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Everything You Wanted to Know About Appraisals, But Were Afraid to Ask

October 18, 2023

Reading time: 12 minutes

In honor of National Estate Planning Week, we thought we’d take a deep dive into the world of appraisals with an Ask Me Anything with our dear friend, colleague, and Ally of Stuff, Sarah Reeder, Founder of Artifactual History Appraisal.

In addition to being an expert on ‘stuff,’ and specifically the value of ‘stuff,’ Sarah is also author of the book Ray Eames in 1930s New York, co-editor of Worthwhile Magazine™ and co-creator of The Art Elevator Collector’s Club. Read on to learn more about what she does as an appraiser, when to contact an appraiser, and even those questions we all want to ask (but may be afraid to!) such as what the difference between an appraisal and a valuation is.

For our members who are new to the appraisal process, how would you sum up what you do?

Reeder: I like to think of what I do as being part lawyer, part accountant, and sometimes even part therapist! It might surprise some people, but appraisals are nothing like what you see on TV. My work entails numerous hours of research, the preparation of legal documents, and meeting meticulous professional requirements for appraising items to establish a value in a specific level of the market on a specific day (called the effective date) for a specific intended use. (We’ll come back to that later!)

Appraisals are nothing like what you see on TV...

The work appraisers do is a very specialized type of professional service akin to an attorney or an accountant that requires a lot of time and focused research, so the very quick and informal “off-the-cuff” depictions of appraising we all see on television have edited out the lengthy preparation (because it would be pretty boring to watch!) that goes into those short segments we see. But I wish it was more widely known that there is so much more work that goes into appraising than the 2-minute clips we see onscreen.

The therapist part sometimes comes into play because as you know so well here at Artifcts, objects can hold powerful memories and inspire strong emotions, totally independent from what their monetary value might be. Sometimes it’s a delicate conversation when the “heart value” and financial value are not aligned, and that is where I rely on market data and research to help individuals understand the current market conditions and corresponding value of the item. I always emphasize that market conditions should not diminish the positive sentimental associations they have with an item—they just happen to be the lens that appraisers must use in our professional work.

So, getting down to the nitty gritty, can you walk us through a typical day?

Reeder: There is no one typical day. That is one of the many things I love about being an appraiser, you never know what you’ll be working on next! There are two types of appraisals I spend most of my time on insurance appraisals and estate appraisals. And yes, they are different!

When I am working on an insurance appraisal, I am creating a legal document that will protect you and your items in the event of damage or loss. These appraisals are for the retail replacement value of the object and in doing so, pins that object and that value in time. That specific moment in time is called the effective date of the appraisal, and all appraisals have effective dates.

The effective date of appraisal is so important in all appraisal report intended uses, because it provides critical context for the numerical appraised value. The markets for art and antiques are always changing, much like the stock market we are more commonly familiar with, so the appraised values need to be contextualized to a specific day, because on the day before or the day after market conditions may have been different. For insurance appraisal reports, the effective date is typically the day I inspect the items in person as it establishes the condition I witnessed on that day.

The markets for art and antiques are always changing, much like the stock market...

When working on these types of appraisals, I spend a lot of time researching the object, documenting it with photos and a detailed description, cataloging it with a standardized format that will allow future users of the appraisal report to know the characteristics of the appraised item, researching the specific level of the market for similar items for the appraisal report’s intended use, and then developing an appraised value based on all the above.

In the case of insurance appraisals, the appraised value is generally the replacement value of the object (i.e. what would it cost to acquire the same exact or very similar object in a short period of time from a retail dealer). For example, if I am appraising a painting by a particular artist for insurance purposes, I’m going to identify which galleries represent that artist or sell paintings by that artist, and then compare their available inventory and pricing (which often is not publicly available and requires outreach to the galleries) to the appraised painting in terms of subject, size, condition, era of the artist’s career, and other factors.

Based on the current retail data I can obtain, I then make adjustments up or down if needed relative to the appraised painting, and document all relevant research for my appraisal client workfile, which I am legally required to keep for a minimum of 5 years. The final number after the specific adjustments from the comparable records accounting for differences from the appraised item is the appraised retail replacement value. So it’s all a lot more complicated and research-intensive than what the public typically sees in popular depictions of appraisers on television.

