Written Appraisal Standards

Many people think preparation of appraisal reports is a simple matter of the appraiser stating in writing what they think their properties are worth. But I do not do those sorts of overly simplistic appraisals. All my written appraisals conform with standards established by USPAP (Uniform Standards of Professional Appraisal Practice), promulgated by The Appraisal Foundation, a not-for-profit organization dedicated to the advancement of professional valuation, which has been authorized by The US Congress as the source of appraisal standards and appraiser qualifications. Although preparation of USPAP compliant appraisal reports are quite complex and time consuming to produce, this diligent preparation is necessary because the resulting reports serve as legal documents that protect both the client and appraiser, and as such need to carefully explain the reasoning behind the stated valuations and attest to the competence of the appraiser to undertake such assessments. These stringent standards and guidelines are described on the website of the Appraisers Association of America, which, with good reason, requires all their members to use them.

Although I also do other types of appraisals, I am most frequently asked to complete appraisal reports for insurance, charitable institution donations, and estate settlements. Each has different requirements for written reports, which I describe in general terms below.

INSURANCE APPRAISALS

*header/footer on every page with: client name, appraiser name & contact info, appraisal purpose, valuation system used, effective date, pagination (include # of photos)

*cover page

*table of contents

*valuation summary

*disclaimers, limiting conditions, assumptions (authenticity), hypothetical & extraordinary assumptions

*appraiser's certification (include compliance with USPAP, fee structure)

*appraiser's CV & qualifications for appraising the type of art in the report

*client name

*clearly defined scope of work -- includes the following:

-description of the appraisal assignment
-purpose of appraisal: insurance

-type of report (appraisal report or restricted appraisal report)

-intended users (client & insurance co)

-valuation type: Retail Replacement Value

-definition of value & source

-market approach: comparative (state why used)

-marketplace: retail

-market analysis

-date & place of inspection

-effective date (same)

-date of report

*inventory of objects noting locations (if appropriate)

*description of objects, noting when Fine Art Breakable, Sterling Silver, Fine Art, nationality, artist, type of art, date, size, relevant inscription & marks, boxes -for Asian objects & scrolls-, material, technique, condition, prior publications, artists' bio, relevant references

*provenance (optional but useful)

*discuss authenticity if relevant

*include comparables (optional): if under $100 each--group together, $5000 & above--comps preferred, groups over $10,000--comps preferred

*Firm Valuation for each object

*photographs

*SIGNATURE

IRS DONATION APPRAISALS
*Need appraisal for donations over $5000, over $50,000 IRS art committee reviews appraisal report, over $500—taxpayer must submit IRS form 8283 (no appraisal needed)
*note: client can deduct cost of appraisal fees from income

*header/footer with: client name, appraiser name & contact info, appraisal purpose, valuation system used, effective date, pagination (include # of photos)
*cover page
*table of contents
*valuation summary
*disclaimers, limiting conditions, assumptions (authenticity), hypothetical & extraordinary assumptions
*appraiser's certification (include compliance w/USPAP, fee structure, disinterest, acknowledgment that misrepresentation will incur penalties, & appraiser not disqualified by IRS)
*appraiser's CV & qualifications for appraising the type of art in the report
*client name

*clearly defined scope of work -- includes the following:

-description of the appraisal assignment

-purpose of appraisal: donation
-type of report: appraisal report (the most comprehensive type)
-intended users (generally client & accountant & donor organization)
-valuation type: Fair Market Value
-definition of value & source
-market approach: comparative market analysis (state why used)
-marketplace: auction and/or retail
-market analysis
-date & place of inspection
-effective date: date of donation
-donee organization and appropriateness of object to that organization
-date of report (cannot be more than 60 days prior to donation)
*object list
*inventory & description of objects (noting nationality, artist, type of art, date, size, relevant inscriptions & marks, boxes -for Asian objects & scrolls-, medium, format, technique, condition
*artist bio, references, other notes
*provenance & price paid
*discuss authenticity if relevant
*Firm Valuation for each object
*photographs
*ownership interest
*COMPARABLES REQUIRED with discussion for: single items & groups over $5000
*SIGNATURE & Tax ID#
*Completion of appraiser's section of IRS form 8283

IRS ESTATE APPRAISALS
*single items over $3000 appraisal required; group of like items over $10,000 appraisal required, over $20,000 IRS art committee reviews appraisal report
*note: client can deduct cost of appraisal fees from income

*header/footer on every page with: client name, appraiser's name & contact info, appraisal purpose, valuation system used, effective date, pagination (include # of photos)
*Cover page
*table of contents
*valuation summary
*limiting conditions, disclaimers, assumptions (authenticity), hypothetical & extraordinary assumptions
*appraiser's certification (include compliance with USPAP, fee structure, disinterest, acknowledgment that misrepresentation will result in penalties, & appraiser not disqualified by IRS)
*Appraiser's CV & qualifications for appraising the type of art in the report
*client name

*clearly defined scope of work -- includes the following:

-description of the appraisal assignment

-purpose of appraisal: estate valuation
-type of report: appraisal report (the most comprehensive type)
-intended users (generally client, accountant, estate executor)
-valuation type: Fair Market Value (if using auction results, include buyer's premium)
-definition of value & source
-market approach: comparative market analysis (state why used)
-marketplace: auction or retail
-effective date: date of death or 6 months later
-date & place of inspection
-report date
-market analysis
*Inventory & description of objects (noting nationality, artist, object type, medium, format, technique, date, size, relevant inscriptions & marks, boxes-for Asian paintings and object-, ownership interest
*references, artist bio, other notes
*provenance & price paid
*discuss authenticity if relevant
*COMPARABLES REQUIRED with discussion for: single items over $3000, groups of like items over $10,000
*photographs (mandatory for over $20,000)
*Firm Valuation for each object *SIGNATURE &Tax ID#
*Completion of appraiser's section of IRS form 8283