Photo credit: Krystal Black, Unsplash.
Sarah Reeder, ISA CAPP is the owner of Artifactual History® Appraisal and the Co-Editor of Worthwhile Magazine™. She is a Certified Member of the International Society of Appraisers with the Private Client Services designation and an Accredited Member of the Appraisers Association of America.
The appraisal process can be complex and confusing depending on the items to be appraised or the specific purpose of the appraisal report.
As a professional appraiser and owner of Artifactual History® Appraisal, I often spend a lot of time at the beginning of each project working through the details of the appraisal with my new clients. Each scope of work is different depending on the collector's needs and it's important to flush out those details.
That being said, the actual appraisal process from start to finish can be broken down into a series of steps, which I'll offer here so you know what to expect.
Step 1: Determine if you need an appraisal
An appraisal is an opinion of value, ideally prepared in compliance with the Uniform Standards of Professional Appraisal Practice by a professional appraiser.
Some people don’t actually need a written appraisal report for their needs. That's why it is important for me to have an initial conversation with the potential client. Sometimes they just need to confirm that specific items don’t have high value in the current market.
Common reasons someone may need an appraisal are for insurance coverage of their collection, for estate planning purposes, for estate tax or probate, for equitable distribution, or for an insurance damage claim.
Step 2: Start looking for a professional appraiser
It can be pretty overwhelming to locate an appraiser. I recommend looking for an appraiser who is a member of one of the three major professional organizations: the Appraisers Association of America, the International Society of Appraisers, and the American Society of Appraisers. All members of these three organizations must be USPAP-compliant, have codes of ethics, and continuing education requirements to retain their membership status.
Each organization has its own database to help you find an appraiser who is a member in your area. There are additional filters that help you locate appraisers who specialize in the type of items you want to have appraised.
Step 3: Reach out to potential appraisers
Don't be shy about contacting multiple appraisers to see if your project would be a good fit for their expertise. While each appraiser has their own business practices, some appraisal firms (like mine) do not have an “access charge” where a payment is required from potential clients to review initial photographs of the objects they are seeking to have appraised.
If you feel uncomfortable with the appraisers you’ve been talking to, keep calling more. Appraising is such an intimate activity where you are inviting relative strangers to evaluate your most cherished possessions, and it is really important that you feel comfortable with the appraiser you eventually select.
Step 4: Choose a professional appraiser to work with
Congratulations! You’ve found an appraiser you want to work with. Now you get to reach out to the appraiser, indicate your interest, and begin the process of working together.
Step 5: Confirm the appraisal report’s scope of work
You collaboratively design the appraisal report’s scope of work with the appraiser and sign a contract. This step includes discussing which items you would like to have appraised and what intended use the appraisal should be written for. The appraiser may suggest you reach out to certain experts to confirm key details of the assignment, such as your attorney or accountant for an estate appraisal, or your insurance agent to determine your scheduling threshold for an insurance appraisal report.
Once you are clear on the total number of items to be appraised, the appraiser will likely provide you with an estimate of total project cost and give you a contract to sign for the project. A deposit may be due to your appraiser at the time of signing the contract.
Photo credit: Dom, Unsplash
Step 6: Schedule an on-site appointment or virtual inspection
The appraiser schedules an on-site appointment with you, or through the COVID-19 pandemic, makes arrangements to obtain the necessary photographs and information as part of a virtual inspection of the items to be appraised.
Step 7: The appraisal inspection occurs
If it is possible to do so safely, the appraiser conducts the on-site inspection of the items to be appraised, photographing, measuring, and doing condition reports. Many of my on-site inspections take several hours to complete.
If you have helpful provenance documents like receipts, your appraiser will be very appreciative if you can have them available to review and document! I like to photograph all provenance items and embed them digitally within my appraisal reports. If you store your provenance documents in a database system like Artwork Archive, you can send digital copies directly from your account.
Step 8: The appraiser inputs inspection data and formats the appraisal report
Back in the appraiser’s office, (s)he downloads the photographs from the on-site inspection, selects the best ones to include in the report, and carefully inputs the inspection notes into the USPAP-compliant appraisal format, and fully catalogs the items to be appraised.
Most people who aren’t appraisers don’t realize just how long this can take us. If you have your collection already catalogued using a service like Artwork Archive, it can save the appraiser time and save you money!
You can log appraisal values, information and upload documents to a safe and secure database like Artwork Archive—keeping the information on hand for future appraisals, insurance and financial needs, or estate planning.
Step 9: The appraiser conducts valuation research and analysis
It’s only at this step that appraisers really get to the meat of our work: the valuation research and analysis. This can look different depending on the specific assignment, but it typically can include things like contacting galleries and artists to inquire about private pricing, scouring auction records for similar sales, and studying how similar the available pieces (or “comparables” as we say in the appraisal field) are to the items we are appraising.
As professional appraisers, we have to evaluate the data and make adjustments as appropriate to arrive at the final appraised values. This part of our work is also meticulous and time-consuming.
Step 10: The appraiser writes and finalizes your appraisal report
As appraisers, we are starting to see the light at the end of the tunnel! Now that we’ve completed our research and analysis, we just have to document it and write these findings in the appraisal report.
Step 11: The appraiser delivers your appraisal report
Once your appraiser has completed your appraisal report, it is delivered to you in the format of your choice. Some appraisers send paper copies and others deliver an electronic report, usually as a pdf file, through a secure method.
You can photograph or scan paper copies into your Artwork Archive account. The system has an Appraisals section on each object record, and by adding the appraisal value, you also automatically update the market price.
The final deposit payment for the appraisal project is usually due at this time unless payment in advance was part of the contract. If you have any questions about your report after reviewing its contents, your appraiser should be happy to answer any questions you may have.
BONUS STEP: Appraisal update!
In three to five years, it is a great idea to circle back to your appraiser to have an appraisal update, particularly if your report was for insurance coverage.
The art market is constantly changing (much like the stock market) and it is wise to have your appraiser prepare an appraisal update every few years to make sure your insurance coverage is in line with the current state of the market. It is usually less expensive than the initial report since your appraiser is already familiar with your collection and doesn’t need to catalog the items again. The appraiser just has to assess the current condition of the items and do new market research.