Most people are familiar with home appraisals. Quite frankly, when compared to an antique appraisal, the process is pretty cut and dried.
Calculating the square footage of the home, type of construction, value of the lot and then comparing the home against others in the area, the appraiser will set a value that ultimately sets a ball park value for the selling price of the home.
But with antiques, many people assume, like a home appraisal, that the antique appraisal sets the price for that item. But in reality, the appraised value of an antique depends on the type of appraisal that was done.
For example, lets say you inherit a 50 piece set of Baltimore made Stieff Co. rose pattern sterling silver flateware your parents had bought in 1940 for $150. Updating your insurance, you want an idea of what it would cost in today's dollars to replace the set.
This is the most common appraisal known as the insurance or replacement value appraisal. It's done to establish what you could replace the silver for in today's dollars - not what you could sell the flatware for. The appraiser's motive is out to establish a replacement value to find the same or like item in a retail marketplace. And in today's marketplace, Baltimore Stieff Silver is selling for about $50 per piece when ordered through the Stieff Catalog. So the appraised value is $2,500 for the set, certainly the highest value you could place on the silver.
Now let's say the IRS comes knocking at your door, claiming that when you settled the estate, the silver was not included. With the IRS breathing down your neck, you knew the original 1940 receipt for $150 would not be acceptable by them and that $2500 for second-hand silver, not brand new, was too high.
What you need is an estate appraisal where the appraiser is trying to establish a fair market value based on wholesale, retail and second hand information such as silver reference books, price guides and jewelry stores.
A smart appraiser will not limit himself geographically. He knows that Stieff silver is more valuable in the Baltimore area than anywhere else. So, for estate purposes, he could establish a fair market value gleaned from research taken from other markets where the value is lower.
Illegal? No, because if you moved to these areas, the fair market value would be much lower - the appraiser, and fortunately the IRS, are looking for the average. So the appraiser values each fork, knife and spoon for about $20 apiece, far less than the retail replacement value.
All of a sudden, a year after you've remarried, your husband want to get rid of the silver. Hates it! Here we need a liquidation appraisal. That is the value of the silver if sold under duress and without due process. As each utensil weighs 3 oz., the appraiser multiplies 3 times $2, the value of silver per ounce today. This liquidation value, known in the pawn and metal business as the melt value, is now $6 each or $300 for the set.
Which appraisal is the appropriate selling price? The original cost of $150? The insurance value of $2,500? The estate value of $1000? The liquidation value of $300? I've found that, with diligence, a seller should be able to find a buyer to pay 40-60% of the retail value for most and antique and collectable. Estate appraisals, when done by an appraiser with a keen eye on the marketplace, consistently establish reliable guidelines when it comes to selling.
. . . . Written by John Harris, Owner of Caplans Auction
. . . . Published by Zip Publishing, Inc