WHAT IS AN APPRAISAL? An appraisal is a document that quantifies the value of: Fine Art: paintings, sculptures, etc. Furniture Decorative Arts Residential Contents ABOUT LISA Lisa M. Barnes is co-owner of Thomas Charles Editions, LLC, Anthem, AZ. She is the founder of a respected international art consultancy and appraisal firm who has appraised and curated art collections for numerous and diverse corporate and private collectors, hotels, and government institutions in the U.S. and abroad. What to expect on an appraisal? Prior to my inspection at your home or business, client shall compile and copy all records - sales receipts, provenance and other related materials, catalogues, letters, and certificates of authenticity (if available). I will review them with you prior to inspection. On site, we will photograph and catalogue the art, and conduct an examination of the artwork based on artist, type of media, dimensions, condition, and all other pertinent information available about the artwork being appraised. It is idea if two-dimensional works are removed from the wall, prior to the inspection, to allow examination of the back side, or verso. After leaving your home, a thorough research of the artists’ markets is conducted, including appropriate levels of gallery and auctions sales, and the items will be analyzed and valued accordingly. We will also research the artist(s), the appropriate sales markets, and research all data pertinent to constructing a written appraisal report that conforms to current USPAP Standards. Identification of each art object includes the following documentation, in conformity with the Getty Object ID System. Maker (artist or culture) Type of Object Materials and Technique Measurements Inscriptions and Markings Distinguishing Features Condition Title (if known) and Subject Date and Period Biographical Data Condition is specified, along with provenance information. At least one 4” x 5” photo (1” x 10” for IRS charitable contribution reports) accompanies a written description of each object, with any additional information that helps to identify it. The appraisal includes a narrative, which details whom was consulted, resources used and how the value conclusion was reached. Also noted is biographical information on the artist. Two reports will be given to the client (one hard copy and one on CD), while one will remain on file for 5 (five) years with Lisa M. Barnes. Is a hands-on inspection always required? The short answer is "No." However, the primary reason for an appraiser to personally inspect a property is to gather information about the characteristics of the property that are relevant to this value. (In general, these are referred to as relevant property characteristics and consist of quality characteristics as well as value-relevant attributes of the property.) But is a personal inspection by the appraiser required to gather the necessary information? The answer is "No" (though it is advised whenever possible). Having said that, appraisers almost always conduct a hands-on inspection of the property which is the subject of the appraisal assignment; however, on some occasions such as in the case of a theft or loss, the property is no longer available for inspection. In such cases, a personal inspection simply is not possible. On other occasions, the high cost or risk of loss of shipping a valuable subject property to the specialist appraiser for examination might necessitate an appraisal being conducted from afar without the benefit of a personal inspection. For items that remain available for inspection and which require special testing procedures or equipment to prove genuineness or quality, or which require authentication, or which are potentially so valuable as to warrant the expense of a hands-on inspection, the specialist appraiser should insist that arrangements be made for personal inspection either by him/herself or by some other qualified appraiser. Otherwise, the appraiser should abandon the assignment. This discussion addresses USPAP's requirements regarding the appraiser's responsibility regarding inspecting and "identification." USPAP REQUIRES APPRAISAL REPORTS TO IDENTIFY THE TYPE AND DEFINITION OF VALUE AND CITE THE SOURCE OF THE DEFINITION. WHAT IS THE "TYPE OF VALUE?" WHY IS THIS NO LONGER REFFERED TO AS THE "PURPOSE" OF THE ASSIGNMENT? Standards 2, 6, 8 and 10 require that appraisal reports state the type and definition of value and cite the source of the definition. The exact wording varies by reporting option. Previously, the term "purpose" in USPAP was used to refer to the several different concepts, including the type and definition of value. For the 2005 edition of USPAP, this and other special meanings of this term were eliminated to increase clarity. Where it is now used in USPAP, "purpose" will only convey the standard dictionary meaning of the word. The "type of value" is the general class or category of value. Examples include market value or fair value. The "definition of value" provides a specific description of the characteristics and conditions of the type of value. Examples include definitions provided from a form report, in FIRREA, in U.S. accounting regulations, and U.S. tax regulations. USPAP does not provide any specific definition of value or endorse any particular source. WHEN SHOULD I GET AN APPRAISAL? It is best to get an appraisal before you need one. You will need an appraisal for: Donations and gifts Determining your net worth Division of property Informed buying Estate planning Obtaining insurance HOW IS VALUE DETERMINED? An appraiser uses a variety of tools: reference works, online electronic databases, and historical documents; and may consult with additional specialists in the field. Based on the analysis of the research, the appraiser produces an appraisal report detailing the appropriate valuation of your personal property. WHY DO I NEED AN APPRAISAL? Donations and Gifts - An appraisal allows you to knowledgeably plan your gifts and donations. In some cases a qualified appraisal is required for tax and other purposes. Determining Your Net Worth You may need to know your exact net worth in order to meet a business or investment need. The appraised value of your personal property - art, antiques, furniture, etc., - increases your total net worth through accurate documentation. Division of Property Your personal property may require division due to dissolution of marriage, bankruptcy or death. A current appraisal provides you with the necessary information and documentation to assure equitable distribution. Informed Buying Considering the purchase of an expensive items such as a painting or antique? An appraisal can assist you in making an informed purchase. Estate Planning An up-to-date appraisal attached to your will reassures your heirs, lawyers, and accountants and will save you money and assist in avoiding unpleasantness. Obtaining Insurance A current appraisal is required for many insurance policies covering fine art, silver, decorative arts, and jewelry. An appraisal updated on a regular basis establishes the accurate replacement value of your personal property and protects you from financial losses caused by theft, fire and flood. HOW CAN YOU HELP ME WITH AUCTIONS? Buying - making a purchase is simple. The general steps are: Registering to bid Bidding Paying Picking up or shipping your property. Selling - if you have property you wish to sell, our team of specialists and client service representatives can help you through the entire process. Evaluation & decision to sell Shipping Selling contract & reserve price Commission & payment IS AN APPRAISAL A LEGAL DOCUMENT? Yes! An appraisal by a qualified appraiser can act as a legal document in insurance settlements, divorces, estate proceedings and other matters involving personal property. WHAT ABOUT THE INTERNAL REVENUE SERVICE? The IRS requires verifiable documentation on the value of property donated to a non-profit organization. An appraisal in accordance with IRS regulations and guidelines provides you with the information needed to document your donation. "Fine art is that in which the hand, the head and the heart of a man go together." - John Ruskin (1819-1900)