The Appraisal Process
An essential aspect of collecting fine art and preserving those objects for yourself and future generations, is an art appraisal. An art appraisal provides you with essential information about your collection and its value and should be updated every 3-5 years depending on the market. This information can then be used for insurance, or as a guide for equitable distribution, donation or gift.
- Insurance - RRV, Retail Replacement Value
- Estate - FMV, Fair Market Value
- Donation - FMV
- Gift or Partial Gift
- Charitable Contribution
- Damage and Loss - RRV/SV, Salvage Value
- Equitable Distribution- MCV, Marketable Cash Value
- Estate Planning
Other Art Services
- Cataloguing collections
- Available for lectures on art and art appraisals
- Appraisal Review
It is defined as an opinion of value.
In 1989, the US Congress enacted Title XI of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), which recognized USPAP, the Uniform Standards of Professional Appraisers Practice, as the generally accepted appraisal standards and requires USPAP compliance for appraisers in federally related transactions. Furthermore, USPAP addresses the ethical and performance obligations of appraisers through definitions, rules, standards, and statements. For further information see, www.appraisalfoundation.org. Appraisers should pass this exam and take the update every two years.
A work of art can have more than one value depending on the final destination of the object or to whom the report is designated. The most common values used in appraisals are:
- RR V - Retail Replacement Value, as defined by the AAA (Appraisers Association of America) as "the value of an object that is to be replaced with another of similar age, origin, appearance, provenance and condition, within a reasonable length of time in an appropriate related market."
- FMV - Fair Market Value. The IRS defines this value as, "the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts." If the seller puts a restriction on the use of the object donated, the "FMV must reflect that restriction." This value would include the buyer's premium and any commission.
- MCV - Marketable Cash Value is the net value of the object sold. It is similar to Fair Market Value but, in this case, the expenses, commissions and/or any other fees necessary to sell the object are not included.
- L V - Liquidation Value is applied when the seller is forced to sell property or is being forced to sell by a "crediting institution" and time constraints or limiting conditions are necessary.