Q: What is a qualified appraisal?
A: qualified appraisal is created by someone who has formal education in appraisal theory, principles, procedures, ethics and law. The appraiser should be up to date on the latest appraisal standards, particularly the Uniform Standards of Professional Appraisal Practice (USPAP). Continuing education and testing are the only ways to ensure this competence. The appraiser you hire should also be familiar with the type of property you want appraised and know how to value it correctly. Ask for a professional profile which lists the appraiser’s education and experience.
Q: What do the designations AM and CAPP mean?
A: These designations are awarded by a professional association to members who have achieved a certain level of experience and education (including the passing of tests). The AM designation refers to Accredited members. This level shows that the appraiser has passed the basic levels of coursework and passed the relevant tests. The CAPP designation refers to Certified members. This level shows that the appraiser has passed both basic and advanced levels of coursework and passed the relevant tests. The CAPP designation is the highest level of designation available. These designations are awarded by the International Society of Appraisers (ISA). Other organizations use different terms.
Q: What are the differences between an appraisal and an estimate of value?
A: An appraisal is a written report including a cover document explaining what type of value is being sought and how the appraisal is to be used, a description of the markets explored and their state, a complete listing of items with descriptions, the date and location of the inspection, the effective date of the report, the appraiser’s qualifications and the appraisers signature. A statement by the appraiser that he or she has no financial interest in the property or that such interest is disclosed in the report is required. Most appraisals include photographs and other additional information that could effect the value conclusions.
An estimate of value may be written or verbal but does not involve market research or many of the other elements of a written appraisal report. This type of report is an educated guess and should only be used for personal information and is not adequate for legal, insurance related or IRS related purposes.
Q: How do I know what type of appraisal I need?
A: Share the reason the appraisal is being performed with your appraiser. They can help you determine what type of appraisal you need to answer your value questions. Examples include valuing belongings to obtain insurance coverage, determining equitable distribution, claims settlement and charitable contribution amounts among other needs. The type of value you need determines how the appraiser proceeds and which rules apply.
Q: What does the client need to do to prepare for an appraisal?
Here are my favorite tips to share with my clients:
- Discuss the type of value needed with your attorney, accountant or insurance agent if the report is intended for their use so you can provide clear guidelines to your appraiser.
- Make a list of items to be appraised before the appraiser arrives.
- Remove extra items from the surface or area around the items to be appraised to make it easier for the appraiser to get a close look. Make sure there is an adequate light source for proper inspection.
- Provide any additional information you have about items such as receipts, old appraisals or documents which provide provenance.
Following these tips will allow the inspection and valuation processes to proceed quickly and ultimately save the client money.
Q: How should an appraiser handle items that may be outside their specialty area?
A: No one person can know about all types of personal property. Every appraiser should know his or her limits. A good appraiser has associates in other areas of expertise that can be called upon when necessary to assist in report completion. If an appraiser is not qualified to appraise the subject property they are ethically obligated to decline the job.