Local Columns
Do you need an appraisal?
By Julianne Kane
Editor's note: This column represents the third in our new monthly series on an array of issues of importance to area seniors. Each entry is prepared by residents, nonprofit organizations and specialists in a variety of fields exclusively for readers of The Independent.A lot of people need an appraisal and don't know it. So the first thing to decide is if you need one in the first place. You will also need to know what kind of an appraisal you need, and what to look for in an appraisal. It is very important to know who and what you should stay away from when you are downsizing, for instance.
My own grandmother was taken advantage of many years ago when she got ready to liquidate her estate. If she had known what the true value of her things were, she would have been better able to make a knowledgeable decision at the time of sale. This is a very common mistake that people make, even today. I was called to help a lady who had already been approached by an antiques person. The offer she was given was $500 for everything in her basement. After my walk through, I found a set of dishes that was alone worth $500! This was not even taking into consideration the remaining items of this very full basement. In this woman's case, she would have lost a great deal if she had not taken the time to get an appraisal.
Not long ago I had the pleasure of helping another lady get ready for her yard sale. I went to her house and spent one hour helping her price her items. She was so happy when she called me the next day and told me she made $3,000 at her yard sale.
I got a call from a woman last summer that had just purchased a painting for $5 at a yard sale and she wanted to know if it was worth anything. After my inspection she found that she had a painting valued at $5000. This was sad for the person that sold it so cheap. Don't let this happen to you.
Let's get back to the question, "Do you need an appraisal?" Some of the reasons for an appraisal are obtaining insurance; in the event of loss of property; division of assets such as in the case of divorce and bankruptcy; liquidation of assets because of downsizing, death and tax settlement for state and federal taxes; charitable donations; buying or selling items, business or home, or the best reason - to satisfy a desire to know the value.
If any of the above applies to you, then you will need an appraisal. You will also need to know what kind of an appraisal you will need. An appraiser will know what kind you need, but let's take a look at the real-life examples I provided in order to help you understand the kinds of appraisals and the reason for each kind. In the case of the lady with the yard sale, she did not need a written appraisal for each item; she just needed help in pricing her items. In the case of the woman with the painting, she was getting ready to insure it, so a full appraisal with photos was needed.
Your appraiser should know which way items are to be appraised, but it is good for you to know how and why different appraisals are used.
1. Fair Market Value. This is the most commonly used appraisal type. It is defined by the price that the item would sell for in the open market.
2. Replacement Value. This appraisal is for the cost to replace the item. This would be used most commonly in insurance appraisals.
3. Liquidation Value. This type of appraisal is for a forced sale. It is normally conducted when there is an assumption that an item needs to be sold in the near future, as in the case of divorce or bankruptcy.
The last thing you should consider is making sure that your appraiser is licensed and has had the training needed. Make sure your report has a value, is signed and dated, has a definition of value appropriate to the type of appraisal and that there is a statement from the appraiser that he or she has no financial interest in the property. Never work with someone who has personal interest in buying your items. They will not be working for you, but for themselves.
So if you are thinking about selling something or need to insure a piece, you should take the time to investigate the option of an appraisal. The difference between your value and a professional's value could mean cash in your wallet; it's worth knowing what it's worth!
Julianne Kane is a CPPA/RA with The Front Porch Appraisal Services.
