Do You Need an Appraisor
Appraise or not to appraise that is the question? Most everyone has a general idea about the worth of their house or real estate; however, few know the value of the personal property that adorns a home. Everything from grandmother's Bristol vase to dad's four poster bed that he lovingly had packed and trucked from his parent's home in upper Michigan to Arizona has a value. A value that should be known if a crisis occurs and/or an estate needs to be equitably distributed to family members becomes a necessity.
Most people have no idea the value of the items they own. Emotional value distorts true value. Aunt Violet's 1920's Cameo that has been passed to her grand niece will hold a greater value to the family than its actual fair market value. Decorative art that lines the living room wall appears to have great value, and therefore, the owner insures them for the value the family thinks it is worth. A poor decision has been made. Why pay unnecessary money to an insurance company based on intrinsic value instead of actual value?
A savvy owner knows there are three basic ways to value an item: retail replacement value, fair market value, and liquidation value. All three will give the item a different amount. Let's say the grandfather clock that has been proudly standing in the corner of the grand entry of the family's estate for several generations needs to be assessed. The cherry case was made in 1809 in Allentown, Pennsylvania, and its works are from London. The clock is in excellent condition and is in working order. It must be appraised.
The intrinsic and emotional value of the clock is priceless; however, there is a value. First, the family wants to insure the clock for retail replacement. Such a item would be extremely difficult to replace and would take a great deal of time, energy and resources to find a like clock. Since there is a history and the original bill of sale is still attached to the clock, and we know where it has been for the last 200 years, the heirloom has providence value as well. Insurance replacement: $36,000.
However, a member of the family believes the clock should be sold, and the money from its sale be divided among the heirs. We now need to look at the clock at fair market value. Since it will most likely be sold locally, a local retail value must be established. The family could receive about $15,000 if they sold the clock out right. But another family member wants to donate it and needs to use the appraised fair market price to offset the estate. A certified report is a necessity for the tax man in order to validate and establish the retail value of the clock for the necessary documentation required.
A final member of the family wants to have a quick liquidation of the entire estate including the clock. It needs to be gone. Since liquidation is the bottom of the value, the clock would most likely fetch a $6000 amount.
Hence the senerio has been played. To appraise or not to appraise is no longer a question, but a necessity.