The Appraisal Process


Clients seek appraisals for a variety of reasons: They need an appraisal for insurance coverage, before or after a loss. They are loaning money against their investment and need a statement of present value. They are collectors seeking a valued inventory for their personal reference. They are seeking to sell an item themselves and need an appraisal to validate their asking price. They wish to make a charitable contribution and need an appraisal for IRS reporting. (Click here for IRS procedural information regarding income, estate and gift tax purposes.)


Whenever there is a question regarding the value of your personal property, there's also a risk involved; selling too low or of paying too much. being under or over insured, not getting your fair share in a division of property, incurring tax penalties or being audited, etc. A professional appraiser helps you manage these and other such risks by providing a written opinion of value upon which you can base your financial decisions.

Preparing for Your Appraisal Call


Ask yourself these preliminary questions and have them answered before you contact an appraiser.


How do I intend to use the appraisal?

Are you looking to insure, sell/buy, donate, etc. Understand your needs or be ready to explain your situation to your appraiser.


Who will use the appraisal?

Will you be sharing the report with your insurance adjuster, the IRS, your accountant, a family member, etc. Have their contact information available to you.


When do I need my report by?

Tell your appraiser if the report is under any time constraints. The appraiser will know right away if she can meet your expectations.




Questions to Ask Any Appraiser



>>>> Have you successfully completed the USPAP qualification or requalification course within the past 2 years?


This may be the most important question you ask. USPAP or Universal Standards of Professional Appraisal Practice is a comprehensive set of standards that provide the appraiser with a guideline for performing professional appraisals, appraisal reviews, and in the case of real property, consulting assignments. In addition, USPAP provides the public with a gauge to measure the performance and capability of the professional appraiser -- not only in developing the appraisal, doing the review or consulting assignment, but also in reporting the results of these activities. USPAP is an accepted international standard for professional appraisers. Without this basic qualification being met by your appraiser, your appraisal may not reflect an unbiased valuation, meet ethical standards within the appraisal community, protect your right to confidentiality, hold weight in a court of law or be accepted by the IRS.



>>>> What qualifies you to appraise my property?

A qualified appraiser has formal education in appraisal theory, principles, procedures, ethics, and law. The appraiser should be up to date on the latest appraisal standards, including USPAP. Continuing education and testing are the only ways to ensure this competence.


The appraiser you hire should be familiar with the type of property you want appraised and know how to value it correctly. Expertise on a particular type of property is not enough if the "expert" does not know how to evaluate an item for it's appropriate worth. Without appraisal training, these "experts" have no way of understanding the complicated variety of marketplace definitions that are used to determine appropriate values for appropriate uses. For example, a museum curator may be able to authenticate a work of art, or a jeweler may be able to determine the identity of a gemstone, but neither may be able to value those items correctly unless they follow appropriate appraisal principles and procedures.

>>>> Do all appraisers have similar qualifications?

No! In most states, anyone can claim to be a personal property appraiser whether they have had formal training or not. Until legislation is passed to protect the public from the unqualified appraiser, the burden is on the consumer to evaluate an appraiser's credentials.

It is important to ask the prospective appraiser what type of formal appraisal education training he or she has received. Obtaining a copy of the appraiser's professional profile or resume can help you evaluate the appraiser's credentials. In most cases, this information is offered on the appraiser's professional or business website.


>>>> Do you belong to an appraisal society that tests its members?

There are many appraisal organizations, but only a few require members to take courses and pass tests before being acknowledged as "accredited" members. ISA is such an organization. Membership in an appraisal association is important because it shows that the appraiser is involved with the profession, has peer recognition, has access to updated information, and is subject to a professional code of ethics and conduct.

>>>> Have you been tested? Do you take continuing education classes?

If the appraiser claims membership in a group that trains and tests its members, be sure to ask if this appraiser has personally gone through the training and testing. Some organizations have "grandfathered" members into high membership status without testing them. "Grandfathering" means allowing members to retain their titles and status if they joined before new rules or testing standards were required.


>>>> How will you handle items which may be outside your specialty area?

No appraiser should claim expertise in everything. A good appraiser knows his or her limits and is expected to consult with other experts when necessary.


>>>> What is your fee and on what basis do you charge?

DO NOT hire an appraiser who charges a percentage of the appraised value, or charges a "contingency" fee. These practices are clearly conflicts of interest, often result in biased values, and are a breach of ethical appraisal conduct. The IRS will not accept an appraisal done with such fee arrangements.

Appraisal reports are research intensive projects and cannot be produced during an on-site inspection. For each on-site hour, additional hours of research, analysis and report writing are necessary.




Preparing for Your On-Site Inspection


  • Decide which items you would like to have appraised before hand.

  • Get out all items to be appraised and prepare an appropriate inspection area.

  • Group similar items together for example, paintings by same artist, print types, items of same series or set, etc.

  • If you have receipts, sales slips, or old appraisals - have them organized and accessible.

  • Limit as many obstacles/obstructions as possible. This helps ensure than all of your belongings stay safe and prevents limiting conditions on your appraisal report.