A Primary Task: The Appraisal must be Relevant to Intended Use

Understanding how a client will use an appraisal (intended use) is the most important task of the appraiser. To do so the appraiser must communicate carefully with the client. There are many reasons that cause a client to seek an appraisal. For example the appraiser may be needed to:

provide litigation support to help settle a legal dispute regarding property value,
determine value to acquire personal property insurance or settle a damage or loss claim,
determine value for IRS tax purposes or for estate, trust or probate management,
determine value for equitable distribution, orderly liquidation or decision making.

For each different reason (intended use) there is a different solution to the appraisal problem and a different scope of work to be determined and performed. Intended use drives the appraisal process.

Based upon intended use the appraiser must identify the appropriate value definition and conditions that apply. This guides the appraiser to identify the appropriate market(s) to investigate that will produce relevant evidence regarding the value of the object. The scope of work varies based upon the intended use and other assignment conditions. See also the final task which is to ensure that the report is worthy of belief relevant to intended use.

For example, in October of 2011 Novotny spent half a day identifying and helping to inventory the contents of a large home with high value contents. She requested a Novotny oral appraisal report for estate planning. The home was located in a high risk fire area. In the event of a destructive fire the client also wanted to know exactly what was lost in order to submit a proper homeowners insurance claim for a policy that was already established.

The client also wanted Novotny to help identify appreciating high value art, antiques, rugs, rare ceramics and other objects for further consultation with an insurance underwriter to acquire an insurance floater or a scheduled endorsement to the current insurance policy.

For the very special collection of several hundred year old Chinese porcelain and snuff bottles, of exceptional quality and rarity, Novotny referred the client to a specialist Fare Eastern Asian objects appraiser as the collection was far too important for oral appraisal by Novotny. Novotny is very familiar with most Asian fine and decorative art.

The client hired a third party to document Novotny's consulting and sometimes oral appraisal report on a video camera. Novotny was able to direct the videographer to focus on specific objects (eg books or groups of books in the library) of above average value, rarity or importance. He also pointed out significant value characteristics and marks etc. The client took notes to begin the object inventory. Novotny recommended that the video, the inventory and relevant purchase receipts be stored in a bank vault.

Novotny could have provided a formal appraisal report to this client, but it was not required by the client at this time, and the informal approach saved the client considerable cost, while answering all of the underlying identification or valuation questions.

During the onsite inspection and appraisal certain properties were researched using the client's computer and internet connection. The client was amazed to see the many comparable examples that had recently sold at auction that Novotny was able to find and analyze before her in minutes to inform or confirm his opinion.

The following day she sent Novotny this email:

Dear Mr. Novotny, You are as wonderful as I would have surmised from your excellent website. Thank you so much for the long, hot trek to our mountaintop yesterday -- not to mention for your impressive expertise! I learned so much. I felt as though I had a private tutorial in the art of appraising!

Thank you, as well, for your referral to the Asian arts appraiser. With best regards and again, my gratitude -- Nancy

See the general types of property that Novotny typically can appraise. Contact Novotny for a free consultation to determine if he is good fit to solve your valuation problem. Read more about the different intended uses of appraisals below.

Trust and Probate Appraisals

A trust is a legal mechanism that establishes how and when your assets will be distributed upon your death. Trusts can help you reduce your estate and gift taxes and distribute assets without the cost, delay and publicity of probate court which administers wills. Estate Planning is an important part of this process.

When someone dies, with a will or a trust, the antiques and personal property frequently need to

be valued by an ethical and competent appraiser to determine fair market value. Novotny will document and value your antiques and personal property as required and appropriate. The formal report must meet the probate court’s requirements and the needs of intended users.

Assets held in joint tenancy may not be subject to probate or trust administration, but they may still have to be valued for estate tax purposes or to establish a basis for later IRS tax purposes (a step up). The IRS can require an itemized list and valuation of person property.

Equitable Distribution and Divorce

Frequently personal property has more than one party with an ownership interest in which the value is in dispute or needs expert valuation.

During the dissolution of marriage the division of personal property marital assets that are community property frequently requires the services of a personal property appraiser. An appraiser is needed to determine the market value of such assets to assist intended users in equitable distribution.

Frequently in trust or estate management situations there are multiple beneficiaries of the personal property and the property requires valuation in order to be distributed equitably.

In some states if one or more of the owners have only a minimal ownership interest, and if a sale would not promote the interests of the owners, the court may order the equitable distribution of such property with payment of just compensation to the owners with such minimal interests. An appraisal may be required in such situations.

