The Personal Property Owner’s Guide to Appraisal Services

Whether you own a piece of fine art, jewelry, a collectible item, or an ordinary article found in any household, you may need to know what it is worth. Or it might be some type of machinery, such as a car, a fleet of cars, or farm or manufacturing equipment. It could be an item you own now or something in which you might acquire a financial interest. Regardless, eventually, most of us need to know the value of an item of personal property, either to preserve it as an asset or use it to create additional wealth while managing the risks of ownership.

By preparing professional appraisals, qualified appraisers give you the objective information you need to make financial decisions in your best interests. But who is a qualified appraiser? What is a professional appraisal? We have prepared this guide to answer these questions. We present the essential elements that all appraisal reports, regardless of the type of property, should contain, along with examples of common situations in which appraisers assist personal property owners.

We also offer questions you can ask an appraiser and ways to consider their answers to enable you to determine if they are qualified to appraise your item.

Click each header for more information.

About personal property (and your asset in particular)


2021.6.1 The term “personal property” refers to items that can “travel with the person,” meaning they are portable. This excludes land, buildings, and other permanent structures. It includes everything from paintings and doll and stamp collections to tools and injection molding machines, to boats and diamond rings, books and manuscripts, coins, toys, and even livestock…the list is nearly endless. The qualified appraiser has a responsibility to you to be knowledgeable enough about your particular property to appraise it or to have the means to acquire such knowledge. This knowledge includes how to identify it and judge its quality, as well as familiarity with the markets where it is bought and sold.

The term “personal property” refers to items that can “travel with the person,” meaning they are portable. This excludes land, buildings, and other permanent structures. It includes everything from paintings and doll and stamp collections to tools and injection molding machines, to boats and diamond rings, books and manuscripts, coins, toys, and even livestock…the list is nearly endless.

The qualified appraiser has a responsibility to you to be knowledgeable enough about your particular property to appraise it or to have the means to acquire such knowledge. This knowledge includes how to identify it and judge its quality, as well as familiarity with the markets where it is bought and sold.

The appraisal process starts with you


2021.6.1 Why do you need your item appraised? This is the most important question in the appraisal process. It becomes the appraisal report’s “intended use” and must be stated in the report itself. It is also the qualified appraiser’s starting point for planning the work that fulfills your need for the appraisal. If you have more than one need, such as deciding whether to insure or sell an item, the qualified appraiser will help you determine if the assignment should address one or the other, or both.

Why do you need your item appraised? This is the most important question in the appraisal process. It becomes the appraisal report’s “intended use” and must be stated in the report itself. It is also the qualified appraiser’s starting point for planning the work that fulfills your need for the appraisal. If you have more than one need, such as deciding whether to insure or sell an item, the qualified appraiser will help you determine if the assignment should address one or the other, or both.

It continues with you


2021.6.1 Every “intended use” requires an “intended user.” That is, you. When you hire an appraiser, for yourself or on behalf of an estate or business, you (or that entity) are the assignment’s client and automatically an intended user. Qualified appraisers owe clients due diligence in rendering an appraisal objectively, impartially, and independently and in protecting their confidentiality. As the client, you may also designate other intended users. Qualified appraisers are responsible for communicating their valuation results to all intended users in a manner they can understand. Perhaps most importantly, this obligation to intended users requires a clear definition of “value,” and it must be stated explicitly in the appraisal report. The word “value” is never used alone. It is always qualified – for example, as fair market value or liquidation value. As an economic concept, value always exists in the context of a particular kind of market (which can vary depending on your intended use, such as insuring an item versus liquidating it) and as of a specific date. These elements must be stated in the report.

Every “intended use” requires an “intended user.” That is, you. When you hire an appraiser, for yourself or on behalf of an estate or business, you (or that entity) are the assignment’s client and automatically an intended user. Qualified appraisers owe clients due diligence in rendering an appraisal objectively, impartially, and independently and in protecting their confidentiality.

As the client, you may also designate other intended users. Qualified appraisers are responsible for communicating their valuation results to all intended users in a manner they can understand.

Perhaps most importantly, this obligation to intended users requires a clear definition of “value,” and it must be stated explicitly in the appraisal report. The word “value” is never used alone. It is always qualified – for example, as fair market value or liquidation value. As an economic concept, value always exists in the context of a particular kind of market (which can vary depending on your intended use, such as insuring an item versus liquidating it) and as of a specific date. These elements must be stated in the report.

If your appraisal has legal or other special considerations


As the client, you have a right to depend on a qualified appraiser to know the technicalities of your assignment. For instance, the appraiser must know of laws or regulations that require a particular value definition for your intended use (such as fair market value for determining federal estate tax liability), or how to handle exceptional circumstances (such as the inability to inspect a ring or a painting because it has been destroyed in a fire) or your need to consider scenarios that are contrary to known facts (such as how future market conditions might affect a lender’s decision to finance an equipment purchase). If special considerations exist in your assignment, the qualified appraiser must explain their presence and state in the report how they have been addressed.

As the client, you have a right to depend on a qualified appraiser to know the technicalities of your assignment. For instance, the appraiser must know of laws or regulations that require a particular value definition for your intended use (such as fair market value for determining federal estate tax liability), or how to handle exceptional circumstances (such as the inability to inspect a ring or a painting because it has been destroyed in a fire) or your need to consider scenarios that are contrary to known facts (such as how future market conditions might affect a lender’s decision to finance an equipment purchase). If special considerations exist in your assignment, the qualified appraiser must explain their presence and state in the report how they have been addressed.

