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What Type of Appraisal Value Is Needed?

Posted on November 3, 2016 by in Appraisals with Comments Off on What Type of Appraisal Value Is Needed?

Wine Pot, C. 1725, Metropolitan Museum of Art.

Appraisals are not simply one size fits most, and need to be customized to fit the specific reason for a written appraisal. Formal appraisals are well-suited for many reasons – those who seek to have values assigned to items they own in order to sell them, those who are seeking valuations for estate purposes or marriage dissolutions, for people who wish to donate items to charity and claim them on their income tax returns (IRS rules dictate single non-cash donated items over $5000 require a written appraisal by a qualified appraiser to accompany form 8283) or for gifted items given with a value over $14,000 (or $28,000 for a married couple). Many people we talk to need valuables assessed for insurance purposes in order to record them on their coverage. Different values apply in each of these cases, and the value conclusions are calculated in different ways.

Estate, donation, and divorce appraisals are calculated using fair market value. The IRS definition of fair market value essentially states that two willing parties agree to transfer ownership of an item, that neither needs to sell or to buy, and that both parties know all relevant facts about an item.  Sound like a perfect world, doesn’t it? And it is absolutely acknowledged to be a ‘best case scenario’ in buying and selling. Most of what we appraise as fair market value is assessed as an auction value (for those types of items that are commonly sold at auctions, both live and online – and if you think about it, if an item has a good description where all relevant facts are presented to a buyer and seller) or a solid price we have seen an item priced at at an estate sale – and observed it sell within a reasonable amount of time. This value would include any buyer’s premium if any comparable sales the value is based upon is a comparable sold at auction.


Sterling bowl c. 1950. A fair market value for this item would be about $450.00, whereas its retail replacement value would be approximately $1200.00.

Market value is the value definition we would use for items appraised for people who come to us wishing to have a price assigned to items they would like to sell. This value differs from fair market value in that it factors in some compulsion to sell. It would not include buyer’s premium if sold at auction, but the value given to an item based upon comparable sales could still be based upon an auction result since there is normally some compulsion to buy and sell present when selling at auction.

Insurance values are calculated using retail replacement cost – which is exactly what it sounds like – the price you could replace an item for in a retail setting. For fine art and furnishings, silver, and jewelry, this would be a high value based upon comparable sales in the retail market. Looking for exact or close comparable sales is what you hope to have for a value conclusion, with tax and any possible shipping and framing factored in. Insurance valuations should be updated every five years – it may be a good time to check those appraisals on your items to make sure they have been done! Foss Appraisal is always available to provide professional valuation services for all of these situations.


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