Monday, February 27, 2017

Getting an Appraisal

QUESTION:  I have inherited a tall case clock and am looking for some guidance. The clock is said to be at least from the time of the Revolutionary War. There’s a slit in the back that I’m told is from a soldier putting a sword through. I’m trying to get a value for shipping and also for fairness for other family members in the event it’s really valuable. Can you help me?

ANSWER: Contrary to popular opinion, not just anyone can valuate an antique or collectible. Asking someone how much an object is worth is like asking if it will rain tomorrow. The only way to know what an antique, especially a potentially valuable one such as this clock, is worth is by having it “appraised” by a professional appraiser. And only a professional appraisal is legally binding when it comes to insurance claims or inheritances.

Exactly what is an appraisal? An appraisal is the paid opinion of an expert on the value of an object based on known facts. In the case of antiques and collectibles, known facts include records from more than one sale at more than one auction, the latest published price guides, and personal experience gained from buying and selling similar items many years.

While a verbal appraisal may offer an indication of how much an item is worth, a professional written one is the only one legally recognized by insurance companies and the courts. It must be based on fact and able to stand challenges in court. However, written appraisals, even for one item, can take hours to prepare and are expensive, but are absolutely necessary to prove an item’s worth.

A verbal appraisal, on the other hand, is an informal one. Usually, the person giving the appraisal spends no time researching auction records and price guides. Therefore, a verbal appraisal is an opinion based on first hand knowledge.

Formal appraisals fall into two categories—replacement and fair market value. Insurance companies require the former, while estate valuations require the latter.

Replacement value is generally defined as the price at which an object would be available on the retail market. In other words, what an antique dealer would charge for a particular item.

When you try to insure a collection, the insurance company wants to know how much it will cost to replace it. The same applies for a single piece of furniture. The insurance company won’t accept a verbal appraisal as the basis of settling a claim. Instead, they require a written appraisal with proof of replacement cost.

Fair market value, on the other hand, is best described as "the price that property would sell for on the open market between a willing buyer and willing seller, with neither being required to act, and both parties having reasonable knowledge of the reasonable knowledge of the relevant facts.

But whatever the appraised value, an object will bring only a percentage of its replacement value when offered for sale—generally between 40 and 60 percent below replacement cost. Items that sell extremely slow will sell for only about 30 percent of replacement value, while those that sell fast may bring 80 to 90 percent of replacement value.

With so many auction sites online these days, it’s easy to pull one up and do a search for a particular antique or collectible to see what it may be selling for. Most people use eBay. Unfortunately, the amounts listed on eBay may not reflect an object’s true value. If the object is listed on an auction site, then, as with live auctions, the price could go way above the object’s current value due to competition between bidders. If someone really wants an antique or collectible, they may stop at no amount of money to obtain it.

Too many homeowners use this as an easy way to price items in a yard or garage sale. Flea marketers do the same. This is why so many items that are actually worth much less are selling for higher prices today at these venues.

Prices of objects at antique shows usually sell for the amount of their value or a little less. However, some sell for what the dealer perceives to be the value of the object. High-end dealers selling objects for four to six figures do their research and know their market. Those selling at middle-market shows, sometimes do research about an item, but, more often than not, just guess at an item’s value and price it for what they think the market will bear.

To find a professional antiques appraiser near you, contact the International Society of Appraisers

For more information, read my article on appraisals in The Antiques Almanac.

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