William M. Novotny ISA AM
Personal Property Appraiser

There are Many Types of Personal Property Appraisal Intended Uses

Intended Use is the Basis for Appraisal Report Development

Understanding how a client will use an appraisal (intended use) is the most important task of the personal property appraiser. Intended use establishes the context for the appraisal problem and drives the appraisal process. Whether or not a report is credible or worthy of belief by a client is determined relevant to intended use. To understand intended use the appraiser must communicate carefully with the client in order to properly understand their needs and objectives, and subsequently, in order to solve the valuation problem. There are many reasons that cause a client to seek an appraisal.  For example the appraiser may be needed to:
Detail of a hand dovetailed drawer of an antique chesgtFor each appraisal request there is a relevant intended use that must be properly identified. Once intended use and the other elements of problem identification have been understood, there is an appropriate solution to the appraisal problem, and a necessary scope of work to be determined and performed when an appraiser accepts an assignment as competent. The credibility of the appraisers opinions, analyses and conclusions is established relevant to intended use.

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 or credible relevant to intended use.

Large Loss Appraisals

When the intended use includes settling a very large damage loss claim a statistical sampling approach can save substantial time and costs while still solving the appraisal problem.

Novotny has entered into a partnership with Dave Maloney and Richard Holgate to form Large Loss Appraisals, LLC (LLA). Large Loss Appraisals has developed, with assistance from statisticians and a database expert, a statistical methodology that can value all subject properties based on a limited sample of equivalent subject property types that have been  randomly selected for appraisal. LLA offers clients substantial savings while  providing credible valuation results having a 95% level of confidence that the projected values are within 10% of their true value.

Large Loss Appraisals can solve large loss valuation assignments with low cost, fast turnaround time and with a very high, mathematically established level of reliability that should be acceptable to intended users. FIND OUT MORE NOW!

 Informal Oral Report Example

Many clients seek to avoid the extra expense of a formally written appraisal report when no report is even required. What they seek is a credible oral report that properly addresses their valuation questions relevant to intended use. Oral appraisals are very fast paced, cost effective and sometimes result in the discovery of a hidden treasure.

In October of 2011 Novotny spent half a day identifying and helping to inventory the contents of a large home with high value contents. The client requested an oral appraisal report for estate planning and decision making. 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 and rare Asian objects for further consultation with an insurance underwriter to determine if it would be necessary to acquire an insurance floater or a scheduled endorsement to the current insurance policy. 

The client owned some very old Chinese porcelain and snuff bottles, of apparent quality and rarity. The apparent importance of some of these objects exceeded his otherwise extensive general expertise with Asian objects. Novotny referred the client to a specialist Far Eastern Asian objects appraiser as the collection was far too important for an oral appraisal. Novotny is very familiar with most, but not all 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 for selected objects of importance with which the client was unfamiliar. 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 the client had relevant to intended use.

During the onsite inspection and appraisal Novotny selected the properties that needed research using the client's computer and internet connection. Novotny follows his typical research procedures while using his usual internet sources in order to inform or confirm his opinion. Clients are comforted to see the basis for his opinion. The client was amazed to see the many comparable examples that had recently sold at auction.

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 a good fit to solve your valuation problem. Read more about the different intended uses of appraisals below.

Types of Intended Use

 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 toMexican Silver Tea and Coffer Service 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

Personal property often has more than one party with an ownership interest. Frequently value is in dispute and the parties need expert valuation. During the dissolution of marriage personal property marital assets that are community property must be equitably distributed based upon a determination of fair market value. This may require the services of a personal property appraiser when the dispute cannot be resolved between the parties.
Pair of bulldog figures keeping a watchful eyeFrequently in trust or estate management situations there are multiple beneficiaries of the personal property and the property requires a fair market valuation in order to be distributed equitably.

Part or all of the appraisal process can be conducted without a written report (when a written report is not required for legal purposes). An oral valuation report can be requested by a party or parties with an interest in the value of the subject property.  An oral valuation report can substantially reduce appraisal costs.  For Novotny to provide an oral report, all parties must agree to retain Novotny, and to be present during Novotny's inspection and valuation.

If the parties accept the stated value then no further appraisal service is needed. If a party contests the stated value, and If a computer is available onsite, Novotny can, if requested, quickly demonstrate the range of published sales of comparable objects. He can also do this, if requested, later at his office and report back to the clients and, as directed, to intended users.

If, on the other hand, a party(s) requires  a written report, at increased cost, Novotny will prepare a written report. He creates formally written appraisal reports nearly every day of his life for various intended uses. Written and oral reports must meet USPAP requirements.