A few personal property appraisal situations (one of them may be yours)

A few personal property appraisal situations (one of them may be yours)
Here are typical scenarios to show how you, your property, why you need it appraised, and the resulting type of value may work together.

Type of Property	Type of Client	Intended Use	Possible Type(s) of Value
2021.8.2 Household contents	Estate (on behalf of executors and heirs)	Estate taxes	Fair Market Value
2022.4.11 Diamond ring	Private owner	Insurance coverage	Replacement value
Fleet of service vehicles 2022.8.1	Banker	Collateral coverage	Fair Market Value Orderly Liquidation Value
Painting	Art collector	Non-cash charitable contribution	Fair Market Value
Manufacturing equipment	Prospective buyer	Management discussion	Fair Market Value Orderly Liquidation Value
Jewelry collection	Heirs of an estate	Equitable distribution	Marketable Cash Value
Medical equipment	New owner	Allocation of purchase price	Fair Value

The method behind your appraisal


What is a professional appraisal? How does a qualified appraiser produce it? An appraisal should be an informed opinion of value, using evidence and logic to arrive at a credible value conclusion. The qualified appraiser performs research into market activity to find relevant data and interprets it using certain analytical methods. Then the appraiser reports the results in a manner you can understand. The analytical methods are known as approaches to value; the two most often used for personal property are the sales comparison approach and the cost approach. In the sales comparison approach, the appraiser locates sales and asking prices of items comparable to yours to discern patterns that point to your item’s most likely value. In the cost approach, the appraiser again uses market activity, this time to estimate the costs of materials and labor plus a typical markup to account for profit to forecast the total cost to replace or reconstruct your item. (Machinery and equipment may be subject to depreciation.)

What is a professional appraisal? How does a qualified appraiser produce it? An appraisal should be an informed opinion of value, using evidence and logic to arrive at a credible value conclusion. The qualified appraiser performs research into market activity to find relevant data and interprets it using certain analytical methods. Then the appraiser reports the results in a manner you can understand.

The analytical methods are known as approaches to value; the two most often used for personal property are the sales comparison approach and the cost approach. In the sales comparison approach, the appraiser locates sales and asking prices of items comparable to yours to discern patterns that point to your item’s most likely value. In the cost approach, the appraiser again uses market activity, this time to estimate the costs of materials and labor plus a typical markup to account for profit to forecast the total cost to replace or reconstruct your item. (Machinery and equipment may be subject to depreciation.)

Who is qualified to appraise your property?

Who is qualified to appraise your property? As you see, qualified appraisers are knowledgeable, ethical professionals. As in any profession, appraisers vary widely in experience, education, and understanding of your particular needs. Here are questions to ask a prospective appraiser to enable you to identify the professional appraiser who is right for your needs.

Ask	Consider
Within your general field, what kind of property have you focused on appraising? 2021.4.19	Just as doctors and lawyers often have specialties in which they have advanced training, most appraisers can identify the kinds of properties in which they hold the most expertise.
What type of assignment do you perform most often? 2021.411.29	If the practitioner has done more assignments that align with your intended use, this may improve the appraiser’s competency to perform your assignment. For example, have they done many insurance appraisals? Or tax-related appraisals?
How long have you been appraising? 2022.3.28	More experience often means that an appraiser is more familiar with correct appraisal methods (including how to gain competency if that is required) and how to write clear reports. It is a factor to consider.
How did you get into appraising? 2022.4.4	Appraisers often enter the profession from allied fields, which can broaden their perspective and enable them to better serve their clients’ needs.
Do you follow a professional standard of practice? 2022.7.25	Use this question to learn what the appraiser's ethical standards are based on. A standard of practice aims to promote the highest possible level of public trust in appraisal practice – that is, in appraising as a profession.
What role, if any, does USPAP play in your work? If it does, are you current with your USPAP training every two years?	USPAP is the Uniform Standards of Professional Appraisal practice. USPAP is promulgated by The Appraisal Foundation, which was established by Congress more than thirty years ago. Its rules and standards have become the generally recognized and accepted standards of appraisal practice in the United States.
Do you belong to an appraisal association or society?	Well-established professional organizations require rigorous training, continuing education, and, usually, periodic re-examination. Not all good appraisers belong to one or more of these organizations, and not all appraisers who do belong are good practitioners. But such membership shows that they have met that group’s professional standards on an ongoing basis and are subject to its ethical standards.
Tell me about your appraisal education and training.	Competent appraising is sometimes complex. Completion of respected formal education prepares an appraiser to produce a thorough, accurate report.
How do you charge for your services?	Appraisers may charge an hourly rate, or a flat fee based on the job. It is unethical to charge a fee based on the appraiser’s value conclusion or one that is contingent on any outcome of that value conclusion.
How long will my appraisal take?	You should be told an expected completion date for your appraisal.
Do you have a service agreement?	If available, this agreement will set out most, if not all, of the important contractual matters for your appraisal.

The members of the Personal Property Resources Panel of The Appraisal Foundation have prepared this guide to appraisal services for personal property owners in the hope that it will benefit you. We also wish to further USPAP’s stated purpose to promote a high level of public trust in appraisal practice. Please contact The Appraisal Foundation for more information.