Estate or Item Appraisal - When To Get One?
With just about everything now available on the internet, most people can typically do some novice research about an item in their house. Going to sites like eBay and Facebook Marketplace is a good starting place. However, there are certain conditions in which an estate appraisal is needed or an expert appraisal is required.
When to get an appraisal for personal property (also called tangible personal property, TPP).
1. For probate or other court ordered reasons, estate settlements or to settle family disputes regarding fair market values for monetary distribution.
2. Divorce settlements so estates can be divided up equally according to fair market values for monetary distribution.
3. Insurance coverage, or additional coverage or to update a current insurance policy if an appraisal is older than two years.
4. If you are donating more than $5,000 to a charity, required by the IRS.
Appraisals are not all equal. There are three appraisal approaches.
1. Fair Market Value method (FMV). FMV uses "sales" comparisons and considers what an identical item, or a comparable item, has "sold" for at a mutual agreed price. Examples are at an auction, Facebook Marketplace, Craigslist, or at a retail shop. Typically, local sold values are used, but regional sold values can be used if no local comps can be found. Sold values two years or newer are considered. Sold values older than two years are subject to market volatility as market demands can fluctuate. Item pictures, measurements, descriptions, condition and age are included in a FMV appraisal.
2. Insurance coverage. For insurance coverage, the "cost" comparison identifies what the price of an identical or comparable item is "for sale" for in the current market, plus consideration for a cost increase which can be 20% - 30%. This is the highest value for an item and does not represent the actual value the item would sell for at auction or at an estate sale. Item pictures, measurements, descriptions, condition and age are included in an insurance appraisal.
3. Quick sale. Quick sale, otherwise called liquidation values, is the expected "sold" value of an item or items that are included in an estate sale. A full appraisal is not necessary to access estate sale values, a home inventory report can achieve quick sale value and may not require item pictures, measurements, descriptions, condition and age.
Expert appraisals.
1. General appraisers are educated and skilled to appraise contents found in most households like furniture, art, collectibles, and common household goods. However, an expert appraisal may be necessary for unique or very rare items, like:
- Diamonds, Rolex watches, minerals, and gems
- Fire arms
- Fine art
- Stamps and coins
- Steinway & other high-end musical instruments
- Rugs
- Signature authentication
Appraisal costs.
1. General appraisals on average range between $90 - $150 per hour. They may also charge mileage and hotel fees, if outside their general area.
2. Expert appraisals on average range between $200 - $250 per hour. They may also charge mileage and hotel fees, if outside their general area. If an expert appraisal is needed, as part of the general appraisal, your appraiser will arrange on your behalf.
Standards and ethics.
1. All appraisers must follow the USPAP stands for Uniform Standards of Professional Appraisal Practice. The IRS, courts, and attorneys recognize these standards. They are set forth and are uniform for analysis and reports in the United States. There is no regulatory or certification requirement to be an appraiser of tangible person property. If you need other assets, like your house appraised, that will require a licensed appraiser required by your state or other regulatory bodies.
2. It is a conflict of interest and unethical for the appraiser to also sell or buy the items they are appraising. It goes against the USPAP standards. If the end goal is the personal property is to be sold, then both an appraiser and an estate liquidator may need to be hired.