IRS Tax Appraisals

Require a Qualified Appraiser and Qualified Appraisal
As of August 2006 the Internal Revenue Service (IRS) began reviewing and changing the rules. Notice 2006-96 was issued providing guidance for defining a qualified appraiser. When the appraiser can fulfill these requirements it will be a good indication that an appraisal for estate tax reporting or charitable contributions will be reviewed positively. Recent changes in the law (Pension Protection Act, 2006) affect the process of charitable contribution.

The IRS recognized the need to better define a qualified appraisal. Proposed regulations (§1.170A-17(a) will establish that a qualified appraisal means an appraisal document that is prepared by a qualified appraiser in accordance with generally accepted appraisal standards such as USPAP.

USPAP will set the benchmarks going forward. The general antique and personal property appraiser must have the knowledge and experience to identify, understand and manage the requirements established by law, IRS regulations and USPAP.

There are many specific requirements relating to non-cash charitable donation and estate tax (decedent 706 estate tax returns) of the IRS that an appraiser must be familiar with and capable of fulfilling. For instance, for tax returns after August 2006 the appraiser must:

• have earned an appraisal designation from a recognized professional appraiser organization,

• regularly perform appraisals for compensation, and

• have verifiable education and experience in valuing the type of property being appraised

Novotny has prepared many IRS tax appraisal reports in compliance with IRS regulations and USPAP. Novotny is a qualified IRS appraiser able to perform IRS tax appraisals for most residential contents appraisals and for many property types.

Insurance Appraisals

Within a homeowner's insurance policy some personal property items are subject to limits such as antiques, jewelry, fine art, collector items and rare objects. Personal property floaters are used to insure personal property which has limited coverage under a standard policy. This can also be accomplished through an endorsement, a provision that changes the original policy coverage. These options offer expanded coverage for individual items or item types that are not otherwise covered. The expanded coverage establishes an agreed value that reflects replacement cost without depreciation. Personal property that is frequently scheduled to expand coverage include:

• Jewelry and antiques
• Furs: real fur garments and garments trimmed with real fur
• Cameras: digital, still, movie, video and equipment
• Musical instruments: professional and non-professional
• Silverware, antique silver and sterling objects and rare decorative art
• Fine Arts: paintings, etchings, bronzes and sculptures
• Manuscripts and books, and antique furniture
• Golfer's equipment: matched sets of golf clubs and clothing
• Sports equipment: fishing gear, archery and hunting gear
• Stamp or coin collections
• Hand tools and power tools owned for business purposes

When your personal property or antiques need to be scheduled, or when insured object(s) are damaged or lost, an appraisal is often required to establish value. Novotny serves private parties, insurance adjusters and litigators with personal property insurance problems. Novotny has the experience to solve client's insurance valuation problems regarding personal property, antiques and collectibles. Novotny can help you

•    Acquire insurance and establish object identification for recovery
•    Value an insured loss or a moving and storage damage claim
•    Act as an appraiser on an appraisal panel under the insurance appraisal clause
•    Serve as an expert appraiser in the mediation and litigation of a disputed insured loss

Protect yourself now. To properly document your personal property assets you should:
•    Gather and keep all sales receipts of major purchases.
•    Take a video inventory or photographic inventory of your personal property.
•    Develop a list of important personal property.
•    Keep your documentation in a safe place.

If you need personal property inventory documentation or insurance valuation contact Novotny.

Estate Planning

There are federal and state laws governing estates. Careful estate planning allows you to communicate and establish your intentions, priorities, concerns and preferences should you be unable to manage your affairs or unexpectedly pass away.

Estate planning can include establishing your trust, will, living will, health-care-proxy and assignment of power of attorney. Should you die without a trust or will the state will distribute your assets based on arbitrary formula that may not be congruent with your intentions. Family conflict could occur and increased legal or administrative costs accrue.

What is the value of your personal property? How do you want to distribute your personal property. To determine value, or to be equitable, sometimes an appraisal is necessary. When you have antiques, fine art, oriental rugs, collectibles and fine jewelry etc., an inventory and valuation of your important personal property assets should be considered.

Novotny can assist you in preparing an inventory and valuation of important personal property by means of a formal inventory or appraisal report.

Some clients require only an informal oral report by which they are able to inventory and list the market value of their personal property. Frequently they will document a Novotny oral report by means of an audio or video tape, handwritten notes that document contents, an excel spreadsheet and digital photos retained off site in a safe or safety deposit box.

Oral Valuation to Assist in Decision Making

Some clients have less formal valuation problems. The client may need an appraiser to provide information to make decisions such as whether to insure, sell, dispose or distribute selected personal property. The client may seek the advice of an appraiser to assist them in making downsizing decisions.

