Personal Property Appraisals

What do you need an appraisal for? The main reasons for personal property appraisals include: obtaining insurance coverage for your treasured items, equitable distribution due to death or divorce, estate taxes, art donations over $1,000 (required if over $5,000) (Legacy will fill out all required IRS tax forms), loss of value (moving damages) at the time of loss (fire/theft), and items you wish to sell. Do you need a value for insurance replacement values (new or used condition)? It is highly advisable to review your insurance policies and ensure you are adequately covered. Additionally, consider video recording and photographing your household from various angles and keep copies in a secure off-site location. What types of appraisals should be considered? A. Insurance Appraisals - assessing the current replacement value of your items B. Estate Appraisals - required for a taxable estate (all items appraised) C. Donation Appraisals - for donated items over $1,000, required for items over $5,000 D. Divorce E. Pre-move Appraisals F. Market Values if you wish to sell an item. What should you expect from an appraisal service? An efficient and ethical service is essential. Appraisers should write their appraisals and maintain strict confidentiality. All appraisals must be conducted by a qualified appraiser, with reports compliant with the Uniform Standards of Professional Appraisal Practice (USPAP) and legal as per IRS standards. How is an appraisal performed? The appraiser visits the location of the item and examines the property to be appraised. This includes taking notes on the size, condition, composition, and desirability of each object. Next, the appraiser photographs the items to document both their condition and existence. Values are researched using comparable sales for similar items in the most common marketplaces. What can I expect from the appraisal process? On-site inspection, measurements and photographs of your art, antiques, or insurable items, detailed descriptions of each item, analysis of market data and current values, and a comprehensive written appraisal report that will be accepted by attorneys, banks, and all courts of law. How do appraisers charge for their work? Do they provide estimates? Appraisers typically charge by the hour, per item, or by the job. Estimates are just that; while we cannot guarantee the exact charge for an appraisal, we might provide a ballpark figure based on past experiences. The time required for inspection, research, and report writing determines your fee. Travel expenses apply for jobs located 15 miles or more from Amarillo. Appraisers should never use a percentage-based fee, as this is considered unethical, if not illegal. How can you help this process along? Gather any previous appraisals, receipts, older photographs of the items, or any documentation that establishes the item's acquisition history or past life. An inventory can be helpful but must be verified by the appraiser. What appraisals are not: The appraisal report should not be considered an authenticity report. Appraisals are not inventory reports; Legacy can perform inventory reports if you need this service. As an accredited member of the International Society of Personal Property Appraisers (ISA), I must adhere strictly to the current ISA code of ethics and the Uniform Standards of Professional Appraisal Practice (USPAP), which is authorized by Congress as the source of appraisal standards and appraiser qualifications. An accredited appraiser is expected to perform valuation services competently, independently, impartially, and objectively. (Beware of appraisers who offer to buy what they appraise!) COVID-19 was declared a pandemic on March 11, 2020, by the World Health Organization. The financial markets have experienced significant turmoil, and it is currently impossible to quantify its long-term or short-term effects on the overall marketplace. The value opinions in the appraisal reports are based on an analysis of market data available to the appraiser at the time of the assignments. Insurance companies suggest that your antiques, artwork, collectibles, sterling, and fine jewelry be appraised every two to three years. Updating appraisals is not very costly and also provides proof of ownership in case of a loss. *Some of these standards have changed for 2024-25 www.isa-appraisers.org **This is not a sign-up, pay-your-dues organization, but one that requires meeting certain minimum yearly educational requirements to qualify for membership. You must requalify every two years for USPAP and every five years for ISA. Written appraisals are utilized by the IRS, insurance companies, and attorneys and are estimated by the hour (considerations are given when appraising whole households). Online appraisals - These single-item, desktop reports are now available for market value information. https://legacyappraisals.onlineappraisalsnow.com/ Additional research, court testimony, or travel will incur additional fees. Inventory services, with or without values, are also available at an hourly fee.

As an appraiser, understanding the definition of Fair Market Value (FMV) is essential, especially in the context of estate appraisals. FMV can be quite confusing for professionals, so it's no surprise that it becomes even more convoluted for the layperson.

Under the United States Treasury regulation 1.170-1(c), Fair Market Value is defined as:

The price at which the property would change hands between a willing buyer and a willing seller, neither being under the compulsion to buy or sell, and both having reasonable knowledge of relevant facts.

That definition simplifies things, doesn’t it? Not quite.

For someone unfamiliar with this definition and its implications, it can lead to misunderstandings. Individuals might conjure inflated “values” that are not true values at all; they are merely asking prices they stumbled upon online.

This is NOT Fair Market Value or even Market Value! For instance, if you are at an estate sale and you and the seller exchange $20 for an item, and neither of you is being forced into this exchange, that $20 is the FMV for that location, day, and moment. If both you and the seller have all the basic facts (the item being a flat-screen TV that works), and you agree on a price without coercion, it constitutes a mutually agreeable transaction. This is Fair Market Value in the secondary marketplace.

Let’s discuss what does NOT constitute Fair Market Value:

- It is not what you paid for an item (most people pay high retail and not FMV).

- It is not wishful thinking; true values are derived from careful research and methodology.

- It is not family lore. We often hear stories about how “valuable” mom always said an item was, but that is not fair market value. Many older relatives may not grasp how drastically today’s market differs or why their children have little interest in their prized possessions.

- It is not outdated appraisal values that were likely created for insurance appraisals or in a significantly healthier market.

- It is not based on what you think it should be or the amount of money needed to pay bills.

- It is not the asking price or even the SOLD price you see for similar items online or on eBay. Asking prices are merely that; we focus on what it actually SOLD FOR, including when and where it sold and how long it was on the market.

- It does not take sentimentality into account (how much you or a loved one cherished it).

- It is not about age or how long you’ve owned it. “Old” doesn’t necessarily equate to value.

- Condition, condition, condition!

Everyone seems to have their own idea of fair market value, but very few I encounter are genuinely “fair.” Ultimately, the market is what it is. All we can do is our best to educate our clients about property appraisals, even if they don’t want to hear the truth.

Bottom line: An item is worth what someone is willing to give you for it. Always seek the assistance of a professional for guidance when you lack the answers.