Insurance appraisals are very different from estate appraisals. Estate appraisals are not used for insurance coverage.  Estate appraisals are prepared at fair market value and are required in some situations to be filed with the federal government or relevant state and local governments for estate tax filing. The legal professional handling an estate is the one who determines whether this is required in specific estate situations.

While insurance appraisals are typically prepared at retail replacement value, estate appraisals are prepared at fair market value, which is often quite a bit lower. The United States government defines fair market value as

"The price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." According to Technical Advisory Memorandum 9235005 [May 27, 1992], fair market value should include the buyer's premium. [Source: Treasury Regulations Section 20.2031-1 (b).]

For estate appraisal reports, the effective date is typically at the time of the death of the deceased. This is very different than with insurance appraisals as it could take an executor months and months to close out an estate and yet the value is still pegged to the date of death. There is something called the “alternate effective date” which is 6 months after the date of death, which the estate can elect to use if the market has changed significantly in that time period. I always like to confirm which effective date the estate is using as this is a critical factor in guiding my valuation research.

Can you tell us a bit about the tools of your trade? What do you take with you when you visit someone’s home to start an appraisal?

Reeder: I always like to take a good camera with me for capturing documentary photos, a tape measure so I can obtain the dimensions of artworks and the other items I am appraising, a clipboard and paper so I can take notes on-site that will later be expanded with research back in my office, a blacklight for examining artwork for inpainting and other restorations, a jeweler’s loupe for studying silver marks and other small details, and a flashlight for studying artist signatures and providing additional ambient lighting for my photographs in dark locations. I carry multiple flashlights and measuring tapes with me so if one breaks while I am on-site, I have a backup available to be able to continue working.

I have to make sure I capture all the precise details that make your object unique. If it is artwork, is there an artist signature? Any blemishes or marks? Water or sun damage? All of these things are important to ascertain the value of an object, and I need to be able to document them while onsite.

 

Worn leather bag used for appraisalsSarah's trusty go-everywhere appraisal bag full of her tools of the trade. 

Some people, and I admit, I was one of them at the beginning, may not know the difference between valuation services and an appraisal. Could you help explain what makes the two different?

Reeder: Sure! The Uniform Standards of Professional Appraisal Practice (USPAP) define valuation services as:

“A service pertaining to an aspect of property value, regardless of the type of service and whether it is performed by appraisers or by others.”

An appraisal is defined by USPAP as:

"(noun) the act or process of developing an opinion of value; an opinion of value. 
(adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services.
Comment: An appraisal is numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g., not more than, not less than) to a previous value opinion or numerical benchmark (e.g., assessed value, collateral value).” 

In terms of the general popular context of these two words outside of their specific USPAP definitions, a valuation is typically more closely associated with ballpark estimates and not with a legal document. Think of it as something that will get you basic guidance, such as getting an approximate sense if an inherited collection is simply sentimental and has no monetary value, or conversely, if it might have significant monetary value.

A valuation is typically more closely associated with ballpark estimates ...

Appraisals are legal documents.  A verbal ballpark numerical range cannot be used in court to settle an estate, with the IRS to document tangible assets for tax purposes, or with an insurer to document items for an insurance policy. USPAP-compliant written appraisal reports are needed for those intended uses.

Are there any red flags our members should watch out for when looking to hire an appraiser?

Reeder: One of my personal red flags is if the appraiser essentially says, “I will tell you how much it is worth and then purchase it from you.” There is a major conflict of interest there, and their interest may not be in your best interest.

Another major red flag is if an appraiser is not USPAP-compliant. USPAP is a very important professional and ethical standard regulating appraisers to help protect users of appraisal services.

It’s always best to look for an independent appraiser who is USPAP-compliant, and ideally is also a member of one of the professional associations for appraisers such as the Appraisers Association of America (AAA), the International Society of Appraisers (ISA), or the American Society of Appraisers (ASA). I am a Certified Member of the Appraisers Association of America and a Certified Member of the International Society of Appraisers.

You also want to make sure that any appraiser you hire has expertise in YOUR object(s). A jewelry appraiser may be great for your jewelry collection, but not your collection of mid-century modern furniture and vice versa. In USPAP, this is called the “Competency Rule”—basically, is this appraiser competent to appraise your items? If they aren’t, they shouldn’t do it.

