Personal Property Appraisal: What, When, and How

General Tips on Appraising Personal Property

Among the most frequent questions POBA is asked about art collections and legacies is: Do I need to get these works appraised? What would the appraisal be useful for? How do I get one done? Here, we suggest some answers to provide a better understanding of the process, the product, and the services available.

What is an Appraisal?

An appraisal is technically no more than a statement of monetary value. Typically, it is a formal written evaluation of objects that includes both a full description of the object and a precise dollar value, for a specific purpose and within an appropriate marketplace.   This simple definition describes multiple possibilities, since any artwork can, and does, have multiple “values,” depending on the purpose of the appraisal.

Appraisals can be done on the basis of four distinct “values” each of which can and should be applied for different, appropriate uses.

  • Replacement Cost Value (RCV) – The RCV is used exclusively for insurance purposes and is the amount that would be necessary to spend to find a same/similar comparable work if there was a loss or serious damage. (Obviously, one work of art is not going to be identical to another, even if by the same artist, painting the same subject, at approximately the same date, using the same materials, and executing a piece of the same size.)
  • Fair Market Value (FMV) – The FMV is the price at which a willing buyer and a willing seller would agree, each having the same information, in a reasonable time frame – typically an auction price. It may by used for an Inventory Appraisal [so that a client knows what s/he is likely to realize if it is sold]; for a Donation (Non-Cash Charitable Contribution) to an appropriate non-for-profit museum or charitable organization; for Equitable Distribution (typically in divorce situations); for Gift Tax purposes, generally to a family foundation; or for Estate Tax purposes.
  • Marketable Cash Value (MCV) – The net value of an object, after all costs of selling, such as promotion, travel, fees and commissions have been considered.
  • Liquidation Cash Value (LCV) – The lowest amount, if any, that would be realized if one must get rid of the object immediately; and/or find someone to take it away, as it has No Commercial Value (NCV).

It may also be useful to hire the Appraiser for an initial consultation, to walk through the home, providing advice as to which works/objects have value in the current art and antiques marketplaces, which objects have little, and which objects should be kept and treasured, always cognizant of the myriad interpretations of ‘value’, the impossibility of extricating the pieces from the personal perceptions of the owner, but suggesting the realities involved in possibly monetizing the works.

When Might an Appraisal Be Useful?

The simple answer is: whenever you want to know what something is, what it might be worth, if there is a market for it, and if so, what that market is. In other words, an appraisal is useful to set benchmark value for the future and actual value now, for one or more of the purposes above: insurance, donation, taxes (gift or estate), net worth, or liquidation so any decision to keep or distribute art works is an informed decision.

People often actually do not know what they have. The carefully curated and passionately collected objects assembled in one generation may be viewed as ‘stuff’ by the next, unaware of the nature of the material.   Value may, or may not, be as anticipated, as the family mythology may be just that; and markets change in both positive and negative directions, as do collecting habits and life-styles. The appraisal report thus becomes an invaluable document – an organized, informative, detailed inventory and evaluation of all or selected items of personal property, designed to the specific purposes for which it is intended, prepared by a neutral and independent authority.

For example, these are some typical situations in which having an appraisal may be extremely useful:

  • For people who are preparing to move from the family home to smaller space or who want to simplify, but as unsure of what to keep of what is beloved
  • For the lawyer who knows his/her clients’ kids will “kill each other” if someone doesn’t provide an unbiased list of “what’s there and what it’s worth”
  • For the child who must dispose of a parent’s estate, has no idea what anything is worth or how to handle it, and is overwhelmed trying to do that in the midst of a busy life
  • For the family forced by loss of good health or competence to close an older person’s home, distraught by the implications of the decision, but needing assistance in both the identification and valuation of the items
  • For the person who wants to give things away now, to place them in public institutions so that they may be protected and enjoyed by generations; and/or to enjoy watching children and grandchildren continue to take pleasure from them, but hasn’t checked on values in years.

There are many more scenarios like these in which an appraisal can be useful. The guiding principle is to appraise when value is important to know for personal reasons or for purposes of distribution in life or after death.

How Do I Prepare for an Appraisal?

  • Decide what particular items you would like to have appraised, perhaps preparing a room-by-room list. Also, if possible, decide at what value level you would like to have works/objects included in the appraisal. The Appraiser may advise you in this process.
  • If possible, collect any documentation relating to the items to be appraised, and have it available for the Appraiser. This may include copies of all past appraisals, invoices, receipts, certificates of authenticity, auction and/or exhibition catalogues, etc. They may provide information about provenance, that is, the history of creation and ownership of art works, that would otherwise be unknown. If no information is apparently available, advise the Appraiser – this is hardly an unusual circumstance.
  • If appropriate, organize art works in a meaningful way, so that access is easy but full for the Appraiser.   This is especially true for rare books and other collectibles. But do not move heavy objects without help, as this may harm you and the work, and both should be avoided.
  • Understand that the Appraiser is going to have to remove paintings and art photography from the walls and objects from floors or tables, or at least lift them to look at the backs. Often artist’s inscriptions, gallery and/or exhibitions labels are then visible. For antiques and furniture, the appraiser would need to see the and inside of drawers and undersides and backs of pieces of antique furniture, to see artist and other construction details. Likewise, the appraiser would examine ceramic, glass and silver objects for important marks.
  • Be aware that this is an intrusive process as the Appraiser has to actually examine the pieces, so will need access to them. The more potentially valuable the object, the more rigorous the inspection will necessarily be, especially as condition is a major component of value in today’s marketplaces. In other words, prepare for some polite and skilled moving of objects during and appraisal.
  • Understand that the Appraiser will photograph the objects for identification, reference and research purposes. (Old photographs, even if available, are generally not useful. Even though establish context, they don’t conform to today’s technology or standards, nor do they show the same details, or the current condition of the works.)

It may neither be possible nor practical to take these recommended steps but they do give you a sense of the process involved in an appraisal and how you might begin to prepare for one. Whatever the particulars of circumstances, the appraisal work, when done by a skilled appraiser, will be conducted in a timely manner, with complete discretion, and personalized service.

– Jane H. Willis, Independent Fine Art Appraiser

_________

Jane H. Willis is Past President Appraisers Association of America and Principal of Jane H. Willis Appraisal Service. She is an expert in fine and decorative art appraisals.