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HIRING A COMPETENT PERSONAL PROPERTY APPRAISER |
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Don’t take chances when getting a 'professional appraisal' of your valuables.
When do I need an appraisal? How often have you watched Antiques Roadshow and guessed the value of a featured item? Everyone has. And you can just imagine how thrilled an owner of great-grandma’s soup tureen was to learn it was worth more than the house she lived in. It’s great fun to guess the value of these items. But finding the appraised value of property isn’t a guessing game. The appraisers on Antiques Roadshow and the ones in your city that are highly qualified aren’t guessing. They are professionals who have spent years obtaining the expertise and the education to qualify them as personal property appraisers who have been tested by a recognized appraisal organization, such as the International Society of Appraisers. But you are not going on Antiques Roadshow anytime soon, so why would you need a professional appraiser?
If you sell this collection or inherit the items from the family home, the IRS certainly wants to know about it, and they have some new requirements regarding the qualifications of a personal property appraiser, thanks to the Pension Protection Act that was passed by Congress in 2006. The IRS will also want to make sure a certified professional property appraiser has given you a written report if you decide to donate this collection and take a tax deduction. If you want to insure the items in your house, the insurance company will require a written appraisal of the value, particularly if the items are antiques or jewelry. Finally, if you are just curious about an item, a professional property appraiser can give you a written report about its value. A qualified professional property appraiser won’t give you an 'off the cuff' appraisal of your property. You should expect an official written document. The IRS will demand it. Your insurance company will require it. Your attorney, insurance agent, accountant or banker will want all of this in writing, on official letterhead. This report needs to have all the necessary components that make it official—the value of the property needs to be based on very specific research methods, there should be strong comparables of items that are similar or identical to yours, and the report must follow certain requirements. Property appraising isn’t a game, so there is no room for guessing. And, for your protection, you shouldn’t be guessing either, particularly about the qualifications of potential property appraisals. This will take a little research on your part. It may be the least exciting part of finding out what your property is worth, but it is the most important. How do I know I'm hiring the right appraiser? It is not exactly a simple process to find a qualified professional appraiser, so you have to do your homework. It’s made harder, since not all appraisers have the same qualifications, and unfortunately, most states have no regulations that require specific training, testing or job performance requirements. In Oregon, for example, anyone can call himself a personal property appraiser—without so much as a high school diploma! The Pension Protection Act, which created a federal definition of a “qualified appraiser,” and what constitutes a “qualified appraisal” for appraisals that are performed for the IRS, has helped somewhat. According to this act, the person who is a “qualified appraiser” has to have this designation from a recognized appraisal organization and must be someone who performs appraisals and is paid for them on a consistent basis. In addition, this person has to show that they have the proper education and experience and are qualified to appraise the type of items that need an appraisal. You wouldn’t want someone who is educated and has vast experience in 18th Century French furniture appraising 17th Century Dutch paintings, for example. But this act only covers those appraisals done for the IRS, and there may be other reasons that you need appraisals, and here is where you need to be careful in choosing the appraiser. So what does qualify someone to appraise your personal property? A qualified and serious appraiser has taken the initiative to go well beyond any state and federal requirements to complete formal training in product knowledge, appraisal theory, IRS requirements, principles, procedures, ethics and law. Your potential appraiser should also be current and versed in recent changes in appraisal methodology and report-writing standards. He or she should have expertise in the type of property you wish to have appraised and readily admit any limitations. For example, when you ask an appraiser, “What do you do when you come across objects outside your area of expertise?” the appropriate answer would be something like “I will consult with an expert or get you the name of someone who can help us.” If you are considering hiring a personal property appraiser, you should ask to see his or her resume detailing education and training. Don’t take it at face value, though. Do some legwork by calling the various institutions to confirm the information. When interviewing a prospective appraiser, ask “Do you belong to a professional appraisal organization?” If the answer is “yes,” then ask if he or she has been tested. If the answer is “yes” again. . . great! But don’t stop there. Call the organization to verify that the individual is indeed a member in good standing and has been tested. Ironically, there are appraisal organizations that do not require testing. With these organizations, for an annual fee, members receive fancy stickers and marketing materials, giving the appearance of something they are not. Some appraisal organizations go as far as grandfathering in some of their older members, allowing them to share similar status and title with newer members who have actually passed the rigorous coursework, testing and training. Organizations such as the International Society of Appraisers (ISA) are excellent because all members—both veteran and new—must go through the same training and certification procedures. Ultimately, membership and education are imperative for appraisers. It shows they are willing to go the extra mile, invest in themselves, take their profession seriously, make their service the very best it can be and promote ethical and responsible appraising. Another important issue that bears examination is the question of fees. What does the appraiser charge and on what basis? Hourly fees and flat rates are the most common and acceptable forms of charging for services rendered. Never hire an appraiser who charges according to a percentage of the appraised value of the objects. Not only will the IRS reject an appraisal using such a fee structure, it also goes against the Appraiser’s Code of Ethics. In addition, it is a conflict of interest. An unethical appraiser could tell you that your property is worth much more than it truly is in order to inflate the fee. Want to hire an appraiser? Take the time to find out about your appraiser’s qualifications. You’ll find that this is well worth the time and effort, and when you get your written appraisal, you’ll be confident in the results.
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