You also want to make sure that any appraiser you hire has expertise in YOUR object(s)...

When should people hire an appraiser? Are there any life transitions that may necessitate an appraiser?

Reeder: Life transitions are a great time to take stock of what you have and what’s it worth. Some common life transitions where it can be useful to engage an appraiser are:

      • If you have inherited potentially valuable items such as artwork. An appraiser can provide expert guidance on their value and prepare an insurance appraisal report so they can be scheduled and protected with your insurance company.
      • If you plan on moving it can be very helpful to have valuable items appraised for insurance purposes in advance or to update an existing appraisal to make sure the insurance coverage is current.
      • For estate filing purposes when someone has passed. The estate’s attorney will direct whether an estate appraisal is needed.
      • For proactive estate planning purposes—if you have large collections, it can be helpful to get a sense of their value and how they might be structured in your estate plan for maximum tax efficiency for your heirs (again, your attorney will be a very helpful resource in this process).
      • Sometimes divorces are another life transition that may require an appraiser for the equitable distribution process. 

And finally, you’ve experienced firsthand the joy (and usefulness!) of Artifcting. Any advice for our members or thoughts on how Artifcting can aid the appraisal process?

Reeder: Yes! Artifct your ‘stuff.’ Don’t wait! The details, photos, even video can help an appraiser get to work immediately determining an appraisal scope of work and sometimes even using the Artifcts as a resource to appraise items that may now be damaged or lost. It can save a lot of time and back and forth emails if you Artifct and share your Artifcts with your appraiser. Artifcts really is perfect for an appraiser’s workflow!

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Sarah Reeder is a Certified Member of the Appraisers Association of America, a Certified Member of the International Society of Appraisers with the Private Client Services designation, and a graduate of New York University's Program in Appraisal Studies in Fine & Decorative Arts.

© 2023 Artifcts, Inc. All Rights Reserved.

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This Artifct is part of a private swim memorabilia collection. Click the image to view the Artifct.

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Artifcts QR code on a swim mannequin

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CLICK THE IMAGE to view the Artifct and listen to Matt tell you about his father and the ring in his own words.

Artifcts to the Rescue

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      2. He shared the Artifct with the restaurant where he had taken it off. The restaurant owner shared the ring photos with his staff to begin the search. Not everyone can easily imagine a ring generically described. Photos help.

Two days later

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If You Love It, Artifct That! 

There's simply, truly, we beg you to understand, no time like the present.

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© 2024 Artifcts, Inc. All Rights Reserved.

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Every Room Has a Story: Closet Edition

Reading time: 7 minutes 

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A long red wool coat with large silver buttons

 
 
What's your "red coat," that item in your closet you just can't part with even if you'll never wear it again?

Fast forward to the present day.  

The woman’s husband and one of her grown daughters are in the former master bedroom on the second story of the family home. Even though the new master bedroom on the first floor has been in use for at least 10 years and boasts a beautiful custom closet and dressing area, the old walk-in master closet is still brimming with clothing, old suitcases, and more.  

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We’re talking specifically about clothing you’ll never wear again. It’s one of our spring-cleaning themes and top targets for decluttering. You know it’s there, even if hidden, the clothing you should recycle or donate. We’re looking for: 

      • Holes, tears, stains 
      • Faded fashions 
      • Ill-fitting pieces 
      • New, with tags, because you had a vision you never brought to fruition, or it simply got buried 
      • Single-purpose pieces (hello, bridesmaids dresses, costumes, and event and corporate swag) 

If you’re wrestling with the sentimental nature of a piece, Artifct that. You’ll feel better. 

Both of our cofounders have Artifcted old suits they wore in their government days. There’s a lot of memories in those suits and feelings of pride and accomplishment. You may know the feeling tied to a key garment and moment in your own life. Artifct that and then donate that to Dress for Success or a similar charity. Hot tip: If it’s a bridesmaid dress you’re thinking of donating, ask the bride before you donate, in case she harbors dreams of a vow renewal one day. We’re happy to save you the potential regret if you didn’t ask!

2. The ‘Why’ of Memento Boxes.

Now the existence and content of some of these keepsake boxes are open secrets, others not so much. But these keepsake boxes and memory boxes, no matter how cute, stylish or feng sui, are vulnerable to fire and flood as well as creatures that could find them munchable. In addition, the details behind what’s inside will easily fade from memory and more rapidly than you’d like to imagine.

