All auctioneers need knowledge of the approximate 'value' of an item consigned for auction, in the sense that they need to have some idea what it might bring at auction in their market area. However, not all auctioneers are appraisers in the strict meaning of the term.
The following article by James G. Poag, a Graduate Gemologist and International Society of Appraisers Certified Appraiser of Gems and Jewellery and Antique and Period Jewellery, will give you the ins and outs of obtaining appraisals for any purpose!
How Much is it Worth? A Question of Training and Ethics
This Could Be You!
Mrs. Clarke had just moved to town from her farm, and didn't have room for her old curio cabinet. She called an antique dealer she'd met to see if he'd be interested in buying it. He came to see it and offered what seemed like a fair price.
She'd liked his price on the curio, so when he expressed interest in other items she had (in some of which she saw little value) she sold them to him also, receiving $3,500.00. The buyer she had 'trusted' re-sold everything for $17,000.00. Would she have accepted $3,500.00 had she known the true value of her possessions?
People often receive valuations from individuals who are not trained, or who have a biased interest (e.g., by wanting to purchase the item for resale or for their own collection.) An item you may feel has little value can have a very high value on the collectors market. Uncertainty about the value of your personal property creates risks. You may sell too low, be under or over insured, or your estate may be unfairly divided. A professional appraisal helps you manage these and other such risks. When You Need An Appraisal Like Mrs. Clarke, you can suffer substantial loss when selling or auctioning items if you don't know their true value. Many factors influence value, including the market the item is offered in (e.g., local, national, international), condition, how many similar items are in existence, how many are actually open to purchase offers, and more. A qualified appraiser will have knowledge of these and other factors, and have the training and resources to research the answers for you. When insuring personal property, many people don't realize that insurance companies reserve the right to pay only the replacement value of the item. Over estimating your property's value results in your paying higher premiums for the higher estimated value, but receiving only the true, lower, replacement value in case of loss. An accurate Insurance appraisal ensures that you pay - and receive - fair value.
Fair estate distribution is important to people - but are you sure that your beneficiaries are receiving items of equal value? An Equitable Distribution Appraisal will provide an accurate, independent valuation to help you in making your estate distribution decisions. This can eliminate hard feelings among your heirs, and help to prevent costly and time consuming estate litigation.
Avoiding Valuation Pitfalls
Consumers often use price guides to determine the value of their items. However, the quickly changing values in today's collectibles market often make price guides out of date by the time they're printed.
Price guides do not take into consideration local markets. For example, a Pequegnat clock will sell for considerably more in Southwestern Ontario than in Alberta because Kitchener (then Berlin) Ontario is where they were made.
Anyone can publish a price guide. A dealer with large collections of certain items may be influenced to price these items higher in his published guide so as to increase his collection's value.
Be cautious about relying on supposed "experts". Being knowledgeable about an item does not make one an appraiser. Be cautious of relying solely on a person purporting to give "appraisals" on a radio phone-in show. Often he or she is just a collector or dealer giving a "best guess" value. A proper appraisal is impossible without seeing the item or at least a good quality photograph of it. And, like some price guide writers, this person may have certain biases of which you are unaware.
Professional Appraisers - Training and Ethics
Watching professional appraisers on TV give valuations after briefly examining an item gives the impression they just "know" the value. In reality, extensive research and consultation takes place on these items long before the show is taped.
More than just product knowledge is required of a professional appraiser. The appraiser must also have education and training in valuation science. This includes education in appraisal theory, market and value research and analysis, identification and authentication issues, report writing, legal requirements for appraisers and appraisals, and the ethics of appraising.
A properly trained appraiser can then be certified by an organization such as the International Society of Appraisers (ISA). And ISA Certification does more than just acknowledge the training and expertise of the individual to perform appraisals. It binds the appraiser to the ISA's strict Code of Ethics. This can protect you from conflict-of-interest situations.
The International Society of Appraisers Code of Ethics considers it to be a conflict of interest if an appraiser is interested in purchasing or selling an item they are also appraising. The ISA Code of Ethics states:
"A dealer / appraiser should not make an appraisal of an item of personal property that the dealer/appraiser will buy, or that the dealer / appraiser owns and intends to sell. The dealer / appraiser can appraise an item of personal property for which there is an interest only if the interest will not prevent the appraiser from being objective and accurate, if a full disclosure of the interest is made to the client in writing and in the appraisal report, and if the client wishes the appraiser to continue despite the stated conflict. It should also be noted that the appraiser must not develop an interest in the property being appraised during the appraisal process without offering to terminate the appraisal assignment and refunding all fees that have been paid. The assignment may be continued if the client consents to the continuation."
Professional Appraisal: What It Costs and What You Should Expect
A professional appraisal is not expensive, particularly when you consider the potential costs, losses and problems caused by inaccurate valuations. A professional appraiser's fees are similar to those of other professionals such as accountants. They usually range from $75.00 to $200.00 an hour, depending on the project.
Always ask the fee - is it by the piece, the job, or the hour? Is travel time included? Will they do a brief no-charge consultation to confirm that an appraisal is worthwhile or which items need appraising, and then quote an approximate cost?
Do not pay a fee that is contingent on the appraiser buying the item, selling the item for you, or that is a percentage of the appraised value. The latter gives the perception the appraiser may increase the value estimate to increase the fee.
A professional appraiser will provide a written, independent, and unbiased opinion of value. The professional appraiser's value conclusions will be based on prescribed methods of evaluation, research, and report writing. This professional appraisal will reduce your risks and help to guide your decisions when deciding to sell, bequeath or insure an item.
To find a qualified appraiser, ask friends and associates, or call appraisal societies for references. Appraisers often work with or own antique stores, auction houses, jewelry stores, or are art dealers and consultants. Contact several appraisers and interview them as you would any person you might hire. And hire one whose area of interest and expertise matches the items you need appraised.
About Appraisals - Article by James Poag - Thank you for this fantastic article