If you’ve recently inherited some personal property, cleared out a family home, or simply started wondering what a few things around the house might sell for, your first instinct might be to call an appraiser. That instinct makes sense, but depending on your situation, it may not be the right first step. In some cases, it isn’t necessary at all: especially if the item or items have a total value in the range of a few thousand dollars or less.
Here’s what you should know before you make that call.
What is the Role of a Professional Appraiser?
In its plainest terms, the word “appraisal” simply means an opinion of value. However, a professional personal property appraiser typically provides a more formal and rigorously prepared product: a USPAP compliant appraisal report. This is a thorough, fully substantiated document that includes an explanation of methodology and value reasoning, as well as reporting terms, conditions, and limitations of use, which protect both the appraiser and the client. These are lengthy, defensible, and often time consuming reports.
On the other hand, other types of knowledgeable industry professionals, such as auction specialists, are not compelled to adhere to the same standards when offering value opinions, which is part of what makes their feedback less time consuming and (and free).
When an Auction House Estimate Makes More Sense
Reputable auction houses routinely offer complimentary value feedback as part of their consignment process. They have deep, current market knowledge, access to real sales data, and a genuine interest in accurately representing what property will bring at auction. For personal property in the modest value range (a few thousand dollars or less) a conversation with an auction specialist will often give you exactly the information you’re looking for, at no cost.
The Cost Equation
A professional personal property appraiser typically charges by the hour, and the cost of those hours can add up. Depending on the scope, an appraisal report for a single item can take one hour, a few hours, or more. When the total market value of the property in question is a few thousand dollars or less, the cost of a formal appraisal report relative to that value often doesn’t make financial sense.
If you call an appraiser and describe property that falls into this category, don’t be surprised if you are referred elsewhere; not because the property isn’t interesting or the question isn’t valid, but because the professional tool isn’t matched to the need.
When You Do Need a Formal Appraisal
The situation changes when the intended use of the personal property appraisal has legal, financial, tax, or insurance implications, or when values are significant enough that the cost of the appraisal is proportionate to what’s at stake.
For high value property being considered for sale, an independent appraisal can also support pricing strategy and negotiation of terms. For situations which involve more than two parties (such as estate tax, charitable donation, or insurance coverage), an informal opinion of value from an auction house isn’t sufficient. You need a signed, credentialed, USPAP-compliant report from a qualified appraiser. The documentation has to hold up, and that’s exactly what a formal appraisal is designed to do.
Not Sure Which Applies to You?
If you’re uncertain whether your situation calls for a formal appraisal, reach out and describe what you have and what you’re trying to accomplish. We’re glad to point you in the right direction. We also offer a $75 per item preliminary review to help determine whether a formal appraisal is the right choice based on value potential. This review also includes recommendations for sales outlets.