 

 
True story: One of our co-founder's daughters recently created a memory box for school. She promises to Artifct first whatever goes into it. Will she? Time will tell. She already has more than 100 Artifcts, so there’s hope.

If you care about what’s in your memento boxes, we implore you to Artifct that. And talk through the contents with them. Have a seat. Share, more than once. Let them know you better. We will never tell you these types of boxes, in moderation, have to go. In fact, we believe everyone deserves a purple bin, yours might just be another color or style.

3. The Why of the Bulky Closet “Clutter.”

Yes, clutter lives in closets, too. We STASH so much in those closets. Take a look and ask about the why behind your stashes.  

A recent closet we were in had stashes of: 

      • Gifts to give “someday,”  
      • Unused frames in want of art or photos, 
      • Old, unused medical supplies, 
      • Brown paper bags of old tax documents and banking records, and 
      • A box of family heirlooms from a loved one who had passed away six years prior. 

The why of stashes often comes down to some form or procrastination. As Matt Paxton likes to say, “Procrastination kills memories.” Procrastination also creates chaos and kills the good intentions in the keeping. 

      • Organize what you want to keep and label it, if that will help you remember it’s there so you can put it to good use. The reason professional organizers love clear bins is to keep the items visible. But if labels do the trick—or a combination of both—go for it! If you are helping someone with dementia to declutter and organize, clear bins and photos have other purposes. Check out this ARTIcles story for insights and tips! 
      • Artifct items from loved ones and share those Artifcted stories so others can enjoy. Plus, if you don’t want to keep it all, your Artifcts become the easy means to ask if others would like to keep the items. Win-win!  
      • Donate unused—and in some cases lightly used—medical supplies through Goodwill or other similar charitable organizations in your community. 
      • If those old documents are more than seven years old, you’ll generally be okay to shred them yourself or at a community shred event. If in doubt, ask your financial advisor. But do not hang onto these where they can do you no good and only create vulnerability if someone were to use the information they contain to access  resources they should not.  
Procrastination kills memories. - Matt Paxton, TV host, author, public speaker

A storage bin for documents organized with labeled file folders can be a better than nothing option, but is nearly as problematic as a brown paper bag. A digital vault, like Trustworthy, can organize important documents via files and images you upload in no time and ensure vital information is accessible to you, your loved ones, and any tax, legal, or other advisors you employ. Bonus: Digital resources can be accessed anytime, from anywhere and you can even receive smart notifications when renewals and updates are required.

4. Special Closet Clutter: Kid Stuff.

We’re talking about reducing kid clutter we’ve found in closets, which admittedly feels a bit like touching the third rail. But hear us out! Do you really need to wardrobe a future generation? How much of it will breakdown or decay before it can ever be used again? And, perhaps most importantly, do you remember why it’s so special? No? Great, out and onward it goes. Yes? You know what we’re going to say: Artifct That.

An Artifct with dresses

 
 
Here’s a great example from our cofounder Ellen. She did keep a couple dresses that belonged to her daughter as a baby and a toddler. Notice we said a couple. But she also Artifcted them with pics of her daughter wearing the dresses to make it oh-so-easy to remember and share the why behind the dresses. CLICK THE IMAGE to view the Artifct.

While sentiment and frugal tendencies can be at play, sometimes you find people are holding onto stuff that their GROWN adults have ASKED them to keep, because they don’t have the space or do not want to take the time or pay the expense to ship it to their homes. Hard no. If you are ready to lighten the load in your home, give your grown adult children a deadline to claim the items. Yes, “adulting” can be hard, but enabling grown adult children to behave, well, like children, doesn’t generally end well. If you can relate, you might want to read or re-read this inspiring guest ARTIcles story from a dad who shared the tough love he showed his adult children during his downsizing experience.

Many of us struggle to bring our habits, best intentions, or even creative brains into play to help us get the job "decluttering" job done. For others, the stories behind the stuff get in our way. But keep in mind as you go room by room that like any muscle, decluttering requires practice. And Articting is here to support you along the way. Object by object as you Artifct you can reflect on what it is, why you have it, and make a decision on what will happen to that object in the future. 

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© 2024 Artifcts, Inc. All Rights Reserved.

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