 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 the Uniform Standards of Professional Appraisal Practice (USPAP).

Novotny is a sterling flatware and hollowware appraiser

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.

An appraisal may be needed for trust or probate purposes, estate planning, equitable distribution and informed decision making. The client may need either a formally written report or an oral report.

 Insurance Appraisals

There are two types of replacement or repair coverage that apply to personal property. Clients may need to obtain insurance or to settle a damage or loss claim. Insurance companies and the moving and storage industry each provide a different type of coverage. Each is governed by different federal laws.

The insurance industry provides home-owner's and renter's insurance for personal property. There are also endorsement and floaters available when property is specifically scheduled independently of the home-owners policy.

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 objects which have 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
Chinese Celadon Porcelain Bowl damaged in shipment
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 valuation problems. Novotny has the experience to solve client's insurance valuation problems regarding personal property, antiques and collectibles. Novotny can help you in the following manner:

•    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.

 Shipping and Storage Damage or Loss Claims

When property is damaged while shipping, either by improper packing or careless handling, an appraisal is frequently required. Moving and storage claims, while similar in some respects, are considerably different from insurance  claims.

Novotny has handled many high value moving and storage claims. Sometimes a damaged object of lesser value also requires a formally written appraisal. Written appraisals are considerably more expensive than oral appraisals, and they must comply with the reporting requirements of the Uniform Standards of Professional Appraisal Practice (USPAP).  Failure to do so properly results in a USPAP violation which is not acceptable.

Novotny developed an abbreviated, low cost, formally written, single page appraisal report template. This template allows Novotny to selectively appraise, and properly report,  the value of single damaged objects at a reduced cost.
Contact Novotny Now to properly value your shipping damage or loss claim.

Jazz musicians painting appraisal Deco molded glass chandelier appraisal Oak Advertising Diamond Dyes merchant Cabinet Vintage painted floor standing butler with tray

 Estate Planning

What is the value of your personal property? How do you want to distribute your personal property? 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.

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.

Many clients request Novotny to assist them in preparing an inventory that identifies and lists the market value of their personal property. When Novotny provides an oral valuation the appraisal will include sufficient signed paperwork to identify the appraisal problem and important disclosures so users can always meaningfully understand the appraisal. The client is provided with a CV and signed appraiser's certification. Since the inventory and valuation is oral, clients typically document a Novotny oral report by means of
    •    taking an audio or video tape of Novotny's oral appraisal report,
    •    taking handwritten notes that documents and values the objects,
    •    preparing an excel spreadsheet
    •    and taking digital photos
All of the above, whether done orally or by means of a formally prepared report should be retained off site in a safe or safety deposit box.

 Oral Valuation to Assist in Decision Making

The client may need an appraiser  to provide information to make decisions such as whether to insure, sell, dispose or distribute selected personal property. Client seek the advice of Novotny  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 should be donated or need to be more formally appraised to insure proper insurance coverage 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, relevant and properly 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 or digital 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 use and intended users, the value definition, the effective date, assignment conditions and his scope or work. He also provides his CV and a signed oral report summary with a USPAP Certification Statement.

Sometimes the client only needs assistance relevant to property liquidation. The focus is less on value and more on orderly liquidation while minimizing time requirements, cost and effort. Oral sales advisories usually do not require a costly formal written report.

 Sales Advisory

Clients frequently need assistance in identifying objects that may require a specialized market to achieve the highest value and with pricing ordinary objects for onsite 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 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.  Such advice often covers issues such as advertising, security and traffic flow. An oral appraisal report is a cost effective way to become informed regarding the price range at which property will probably sell with time restraints.
Grouping of molded glass and cut crystal objects
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

Whether or not a personal property appraisal report is credible,
or worthy of belief,
must be judged
based upon relevancy to the
 client's intended use of the report.

The appraiser must determine the scope of work necessary to solve the appraisal problem. This determination is based on a proper understanding of the client's valuation problem.

The appraiser must identify all assignment elements including the client, intended users, intended use, the definition of value, effective date, relevant property characteristics and assignment conditions such as limiting conditions and assumptions.  But most importantly intended use.
The intended use will cause a client to make decisions or take an action based upon reliance upon the appraisal. Once the appraiser understands the appraisal problem, especially intended use, he or she is able to determine the relevant market to research and make other scope of work decisions. Whether or not a report is credible is established relevant to intended use.

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 provide a credible answer the questions asked? Is it worthy of belief?
  • 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! My report is credible”, 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.

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

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