Black’s Law Dictionary defines an appraisal as “a valuation or an estimation of value of property by disinterested persons of suitable qualifications” and “the process of ascertaining a value of an asset or liability that involves expert opinion rather than explicit market transactions.”
A professionally prepared appraisal will provide:
• The objective. Estimating the value of a property.
• The intended use or function. There are several intended uses of functions for appraisals, such as insurance, taxation, distribution, and liquidation. An appraisal can have only one intended use.
• The purpose of the appraisal, or type of value. There are many types of value, and one type must be selected that is appropriate to both the objective and intended use of the appraisal.
• The definition of the type of value used. Please see Types of Appraisals.
• The scope of the appraisal (range of information needed for a specific assignment).
Proof of Ownership:
• Establishment of ownership is vital to any insurance, estate or other legal claim that may arise. Having your jewelry thoroughly and properly documented will also serve as a basis for subsequent updating; this makes updating an easier and less costly process. Often a simple process of inspection, with value updating, is sufficient to maintain proper insurance coverage.
Types of Appraisals:
• Replacement Value/ Insurance Value: Customarily understood to represent the amount of money required to replace a property with another of similar type, nature and quality. An insurer prior to scheduling on a policy requires this type of appraisal. Scheduling will protect a property owner beyond a minimum amount (usually a limited, aggregate dollar amount allowed for all unscheduled personal property). Insurance policies for scheduled and unscheduled property can vary significantly; you should review your particular type of coverage (its benefits and limitations) with your insurance agent prior to the appraisal process.
• Estate Settlement/ Fair Market Value: An estate appraisal is a legal document; the terms of which are framed by the IRS, specifically for the purpose of establishing federal tax liabilities for estates, income, gifts or charitable donation. Fair Market Value is essentially a hypothetical value assuming a pre-determined sale- the amount the jewelry would sell for, in its present and used condition, to a disinterested third party, for his/her own use. Other specific requirements apply, and meeting those requirements with a concisely written appraisal document may well allay further complications and an IRS audit.
• Property Distribution/ Equitable Division: This type of appraisal addresses in specific part, the need for arriving at estimates of value that reflect just compensation to individuals of jointly held property (i.e. division of estate property among heirs). The tenet of valuation is that the participating individuals might receive portions of jewelry, furnishings, art, real property (real estate) etc. And that the specific appraisal should facilitate a fair division.
• Marketable Cash Value: This type of appraisal is most commonly used for collateral appraisals, or in cases where the sale of property is contemplated or desired. This appraisal anticipates the net proceeds for cash-in-hand that would be yielded from an orderly sale of a property, after all costs involved in selling the property are subtracted (i.e., the estimated net amount that would be received by the seller).
• Liquidation: This type of appraisal assumes the concept of Value–in–Exchange. This assumes a forced liquidation and/or orderly liquidation; jurisdictional guidelines impending.
• Forced: When property must be sold without regard to the relevant marketplace. This anticipates cash terms, limited conditions and time constraints.
• Orderly: Property liquidation allowing a range of possible marketing scenarios; consignment, geographically propitious markets, auctions etc.
*Other market situations and conditions may be encountered that are not addressed here. Please contact Elliott Appraisers with further questions.
THE APPRAISAL DOCUMENT
What does your valuation contain?
• Definition of value: the Intended Use of the appraisal, defining the reason or function of the appraisal; the Purpose, or type of value chosen, pursuant to the Intended Use.
• A detailed and expertly written description of each item, including metals and fineness, physical measurements, design and style elements, estimated vintage (when applicable).
• Gemstone identifications, measurements, estimated weights, listed counts and total weights, quality analyses.
• Diamond Report, for principle diamonds 1.00ct. and over, as requested.
• Color digital image of each item, or digital photoscans laid into document.
• Provenance, or history of an item (when provided by the owner or authorized agent) will be detailed in the appraiser’s notes; and if applicable, any comments regarding period, style, cultural, and/or artistic importance to value.
• Indication of wear, originality and condition.
You will receive an original document, and one authorized copy. Additional copies may be ordered.
