ESTATE APPRAISAL PROCESS
First, your appraiser will interview you regarding the reason you require an estate appraisal. Many people consult an appraiser saying, “I just want to know what it is worth.” The estate appraiser will explain the many levels of “worth” or value, such as what an item of fine art would be worth if you were going to sell it, and even then, where you are considering selling it. Your appraiser must know who the intended users are and the intended use of the appraisal, in order to correctly develop an appropriate estate appraisal. The Scope of Work, which is the type and extent of research and analyses required to prepare the appraisal, is determined by the appraiser at this time. In each appraisal, an appraiser must identify the problem to be solved, determine and perform the scope of work necessary to develop credible assignment results, and disclose the scope of work in the report.
The client and estate appraiser will schedule a date for an on-site estate appraisal inspection. The client may provide the appraiser with information relevant to the objects being appraised. On-site, each object is inspected, other information is gathered and photographs taken to fully document the condition and appearance of the object.After data collection and analysis is complete, the appraiser determines the best approach to value each object. The three traditional approaches to value are the cost approach, the sales comparison approach, and the income approach.
The cost approach reports the present cost to reproduce the item or create a property with similar utility and marketability. This approach is often used when appraising items that are still in production or can be reproduced using contemporary artists or makers.The sales comparison approach utilizes recent sales of similar items, and is accomplished by researching all relevant and available sales records and asking prices. The appraiser analyzes comparable sale characteristics that include age of the object, material or medium, style, maker, manufacturer, artist, quality, rarity, exhibition and publication history, and the market in which they were sold. Careful research and analysis is required for the appraiser to reach a credible value conclusion.
The income approach produces an opinion of the present value of anticipated monetary benefits for income producing objects such as fine or decorative art objects that are being leased, or are part of a rental loan collection.The appraiser develops the opinion of value, prepares the report, and communicates or delivers the report to the client. The supporting information may or may not be included in the actual appraisal report; however, it must be contained in the estate appraiser’s work file.