Personal property appraisers receive frequent calls where the caller wants to know what their antique or vintage items are worth. This is not a quick answer because the intended use dictates both the value you will use and the effective date of the appraisal.
Let’s first define some values:
“Replacement Value” has been defined as the “cost to replace a property with an equivalent or substitute which is new, using modern materials, techniques and standards which satisfies the description or use of the replaced property with having the same quality and utility.
“Replacement Value” has also been defined as the amount of money that would be required to replace the subject with another of similar qualities within a reasonable length of time in an appropriate or relevant market.
Fair Market Value
“Fair Market Value” is defined as the price at which such property would change hands between a willing buyer and a willing seller, neither being under compulsion to buy or sell and both having reasonable knowledge of the relevant facts, in the most common market that is reasonable and appropriate for a purchaser who is the ultimate consumer of the property.
“Orderly Liquidation” is the estimate of the most probable price expressed in terms of cash in US dollars in which the personal property could typically realize at a privately negotiated sale or properly advertised auction by a seller obligated to sell over an extended period of time, usually within six to twelve months.
The next question to ask is: “Are you trying to sell, insure, or donate the item.” All involve different values, so the item is worth its value in the market in which it will be consumed.
The effective date of the appraisal is important, too. This is different from the date the appraisal is prepared. For estate appraisals, the effective date is the date of death or the date the property transferred. The list below is an overview of how different types of appraisals use different values and different effective dates.
Replacement Value: effective date is usually the document date.
- Retail Purchases
Fair Market Value: effective date exceptions noted, otherwise use the document date.
- Non-Cash Donation Appraisals
The effective date is as of the date of the donation.
The document cannot precede the date of the donation by more than 60 days.
The document may be executed as much as two years later, but no later than two years. The IRS does not feel that the
researched values are relevant more than two years later.
- Estate Planning Appraisals
Probate or Distribution to Heirs of an Estate: the effective date is the date of death. Also, 18 month deadline.
Also, may be a retrospective effective date.
- Most Legal Disputes: You may want a self-contained appraisal.
On-line Sale: I often recommend insurance replacement appraisal as a sales tool.
- Estate Sales: I often recommend insurance replacement appraisal as a sales tool.
Liquidation Value: effective date is the date of the appraisal.
- Estate Liquidation
People are often surprised to learn that bankruptcy appraisals are done for fair market value, because the personal property will not necessarily be liquidated.