What is it worth?

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What is it worth?

Most people don’t realize they have a need for an appraisal. The need for the appraisal is usually an event, such as insurance, loss, or value for division or liquidation, and you have sadly realized the need after the event has passed. There are many reasons to have an appraisal, but the most common one is for Insurance Purposes

Any item in your house worth more than your deductible should be appraised and added to a SPECIAL RIDER endorsement to your household insurance. Also, look at collections of items that might be more than the deductible if they were to be stolen or damaged at one time. While you may not have any items over your deductible, your collective may have many items near that limit such as carpets, art, jewelry, weapons, books, electronics, etc.

Take a look around your house to see what you have and do some guestimates on value. If the value or values, if lost in a catastrophic event, are more than the deductible, it might be time to sit down with your agent and review the policy limited and exclusions.

If you are a business owner, in particular, and owner with lots of equipment and or with significant modifications to your building, such as electrical, energy savings improvements, solar panels, etc

Estate Settlements
Damage Claims
Insurance Evaluations (including collector cars & trucks)
Private Trusts
Equitable Distribution among Heirs
Charitable Donations
Business Equipment Donations
Bankruptcy Evaluations
Divorce Property Settlements
Domestic Litigation Claims

Why are there so many different values for the same item? It is a fair question. You see on the television many different stories of closet trash to family treasures based upon the value of an item. The appraiser will often mention a price for insurance and a price for the market

Each different appraisal has to do with the market under which an item is to be valued. We all know there is always a price difference between credit and cash, well the same is true for appraisal between, Insurance, Market, Estate or marital dissolutions.

A most common appraisal is for Insurance Coverage

Next would be appraisal for Estates. This type of appraisal would be for Fair Market Value. It literally means, what would someone be willing to pay for this item if it were sold today? There are many complex databases of sold items to find the same or similar items. But if you wanted to get an idea – a bad ballpark – one can always see what was sold on Etsy or EBay to get a bad idea of value.

The following type of appraisals would also be using Fair Market Value for their appraisals. Divorce Settlements, Bankruptcy’s and evaluation of items not for estate purposes, such as items people are thinking of selling but do not have any idea of its value. As these items are unlikely to be sold – assuming the method of appraisal is consistent – it is a base line for an equal division of the assets can occur.

Appraisals for Charitable Contributions look at the replacement value of the item in today’s marketplace. This value has nothing to do with the original cost of the item. As the person receiving this item, if they were to purchase it, would have to pay more than the original cost.

Also, the appraiser has to take into consideration the local marketplace.   For example good quality oriental antiques sell for a higher price in the USA’s western coastal cities than in the heartland and even more than in the eastern coastal cities. Just as 4-Wheels Trucks sell for a higher price in the western USA than in the Eastern US, but estate jewelry and furs sell for more in the eastern coastal cities than in the west or mid-west.

As you can see, there could be many different values for the same item depending upon not just condition, but market for the appraisal, as well as the actual marketplace in which the items could be sold.

The last area of valuation are the intangible emotional values ascribed to items from our lives – be it an old plastic vase or sewing table or an old picture that hung in the family room where you grew up. The only adult solution I have seen is to have the heirs bunch all of those things together. Each is to write down in private what they are willing to pay for the item in real money. Sell the items to the highest bidder then divide the money equally amounts the heirs. It is too is imperfect.

So what is it worth? I have no idea. For real due diligence on values, you need to find and hire an expert.


L. Burke Files, DDP, CACM
International Due Diligence Organization

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