conducted for pieces about which they are unsure, in an effort to properly authenticate items prior to their being listed. Others have them done in order to be able to use the appraisal document in their listing as evidence of authenticity and/or certain value. However, we have some observations to make about appraisals in general that may help those who pay for an appraisal to be sure the appraisal results they receive are of practical use to them. As well as in regard to ‘using’ an appraisal to suggest an assured value to the buyer.

Who can be considered a ‘qualified appraiser’ of personal property?
Pretty much anyone can hang out a shingle to advertise himself or herself as qualified to appraise personal property. They might base this ability on their ‘years in the business’ or their education in a given field. But, the truth is the fact that someone might be a 'specialist' or that they might have expert knowledge about a certain type of item doesn’t actually mean they will also be able to produce a professional appraisal document for you. The virtue of many years’ experience as a dealer in antiques or having obtained a gemological certificate would each be a good beginning for entering the personal property appraisal field. But by themselves item authentication skills do not magically transform one into a professional appraiser who can produce appraisal documents able to meet uniform standards recognized and adhered to by the appraisal industry.

To be a qualified appraiser the person performing the service needs also to have had some formal education in the principals of appraisal procedures, as well as the legal aspects of appraising personal property for value. So, an appraiser should be familiar with a type of property, yes, but they also need to know how to value it in a competent manner.

For one thing, without appraisal training a specialist or 'expert' probably isn't going to recognize that many different assigned uses and types of values exist. Different values can apply for the same item, depending on how the person requesting it intends to use the appraisal. Was appraised value needed so that adequate insurance coverage could be obtained, or was it sought in preparation for selling the item? Does the requester seek to document the value of a donated item to establish for the IRS the amount of their charitable contribution; or is the function to determine casualty loss, after the loss has occurred? A client might request each of these assigned uses, or any of many more. And each can result in a different appraised value because different market approaches and different methodology might apply for each.

Those who desire to provide consumers with appraisals should look into joining a professional personal property appraisal organization. This should be considered for the protection of both the consumer and the person wanting to conduct appraisals.

Appraisals Used to Help Sell an Item
An unprofessional or improperly executed appraisal can end up being inaccurate or misleading. But, likewise, the information supplied in a perfectly performed, professional appraisal, can also be misused or incorrectly applied, creating the same problem for consumers, if they are relying on the appraised value quoted when making a purchasing decision. This can occur if partial or incomplete information is extracted from appraisal materials for use in an item description, or if value is not fully and properly defined for potential buyers.

As pointed out already, an appraised value for insurance purposes is not going to be arrived at via the same methodology as that which would be employed for the applied use of resale. In fact, there can be a marked difference between those two types of values. An insurance appraisal establishes an estimate of how much the insured party would likely have to pay to replace a lost property. This means a value quoted for insurance indemnity is not intended to establish market value for an item, but rather the amount of money it is estimated will be needed to replace (by purchase or reproduction) an item with an identical item of property, or with a suitable replacement. In other words, for insurance the value given is what the appraiser anticipates the client would have to pay in order to replace the property at some point in the future, should replacement become necessary. It is an estimate to predict potential future cost.

An appraisal to determine market value for an item because its owner is considering its immediate sale determines the worth of that item at a set point in time, which is very different.

The date an appraisal was performed is also essential information. If an appraisal for resale was done during a time when that type of item was commonly selling for very high prices, its appraised value at that time will reflect this. But, if that type of item is no longer as popular as it once was and currently it regularly sells for much less, quoting a value given during the height of its popularity would be misleading.

The same can be true when considering frequent fluctuations in markets such as those for precious metals or gems. If the appraised value being quoted in a listing were obtained during a period of extreme popularity or was subject to other similar considerations of the time, it would no longer be applicable to today’s market.

Because of the fundamental differences in the way appraised values are determined or what each may express, such as future cost vs. present market value, values given for a specific assigned use should only be quoted in concert with mention of the use for which it was given.

We understand that the differences between types of appraisals and the manner in which appraisals should be written can seem confusing. But if a shop owner is using appraisal documents to enhance their listings, they need to be well enough educated on the subject to prevent inadvertently misrepresenting the appraised item to buyers.

If quoting from an appraisal document always include the date the appraisal was conducted, for what assigned use it was conducted (such as for insurance) and if there were any disclaimers made, such as those regarding estimated gemstone weights, etc. All pertinent information relating to the value being quoted should always be entered in the text or an image included in the listing to show the entire appraisal document, if not adding this necessary text.

Who can be considered a ‘qualified appraiser’ of personal property?
Pretty much anyone can hang out a shingle to advertise himself or herself as qualified to appraise personal property. They might base this ability on their ‘years in the business’ or their education in a given field. But, the truth is the fact that someone might be a 'specialist' or that they might have expert knowledge about a certain type of item doesn’t actually mean they will also be able to produce a professional appraisal.

Source: Notes from the Lane at http://blog.rubylane.com - Your complete resource for online sales success.
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