The most common question appraises are asked is “what is it worth?” It’s a logical question, but with so many definitions of value, it can be confusing for the layman and, at times, for the appraiser. There are at least seven different values for the same object, and the answer varies for each value.
Most people think that their Antiques Road Show item is worth what they hear when the appraiser provides the insurance value or projected auction estimate for the object. The owner may think, “I am rich!” until they learn the definition of the value given.
Insurance replacement value is the estimated cost that it would take to replace the object with an identical item or an object with similar qualities and usefulness in a reasonable amount of time. It includes the cost to purchase the item and the costs associated with finding and obtaining the item at fair market value, along with the possible help of an expert and the necessary expenses of packing and shipping. This is the highest value of an item and generally does not represent what the owner could get in cash.
An auction value estimate is what the estimator or auction house appraiser thinks the item might bring at a national or international specialized auction. An average is given. If the average is not met in many cases, the item is not sold, and the estimate was not its value for that auction.
Then there is the most commonly heard phrase: fair market value. This is the term associated with the IRS, taxable estates and, at times, estate settlement. The items are not sold, but a sale determines a value within a general marketplace. For example, a master artist’s work would not glean the highest value in a local market but would realize its actual value on the international market. This would be its fair market value.
Market value is what most people want. It is the most probable amount of money a buyer would pay for the item in a specific market. It is essentially the price for which the object would be sold in a shop or show; it is the secondary retail market value.
The value can differ by geographic location. For example, vintage rocking chairs have very little value in our area; however, that same rocker’s value would be more in a Midwest or Southern marketplace.
Items sold at an estate sale or an auction are considered an orderly liquidation when several prospective buyers have access to the items; therefore, the value can range from just under secondary market to 50% or less than market value. The lowest value is called forced liquidation. This is when the seller is forced to sell, and only one or two people have the opportunity to purchase the item.
There is also the value term called scrap value. At times there is significant value in an object from the standpoint of its parts or materials. Gold and silver are examples of items sold for scrap value. Parts of equipment, recycled items and clunkers all have value.
If you are bogged down by the quagmire of values and drowning in stuff, then you might not only need an appraisal service but the consulting arm of the business. Nevertheless, don’t dismiss the offer until you understand which value is being used.