Personal Property Appraising 101: It’s All About Context

“I don’t need an appraisal…I just want to know what it’s worth.”

As a jewelry appraiser, I hear some version of this almost every week.

Most people’s primary experience with value is as a buyer, usually at a retail establishment, and they think of value in terms of purchase prices. As we all tend to believe that we are savvy shoppers, we assume that the price we paid for something is equivalent to its value at the least.  Or better yet, maybe we got a bargain and the item is actually “worth” much more.

So when my customers say, “I just want to know what it is worth”, they usually mean what it sells for new in the store.  But personal property appraising is not always that simple.

If they’re looking to insure their personal property and need to know what it would cost to replace, this approach may make sense. However, often that is not my customers’ main motivation for finding the value of their property.

Most of the time, they are considering selling their property or trading it in.  Sometimes, people come to me for an appraisal for an estate tax return or to divide the property among potential heirs. If the items are new and in good condition, the primary market (new in a retail store) while helpful may not be the most appropriate, because when we are looking at fair market value, we look to the secondary market (what something sells for at auction or an estate sale).

One major draw to the re-sale market is a better price than one would expect to pay for something new.

So when I hear, “I just need to know what it is worth”, for me that statement just signifies the beginning of the conversation – not the extent of the assignment.

Understanding the Context

We begin by explaining that while it might seem a little personal, we need to understand the context of the potential or hypothetical transaction that will take place.

A consumer wanting to sell their property wants to know how much they can reasonably ask for.  Well, that too, is context-driven.

Some common questions I ask include:

1. Do you want to sell it yourself, directly to another consumer?

If yes, are you willing to do the work, post it online, and take the time to meet with the buyer?

2. How soon do you need the money?

3. How concerned are you about security of your property, your person, or the money that you will get paid?

People know that if they sell their house or car directly to another consumer they can bypass the seller’s fee.  Well, it is pretty much the same with other personal property as well, so it may appeal to some people to sell their jewelry directly to the buyer. These questions become important as the asking price is influenced by the amount of effort the seller is willing to put in and how confident they feel about the transaction.

In this case, context is just as important in determining the value of the property as the property itself. Similarly, choosing the right appraiser plays an important role in understanding the value of your personal property.

What Do You Have to Do to Become an Appraiser?

Essentially, there are two tracks of study:

The first field of study is the product itself: art, antiques, jewelry.

The study can be formal, as in college, trade school, or even correspondence programs. It can also be informal, such as work experience and training under a mentor.

Either way, a degree of expertise needs to be developed and demonstrated.

The second track is a formal program of appraisal methodology.  This program includes an understanding of the many levels of context for the various transactions that might be applicable.

Common questions to determine context include: Is the appraisal being made to confirm a new purchase (i.e. have the value elements been accurately described or delivered)? Is the item of the quality that the seller claimed?  Does the value support the purchase price?

Regardless of the context, reviewing the appropriate market for comparable items and seeing where the majority of the selling prices cluster always determine value. Transactions that are clearly outside of the cluster are discarded, such as abnormally high or low prices.

The next time you need your personal property appraised, whether it’s jewelry or antiques, be sure to keep in mind that much more goes into determining it’s value than the simple question, “What is it worth?” Be sure to find an appraiser who understands context as well as your property and the appropriate markets.

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