Caroline Ashleigh's Blog

I’m thrilled to announce that I will be a regular guest blogger on the Antique Trader blog. My most recent post is about the liquidation by Christie’s of the collection of movie memorabilia owned by Debbie Reynolds. Over the years, Ms Reynolds collected numerous items and the collection has been valued at over $50 million.

I have always been impressed by the foresight that Debbie Reynolds showed in preserving this memorabilia. Many of her contemporaries scoffed her collection of movie posters, costumes, props and other items. But today, the collection represents a glimpse into our culture.

To learn more about Ms Reynolds' extraordinary collection, read the full post by Caroline Ashleigh at the Antique Trader Blog:

Appraiser Caroline Ashleigh pays respect to major Hollywood memorabilia sale on her new blog

And, for more information about the Debbie Reynolds collection, read:

The Final Curtain Goes Up, As The Auction Hammer Goes Down, On Debbie Reynolds' Collection

Appraisals are not certificates of authenticity; these are very different documents. An appraisal is an opinion or statement of the value rendered by a professional appraiser who acts as an independent, impartial third party. A certificate of authenticity is an opinion or statement of authenticity.

In preparing the appraisal an appraiser may rely on a certificate of authenticity as well as on third parties and/or published information, including catalogue raisonnes, exhibition catalogues, auction catalogues or other available information. Third parties might include scholars, museum curators, conservators, descendents or associates of an artist.

Appraisals are done for a variety of reasons, but all are related to establishing the value of an item or a collection, often for insurance purposes, for IRS reporting or for liquidating an estate. A certificate of authenticity is done to establish the authenticity of an item or items, and the COA may be provided to the appraiser as part of the appraisal process.

Thanks for visiting! In this blog, I will be discussing art and antiques, and appraisal-related issues, including trending topics in the art and auction industry and relating some of my personal stories and experience. If you are a collector of fine art, antiques, and collectibles, I hope that you will find this blog informative.

An appraisal is an opinion or statement of the value rendered by a professional appraiser who acts as an independent, impartial third party. Appraisals are often done on personal property and real estate. Personal property appraisals are often done for valuable items like artwork, collectibles or antiquities.

Appraisals should be done by a qualified professional who is an expert in evaluating the type of personal property being appraised. An appraisal, which typically comes in the form of a written report, is assumed to be more reliable to third parties than statements of value made by non professionals, such as collectors, conservators, dealers and museum curators.

When should you have an appraisal done?

Personal property appraisals should be done to establish the value of an item or items in order to secure adequate insurance coverage or to make decisions about the division of property of an estate. It is important that the appraiser understand the reason for the appraisal, as values may differ according to the purpose of the appraisal.

Depending upon the purpose of appraisal, the value assessed to an item or items of personal property may differ. The four major types of valuation used by personal property appraisers are:

Replacement value for insurance purposes
Fair market value for IRS purposes
Marketable cash value for equitable distribution (e.g. divorce)
Liquidation value in bankruptcy situations

In a series of blog posts will address these four types of appraisal valuations.

Replacement Value
Generally, the highest value used in appraising is replacement value. This value is most commonly used for insurance purposes and has been defined by the AAA (Appraisers Association of America) as “the amount it would cost to replace an item with one of similar and like quality, purchased in the most appropriate marketplace within a limited amount of time.”

In the event of a loss, a person would not be expected to wait a long time for a bargain to appear or to do extensive shopping. It’s assumed that the person would go out and purchase the same or similar item within a short amount of time, and for this convenience they would pay a higher price. Consequently, replacement value is generally the highest value for an appraised item.

Related Posts
Types of Appraisal Valuation: Liquidation Value
Types of Appraisal Valuation: Marketable Cash Value
Types of Appraisal Valuation: Fair Market Value

Fair market value (FMV) is favored by the IRS and is defined as “the price that property would sell on the open market between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.” FMV is what a property owner would expect to receive if they were to sell a newly purchased object at a later date. This is frequently less than what was originally paid, especially if top price had been paid. As a result, fair market value is most frequently a lower value than replacement value.

The IRS has determined that fair market value is a gross value and may include sales commission or buyers premium.

Related Posts
Types of Appraisal Valuation: Liquidation Value
Types of Appraisal Valuation: Marketable Cash Value
Types of Appraisal Valuation: Replacement Value

Marketable cash value has been defined as “the value realized, net of expenses, by a willing seller disposing of property in a competitive and open market to a willing buyer, both reasonably knowledgeable of all relevant facts and neither being under constraint to buy or sell.”

This is similar to fair market value (FMV), but the essential difference being the phrase “net of expenses.” This term is most often used in equitable distribution situations such as divorce. In these cases, one partner is willing to receive ownership of property in lieu of cash. However, the person needs assurance that, should they decide at some point to sell, the money received would be close to the amount of cash originally sacrificed. Thus, the value used in this type of appraisal should be net of any sales commission or fee connected with the sale of the property.

Related Posts
Types of Appraisal Valuation: Liquidation Value
Types of Appraisal Valuation: Fair Market Value
Types of Appraisal Valuation: Replacement Value

Liquidation value is defined by the AAA as “the price realized in a sale situation under forced or limiting conditions and under time constraints. This action may be initiated by the property owner or a crediting institution.”

In calculating two previously discussed valuations—marketable cash value and fair market value—it is assumed that the seller will have time to sell the property. In the event of liquidation, however, one cannot wait to market the property properly. In such instances, creditors may be willing to accept something less than full marketable cash value for the convenience of receiving cash in hand immediately.

Related Posts
Types of Appraisal Valuation: Marketable Cash Value
Types of Appraisal Valuation: Fair Market Value
Types of Appraisal Valuation: Replacement Value

It is typically adequate to have a collection appraised every three to five years. However, if there are objects in the collection whose value fluctuates frequently or are in a category that has seen significant value changes, you may want to consider having the items appraised more frequently. By working closely with an accredited appraiser you and they can determine whether market forces dictate a more frequent appraisal schedule.

The Elements of a Correctly Prepared Appraisal is a professional standard published by the Appraiser’s Association of America (AAA). It outlines the elements that should be included in an appraisal report. In addition to basic information, like the name and address of the client, the appraisal should include the following.

Information about the appraisal itself

Number of pages in the appraisal
Purpose of the appraisal and intended use
Type of valuation used (replacement value, fair market value, marketable cash value, liquidation value) and a definition.
Valuation approach used: cost estimate approach, income approach, market data comparison approach, etc.
Market in which valuation is applied (statement of most common marketplace)
Date of preparation of appraisal and the date of which objects were viewed and effective date of appraisal.
Market analysis: generic market history & possible projections for future activity.
Firm statement of value - not estimates, except when followed by detailed explanations of qualifications.

Information about the item(s)

A thorough description of appraised objects. Including measurements and weights when applicable
The condition of the appraised objects
The provenance (history of ownership) for the item(s), if available
How objects were acquired (especially for IRS purposes)
Comparables and related analysis, if necessary
Brief biography of the artists
Exhibition and publication history
Statement that the appraised object(s) correspond to description(s) listed in the appraisal.

Information about the Appraiser(s)

Statement that the appraiser’s fee is not contingent on appraised value of objects.
Statement that the appraiser has not been "disqualified" by the IRS (for IRS appraisals)
Curriculum Vitae of the appraiser(s).
Statement of “disinterest” on the part of the appraiser
Clear division of appraisal when more than one appraiser is involved. Who did what? Inclusion of CV of other appraiser
Signature(s) of Appraiser(s) & Tax ID number(s) when appraisal is prepared for IRS purposes
Statement of assumptions & limiting conditions

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