General Interest

August 2003
Whatís It Worth?
Frances Redell-White

Whether looking to add something to your collection or sell an item collecting dust in your attic, taking the proper steps to determine what it is worth can help you save or earn a significant amount of money. Take the following three situations, for example.

Little did Mary and her lawyer know that, on the day she agreed to a divorce settlement, she lost the sum of $78,000. How did this happen? Her lawyer had been diligent in gathering information regarding joint marital property and financial holdings, the IRA, 401Ks and their stock portfolio; and business assets had been examined and accessed by accountants. Their house, built in 1995, had been appraised along with the Lexus and minivan. The problem arose from determining the value of the furnishings in the house. Mary?s husband had kept diligent records and receipts of all of the furniture and furnishings; the custom window treatments alone cost $25,000. When the retail receipts were totaled, the sum was in excess of $115,000. He magnanimously left the contents of the house to his soon-to-be ex-wife. She was pleased, as many of the furnishings were customized to her specific tastes, and, in return, she agreed to let her husband keep the stock portfolio worth approximately $98,000.

One year after the divorce, Mary decided to move and start a new life with no lingering reminders of her former marriage. It was then that she was informed that the sale of her furnishings, less the cost of trucking, advertising and commissions would probably net around $20,000, a difference of $78,000 from the stocks she had given up. Adding insult to injury, in the first year after the divorce, the value of the stock had increased another $5,000! And what of the expensive window treatments? They were sold with the house for a nominal price of $250.

Carol was busy disposing of her mother?s estate. The farmhouse, whose foundations dated from the late 1700s, had generations of furniture and furnishings from various periods and in varied condition. After a local antique dealer offered her $400 for a carved and painted mannequin head, she sought a second opinion. To Carol, the carved head, a remnant of her great grandfather?s milliners? shop, was nothing more than a target on which to throw hats ? a challenging game she played with her brother as a youngster. The fact that anyone wanted to give her money for it astounded her. This made her realize that, while she knew the personal history of her mother?s things, she had no idea of their fair market value. The carved head was offered for sale at auction with a preauction estimate of $5,000 to $7,000. On the day of the auction, as she sat in the audience, the ?Outstanding Primitive Americana? artifact was put on the block. The higher the bidding went, the redder her face became until the bidding topped $10,000. From that point on, she started to pale. By the time the bidding stopped at $13,000, Carol had her head on her knees to keep from fainting.

Susan was an aspiring art collector. While on vacation in a warm southern climate, she decided to go gallery hopping. A painting by a noted 19th century landscape artist caught her eye. It was fairly expensive, but Susan was not overly concerned since she had just come into a small inheritance that was gathering nominal interest in a money market fund. Besides, she had always heard that art was a great investment, and it was a painting by a well-known artist. After heavy negotiations, she talked the price down from $28,000 to $22,900. Less than a month later, she sought an appraisal for her insurance policy. It only took a matter of minutes for the appraiser to confirm that this very painting had only recently been purchased at public auction for a small fraction of the retail price. While this artist?s work had increased in value over the past decade, the chances of her recouping her initial investment in the foreseeable future were slim.

In situations like these, consulting with a qualified property appraiser could result in significant earnings or savings. In fact, the cost to hire an appraiser is usually nominal compared to the return.

Most people have viewed at least one episode of the PBS series ?The Antiques Roadshow.? The British edition of this show is the longest-airing program in the history of television and shows no signs of slowing down. They are always quick to interview the mirthful owners, who are only too happy to tell you how they had purchased this $20,000 item months before at a local tag sale for a mere five dollars. The program then cuts to show the antique selling at auction for twice the estimated value. What they don?t show you is the interview with the poor fellow who decided to clear out the attic and hold a yard sale, selling the featured antique for a mere five dollars because he thought it was ?incredibly ugly,? and it belonged to his mother-in-law who everyone knew was a woman of little substance and less taste.

The need for appraisers is similar to that of auction houses. The business is driven by the three Ds ? divorce, death, and debt ? although I also like to include Decorating, which can be just as traumatic and has actually been known to lead to one or more of the traditional three ?Ds?. The phenomena of eBay and ?The Antiques Roadshow? have added to the general interest in collectibles and their valuation. For personal property appraisers, there are also issues of insurance, IRS charitable contributions, estate planning, equitable distribution of property in estates or divorce proceedings, bankruptcy, and buildup or liquidation of a collection. Most of these situations are facts of life, and, as such, will probably crop up at some point in your future, making it necessary for you to use the services of a personal property appraiser. As illustrated above, it can be in your best financial interest to seek out a qualified appraiser when confronted with issues of value.

Of course, you should hire an appraiser who has expertise in the particular item that needs to be valued. An appraiser who professes an intimate knowledge of Georgian silver, Japanese inro boxes and also your farm equipment, baseball cards, gun collection and heirloom jewelry is deluding him/herself, which is O.K. as long as you are not deluded in the process. Expertise in a certain field is not the only requirement for a good appraiser; to have a extensive knowledge of an antique is only part of the equation. A qualified appraiser must also have a firm knowledge of the different methodology, research and market trends. Professional appraisers charge fees based on time and are not contingent on the value of the articles being appraised. To do otherwise could be seen as a conflict of interest. Ultimately, valuation is dependent on purpose. An insurance/replacement valuation of your antique chair is typically higher than a fair market valuation for resale purposes.

But what makes for a qualified appraiser? Ultimately, the significance that the government, the court system or you put on an appraisal is dependent on the professional qualifications of the appraiser and the thoroughness of the appraisal document. Unlike real estate appraisers, lawyers and CPAs who must test on a state or national government level for certification, personal property appraisers, or those persons who appraise everything except real estate property, are not licensed or regulated by the state. Literally, anyone can call himself or herself an appraiser. To date, there is no state or federal certification for personal property appraisers. Certification is solely through the various appraisal organizations, and therefore the quality of certification is only as good as the organization from which it came. And, of course, not all appraisal organizations are created equal.

Although there is no government certification, an appraiser who is serious and seeks to aspire to professional standards can not only join a professional organization but also test for the Uniform Standards of Professional Appraisal Practice (USPAP). Developed by the Appraisal Foundation, which is a federally funded organization, USPAP is authorized by Congress as the source for appraisal standards and appraiser qualifications. USPAP was developed in 1986-1987 in response to difficulties arising out of the savings and loan crisis in which collateral for loans was incompetently appraised due to unregulated standards in the industry. Standards were developed by the Ad Hoc Committee on Uniform Standards and copyrighted in 1987 by the Appraisal Foundation. These standards have been adopted by major professional appraisal organizations in North America and have become recognized as the generally accepted standards of appraisal practices.

What is the value of a qualified appraiser? Well, for Mary, had she or her lawyer hired one as a matter of protocol, it could have saved her in excess of $80,000. For Carol, who sought the opinion of a qualified appraiser, it meant a gain of over $12,000 and a brand new car in her immediate future instead of the five-year-old truck she was going to buy. Susan would have benefited from being an ?educated consumer? and found a better painting to ?invest? in. Finally, for any current tag sale entrepreneurs, it can save you the humiliation of watching someone on a future episode of ?The Antiques Roadshow? waxing eloquently over your former junk. And you can?t put a price on that.


Frances Redell-White of Appraisal and Consultant Services is a practicing personal property appraiser in the Tampa Bay area. She holds two degrees including a masterís degree in Curatorial Studies from New York University, has USPAP certification and is a Certified Member of the Appraisers Association of America, Inc.

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