The client may request an oral report so they can be properly informed to make the necessary decisions without the additional cost that applies to a written formal report which may not be required or requested. Clients may, in the course of an oral report, decide that selected items need to be more formally appraised and consequently request a formal report.

When an oral appraisal report is provided, the client (or the client's agent) must document and report Novotny's opinions, analyses and conclusions. The client may document the oral appraisal by means of an audio or visual tape, or by written documentation.

The client can attach their documentations of the oral appraisal report to the documents that Novotny will provide so that the assembled documents are meaningful and better understood. The client should retain some photographic evidence of the subject property as part of that documentation. Oral appraisals have a reduced scope of work in order to be cost effective and affordable, while still being credible (relevant to intended use) and still solving the clients appraisal problem as presented.

Novotny retains a micro-cassette audio recording that documents his onsite relevant narrative including his limiting conditions, assumptions, opinions, analyses and conclusions. He does not take photographs unless specifically requested as part of the contract.

For oral appraisal reports Novotny requires that intended users be present. Novotny provides clients with a signed formal contract with identifies intended users, the value definition, the effective date and assignment conditions. He provides his CV, a signed oral report summary and a signed USPAP Certification statement.

It is the client's responsibility to communicate Novotny's oral report truthfully and factually. Novotny does not allow there to be other intended users.

Find out more about a Novotny Oral Appraisal Report

Sales Advisory

When the intended use of the valuation is to sell or liquidate personal property, and the client needs assistance in pricing the property for sale, clients frequently request Novotny to provide an oral (Antiques Roadshow type) appraisal report only. During the oral valuation Novotny will identify the property and provide a price range. When relevant he will identify and discuss appropriate competing markets. When the client intends to personally manage the liquidation of the personal property, Novotny will provide advice, as requested, about how to properly organize, produce and conduct an onsite estate, tag or garage sale.

If necessary, and required by the client, Novotny will prepare a formal written appraisal report for the sales advisory.

If Novotny is requested to conduct an estate sale, rather than price the property for his standard fee, Novotny will decline the appraisal assignment and offer his services as an estate sale agent or broker.

Appraisal Review

Appraisers should comply with USPAP, a minimum standard, as well as the standards of their professional society. If their work is faulty, as can happen, a client can be harmed. In most cases money distribution is impacted. The appraiser should be held accountable. The public has a right to expect ethical and competent performance of appraisers. The primary purpose of USPAP is to protect the public.

Novotny's expertise in USPAP, and his certification as an AQB Certified USPAP instructor, has resulted in occasional requests for him to review the quality of the work of another appraiser. Novotny's background in personal property valuation, in appraisal course development, as an AQB Certified USPAP instructor and as an instructor of appraisal theory, methods and practice works together to help him perform appraisal reviews.

Appraisal Reviews focus on the quality of the work of another appraiser based on USPAP and relevant standards of care. Some appraisal review assignments also require the appraiser to give his or her opinion as the the value of the subject property.

The Appraiser's Task

The credibility, or the worthiness of belief of the appraisal,
is judged relevant to the client's intended use.

The appraiser must determine the scope of work necessary to solve the appraisal problem based on a proper understanding of the client's valuation problem, particularly intended use, The intended use will cause a client to make decisions or take an action based upon reliance upon the appraisal. Only after the appraiser has identified the client's problem can he or she determine whether or not they possess the competency to accept the assignment. Once the assignment is accepted the appraiser must do whatever is necessary to develop credible assignment results.

Before concluding an assignment the appraiser must ask him or herself:

Was the problem properly identified? Did my report credibly answer the questions asked?

Should my client feel comfortable placing his or her reliance on my opinions, analyses and conclusions?

Does the report have proper disclosures, is it logical, complete, relevant, easy to follow, meaningful and not misleading?

Have I complied with USPAP?

Signing the USPAP certification statement, is, in effect, attesting that the answer to these questions is “Yes!”, thereby providing the client with a reason to put his or her confidence in the appraisal report. Find out more about how USPAP protects public trust in appraisers by establishing the minimum standards for appraisers.

Novotny will comply with USPAP, as well as the ANA and ISA Code of Ethics and Conduct and the ISA Report Writing Standard in all appraisal assignments. Quality matters.

To find out more about Novotny's Appraisal Services visit his HOME PAGE now.

To find out how Novotny acquired 30+ years of appraisal experience see ABOUT US

To find out more about the types of personal property appraised visit PROPERTY TYPES
If you need a generalist antiques and personal property appraiser CONTACT NOVOTNY