The Appraisal Basics (FAQ)
Learn more about the appraisal, what's included in a qualified report and other frequently asked questions (FAQ). We have also provided a glossary of relevant terms that can assist you in understanding your appraisal report.
You may use the links under the Appraisal Basics dropdown menu to navigate between sections of interest.
What is an appraisal?
Appraisals are informed judgements based upon facts and well researched data. Your appraiser must carefully follow specific guidelines for the development and communication of an appraisal assignment.
Since an appraisal is both an opinion as well as the process of determining value or estimating cost, you should choose an appraiser who is methodical and thorough in analyzing all relevant factors to help you find the appropriate estimate for or value of your artwork.
Value is defined as the monetary worth (at a designated point of time) which an informed purchaser would offer in exchange for an item of personal property taking into consideration a given market condition.
Cost refers to the amount of money paid for an item.
We can provide either an Appraisal Report or a Restricted Appraisal Report, which limits access to specified individuals.
For additional information about appraisals and the process, you can view the official brochure about Fine Art Valuation or the Uniform Standards of Professional Appraisal Practice (USPAP) created by The Appraisal Foundation.
Why Should I Hire a Professional Appraiser?
There are many personal and business reasons that would necessitate an appraisal.
For taxation purposes, the IRS might require you to provide a professional appraisal.
In the instance of an estate, you may need to know the worth of inherited works of art for estate tax liability and/or for consideration of equitable distribution among relatives.
If you donate a work of art to a museum, then an appraiser could calculate the appropriate income tax deduction for a non-cash charitable contribution.
You may also want to insure your art collection against theft, damage, or loss, in which case a qualified appraiser could generate a report for the insurance company that would provide evidence of condition and an estimate of replacement costs.
You may have a work of art that you want to sell or purchase. Having an appraisal would help you to make an informed decision on an asking or purchase price.
For general curiosity and knowledge, if you want to find out how much your art is worth or identify whether your painting or sculpture was created by a famous artist, investing in a professional appraisal could uncover the origin of your property and its potential value.
In any of these cases, it is important to make sure that you hire a qualified appraiser, like WFAA, who follows set standards of professional conduct and ethical behavior. That way you can be assured of an accurate, fact-based appraisal to rely upon.
What's Included in the Appraisal Report?
Our qualified appraisal reports adhere to the International Society of Appraisers Appraisal Report Writing Standard (ISA ARWS) and are USPAP-compliant.
The Appraisal Foundation in Washington D.C. sets forth the Uniform Standards of Professional Appraisal Practice (USPAP), adopted by Congress in 1989 as the ethical and performance standards for professional art appraisers in the U.S. The following are included in an appraisal report:
Glossary of Terms
According to the International Society of Appraisers (ISA).
“The cost to replace (by purchase, production, or reproduction) the item with a new or comparable substitute.”
Internal Revenue Regulation Section 1.170A-1(c)(2) defines FMV as “The price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.”
This approach anticipates gross proceeds expected from a hypothetical sale of the property and then subtracts any expenses associated with the sale, such as taxes, buyer’s premiums, dealer’s commissions, insurance, shipping, and handling.
“The cost to replace an item with another having similar qualities within a reasonable amount of time in the relevant marketplace.”
“The price in terms of cash or other precisely revealed terms that would be required to replace a property with another of similar age, quality, origin, appearance and condition within a reasonable length of time in an appropriate and relevant market.” This evaluation is a protective value, and as such, it reflects the highest price to replace the property as described without consideration of depreciation in the most relevant market.