Issues with APPRAISALS…

As a full-time bookman and mostly self-employed guy over the last fifteen years or so, it only makes sense that I wanted to expand my base of knowledge into something that wasn’t straight retail.  As a general rule, full-time dealers in nearly every facet of the collectibles industry have been doing appraisals for customers and friends their whole careers in some form or fashion.  I started doing appraisals myself a few years ago.  It didn’t seem like something I wanted to take lightly, so I sought out a professional course in appraisal studies to give the “base” of knowledge in appraising to compliment my already existing knowledge of my specialty areas.

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Since becoming an accredited member of the International Society of Appraisers I have noticed a few things…  First off, the amount of work that I put into an appraisal is exponentially more than I ever would have imagined.  There are insurance policies to deal with, contractual obligations to fill, United States Professional Appraisal Practice Codes to abide by.  All of this work is for a good cause though…  The finished product of a USPAP compliant appraiser and member of the ISA is (or should be) a professional piece that both the appraiser and the client are proud of.

One problem…  Getting to the appraising… 

My fellow appraisers and I have the same stories…

“I was given a collection of clothes worth $1.4 Million, can you issue the appraisal without seeing the clothes?  Can you do it in under one hour?”

“I saw a copy of the Declaration of Independence on the Antiques Roadshow and have the same exact one.  Can you send me an appraisal for $1 million based upon that episode and a photograph that I can text to you?”

“I am donating 6000 books that had a retail value of $25.00 in 1989.  I see that people sell them for less money now, but I need an IRS appraisal that reflects the $25.00 X6000 copies.  How quickly can you have this done?  Ten minutes?  One hour?  I just don’t have the money to pay for more than that.”

THE APPRAISAL BUSINESS IS FUNDAMENTALLY FLAWED!

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Even after you get past the silly, the appraisal industry seems to have a few problems…

The appraiser is working in most instances for a client who needs work done in order to be compensated for damage or potential damage and/or be compensated for a donation they are making.  You are either insuring or donating in most instances where you need to call a guy like me.  The appraiser is limited to the constraints demanded by the client.  How can you possibly do a fair job for the Internal Revenue Service if you are having to state in your limiting conditions statement that you did this job in a hurry based upon client needs?  It is totally legit and we all have to put in statements like this to cover ourselves, especially when we have constraints imposed by clients.  WOULDN’T IT MAKE SENSE THAT THE IRS WOULD WANT A REPORT THAT DOESN’T HAVE THESE SORT OF LIMITATIONS SPELLED OUT?  HOW DO WE GET TO THAT?

WHY IS IT THAT THE IRS IS NOT THE “PAYING” CLIENT WHEN IT COMES TO AN APPRAISAL FOR THE IRS?  THEY ARE THE ONES USING THE REPORT TO EITHER ACCEPT AND/OR DENY TAX OBLIGATION.  THEY ARE THE ONES WHO NEED TO MAKE SURE THAT THE AMOUNTS AND FIGURES ARE AS ACCURATE AS CAN BE, WITHOUT THE CONSTRAINT OF TIME BEING AN ISSUE.

In general, it just makes sense that the owner of a product would pay for an appraisal:

  • To know what they should pay or should’ve paid for something
  • To cover themselves for insurance purposes in case something happens to their item
  • To know what to sell something for

Etc…  etc… etc…

In all of these situations, the client is paying for a piece of work that THEY are using. 

In the case of an IRS Donation Appraisal, the client is using the value we give them, but the REAL user is the IRS! 

They are the ones using that value as a basis for tax obligations or lack thereof.

WHY DOES THE IRS NOT PAY FOR EVERY DONATION APPRAISAL AND IMMEDIATELY DEDUCT THE AMOUNT PAID FOR THE APPRAISAL OFF OF THE TAX INCENTIVE THEY ARE GIVING TO THE PERSON MAKING THE DONATION.  DOESN’T IT MAKE MORE SENSE THAT THE IRS WOULD WANT THE APPRAISAL DONE FOR THEM, WITHOUT LIMITATION???

THIS IS JUST A DIALOGUE PIECE…  I am not on a rant, just something that has been bothering me.

Mike Cotter

“The Transforming World of Collectible” 

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