Mitigate risk by choosing a qualified appraiser

Risk is always involved when there's a question about the value of your personal property – including fine art and collectibles. There may be risks such as selling at a low price or paying too much; being under or over insured; not getting your fair share when dividing property; or incurring tax penalties or being audited.

Choosing a professional appraiser with experience, expertise, and education in the type of personal property being appraised is imperative in these situations. By providing a written opinion of value upon which you can base your financial decisions, an appraiser can help you manage these and other such risks.

Because the personal property appraisal industry is unregulated, it is incumbent upon the client to choose a qualified appraiser and do their due diligence before engaging an appraiser. A professional art appraiser is trained to value fine art assets correctly for their specific valuation purpose. Such as; insurance coverage or claims, equitable distribution of assets, establishing a value of an object to be used as collateral for a loan, situations with tax consequences include donating a valuable object to a museum, making a gift, transferring a work or collection to a Trust, or filing estate taxes.

Here are the qualities you should look for in a qualified fine art appraiser:

• Has formal education in appraisal theory, principles, procedures, ethics, and law (typically from the Appraisal Foundation’s courses or a professional appraisal organization).

• Has professional credentials based on testing and successful course completion of appraisal education.

• Is an expert in fine art, not only appraising, they should have an academic background in art history or extensive art market experience – a thorough knowledge and expertise in the objects they are appraising is a must.

• Takes continuing education courses to stay up to date on the latest appraisal standards as well as market changes and trends.

• Adheres to a professional code of ethics.

Engaging a professional appraiser involves signing a formal letter of engagement that outlines exactly what you can expect from the final report. A professional appraisal should not be a few pages long it should be a rather lengthy well-researched and well-written report. An appraisal report is a self-contained legal document. Therefore, the recipient (or intended user) of the report should clearly understand the value(s) and the conclusions contained within the report.

A comprehensive and credible appraisal report should consist of the following essential elements:

• A cover document explaining in detail what type of value is being sought, its definition (e.g., fair market or replacement value), and the intended use of the appraisal.

• The methodology and resources relied upon, including market analysis and market(s) selected.

• The date(s) and location of inspection, and the effective date of value(s).

• A signed certification that states the appraiser is not biased and does not have a present or prospective interest in the property.

• A complete and accurate description of the objects appraised written in such a manner that it can be identified without photos (may still include photos).

• The data and analysis required to support the opinion of value must be effectively communicated. A report body with justifications, market analyses and comparable artworks in a reasoned justification for the appraised values (this may only be necessary for objects appraised at a certain value threshold and unnecessary for low value items).

• The appraiser’s qualifications and signature.

There is no standard appraisal report format or style. However, all credible reports, regardless of the type of appraisal report they use, must provide the appropriate information for the intended user to understand the conclusions and to be credible.

A professional appraiser should always prepare an appraisal report in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP), regardless of the intended use of the report. Appraisers are trained to avert any attempts to influence their opinions by remaining independent, impartial and unbiased. An appraiser’s responsibility for composing the analyses, opinions and conclusions contained in the appraisal makes his or her independence a critical factor in enhancing the public’s trust in such assessments. USPAP abiding appraisers must maintain this level of independence, perform assignments without bias, and include such a statement in the appraisal certification.

An appraiser who adheres to these methodology and ethical standards and meets educational and experience requirements may even be required by law in certain instances.

If you would never recommend an uncredentialed doctor or lawyer, why would you consider an uncredentialed personal property appraiser?