My friend Jennifer, a Port Shopping Ambassador on a cruise ship, related the following story: a passenger purchased an antique clock from a store in Amsterdam, Holland for around $3,000 USD. The following day, the passenger got a serious case of buyer’s remorse, and sought to return the clock on the basis that the item was misrepresented and overpriced.
To prove the item was overpriced, she took the item to a second antique shop to ask the shopkeeper to appraise the item. The appraisal offered was nowhere near what she paid for the item. In fact, the second shopkeeper told her that she had over-paid, and that she should return the item and then come back, because he could offer her a higher quality item at a lower price.
I’m sure that this situation is as transparent to you as it was to me: the second shopkeeper was trying to make a sale at the expense of the first shopkeeper. That this sales tactic could work is rooted in the passenger’s ignorance of the difference between an appraisal and an opinion of value. A consumer’s ignorance of this difference can result in lost insurance claims, missed opportunities, and much aggravation. Knowing the difference between an appraisal and an opinion of value is a great advantage to a consumer.
An “opinion of value” is a personal opinion offered on the basis of experience and expertise. Such opinions may or may not be valid, depending on the qualifications and ethics of the person offering the opinion. The persons offering such opinions are not required to be independent, impartial or objective. They can, and often do, have conflicts of interest and hidden agendas.
An opinion of value has no requirements for documentation or evidence. Those offering an opinion of value are not held to the same legal and ethical standards as a certified appraiser. For example, let’s say that you took a Picasso etching to an art dealer who gave you his opinion of its value, called the opinion an appraisal, and then offered to buy the etching for his “appraised” value. The dealer would have offered you no evidence to back up his claim of value, and clearly had a conflict of interest. His opinion of value is worthless.
The value offered in a certified appraisal, on the other hand, has been researched and evidence is offered to support the value claimed. Most often, evidence is offered in the form of comparable sales; that is, what items like yours have actually sold for recently in your market.
In addition, a certified appraisal follows the format of the Uniform Standards of Professional Appraisal Practice (USPAP) which has been authorized by Congress as the source of appraisal standards and appraiser qualifications. USPAP is generally recognized by the courts and by the IRS. A USPAP-compliant appraisal clearly establishes the details of the appraisal, the appraiser, the intent of the report, assumptions, limiting conditions, and all evidence supporting the conclusion. When done, the appraiser must sign and certify the report. Such a report will stand up to legal and IRS scrutiny and the value offered can be trusted.
Now that I’ve established what an appraisal is and isn’t, let me throw a wrench in the works. If you called five appraisers to appraise the same item, you may get five different appraised values for the item.
How can that be? An appraiser must make certain assumptions and adjustments in arriving at the value of your item. Unless sales evidence can be found for an item exactly like yours, adjustments will have to be made to compensate for differences in age and condition. Making adjustments is more art than science, and ultimately depends on the skill and experience of the appraiser.
Also, the intent of an appraisal will have a bearing on the value. Appraisals for insurance replacement, estate liquidation, fair market value and gift value will all yield different numbers.
If the value of your tangible personal property is important for insurance, estate, tax, divorce, or other legal consideration, please don’t rely on an opinion of value to make your claim. Call a certified personal property appraiser.