What Does a Personal Property Appraiser Do?

WHAT DOES A PERSONAL PROPERTY APPRAISER DO?

Congress passed a law in August of 2006 called the Pension Protection Act, which redefines the federal definition of “qualified appraiser” and “qualified appraisal” for all appraisals performed for the IRS. In the past, a “qualified appraiser” simply had to hold himself out to the public as an appraiser or perform appraisals on a regular basis. The new definition requires one who has earned an appraisal designation from a recognized appraisal organization, who regularly performs and is paid for appraisals and can demonstrate verifiable education and experience in valuing the type of property appraised. An appraisal document used to be considered qualified as long as it included a description of the method of valuation used to determine fair market value. In the new definition, an appraisal must be prepared by a qualified appraiser, and must be prepared in accordance with generally accepted appraisal standards. These rigorous standards, contained in a 232 page document subject to revision every two years, are known to appraisers as Uniform Standards of Professional Appraisal Practice (USPAP). All professional appraisers must pass an examination on USPAP every five years and certify in every report that they adhere to USPAP regulations in their practice. What does this mean for you? If you need an appraisal for charitable contribution, estate tax, estate settlement, income tax or any other reason for the IRS, and you don’t want an outright risk that it will be questioned or audited, then you need to use a qualified appraiser and submit a qualified document.

There are two distinctly separate knowledge bases that a personal property appraiser must utilize. One is connoisseurship, and the other is appraisal methodology. Connoisseurship is expert knowledge and training in a particular field, such as antiques, fine art, wine or food. It can be a broad category like “American Paintings” or a specialty field like “18th Century French Porcelain.” This expertise comes from study, education, knowledge of and familiarity with objects in a given specialty area. Many individuals, collectors, dealers, and gallery owners are connoisseurs of a particular subject specialty and may know more about the detail, quality and importance of their chosen items than any other professional “expert.”

When it comes to appraisal though, connoisseurship is only half the battle. The other crucial part of the equation is the proper understanding and application of appraisal theory. There are different types of value for different purposes. There is consideration of the most appropriate market for an item depending on the appraisal assignment. Laws differ from state to state and the appraisal has to adhere to your state’s law. Someone who is not trained in appraisal methodology will not know to consider all of these factors. A gallery is likely to quote you a retail price for a painting, no matter if you need a value for charitable contribution. An auction house sales result is not likely to be the appropriate value for insurance coverage. Other types of incorrect values for appraisal assignments: insurance replacement value is not the proper value for federal estate tax purposes. Fair market value is not the proper value for bankruptcy appraisals. Liquidation value is not appropriate for insurance replacement riders. A consultation for disposition requires use of marketable cash value, not fair market value. Insurance claim settlement values will vary according to the terms of the individual insurance contract. These and other types of basic appraisal errors can be avoided if you employ the services of a qualified appraiser.

What does an appraiser actually do at your house? Onsite, they witness, identify, and examine the items. This means measuring, photographing, inspecting and describing the objects and verifying that what is being appraised actually exists. Then the offsite research and market data analysis is performed and a report is written. It can take upwards of four to six weeks or more to get a report, depending on a number of variable factors. Research is essential to the process and an appraisal is not considered accurate unless formal research is undertaken. Even on the Antiques Roadshow, research is conducted behind the scenes or in advance of taping.

What does a professional appraisal report look like? The body of the report must include a complete description of each item (encompassing condition, age, style, form, dimensions, maker's marks, inscriptions, materials, and other information), photographs, provenance information, other documentation, and the facts on which the appraisal were based, such as the approach to value utilized and sales and market analysis, among other points. The items are usually described in the context of the general market, and there is also typically a section that describes the particular conditions of the assignment. In all, there are seventeen official parts to a complete professional appraisal document. USPAP also requires a signed certification that assures the appraiser has adhered to the competency, ethics, confidentiality, and record keeping standards set forth by the Appraisal Foundation.

There are many more connoisseurs out there than there are professional appraisers. It takes years of education and training, years of experience and professional development, and strict adherence to ethical standards to be accepted into a professional appraisal society as an accredited member. Not everyone is qualified for the job.

Rebecca Markman, ISA CAPP, AM is a certified personal property appraiser specializing in 18th, 19th and 20th century American, British and European antique furniture, tableware, silver, glass, porcelain, pottery and paintings.