Parsons Fine Art Advisory

A buyer’s guide

Five questions to ask any appraiser before you engage one

Most people hire an appraiser once or twice in a lifetime, usually at a difficult moment, with no way to judge one from another. These five questions will sort the field in a single phone call. Ask them of anyone under consideration, this practice included.

1. How are you paid?

The only defensible answer is a rate for time, quoted in writing before work starts. An appraiser paid a percentage of value has an interest in the number, which is why contingent fees are prohibited under the USPAP Ethics Rule and rejected by the IRS. Ask for the rate, ask for an estimate, and ask what happens if the work runs beyond it.

2. Do you buy or sell?

An appraiser who might buy the property, sell it on commission or steer it to a saleroom has a stake in the outcome that no disclosure can fully cure. Dealers and auction specialists can be superb judges of objects; ask whose interest the number serves. This practice advises, does not transact, and takes no interest in any sale of property it appraises.

3. Is a sample report available?

The report is the product. A proper one identifies and describes each object, states the type of value and defines it with a source, explains the market evidence and the reasoning behind each figure, discloses the assumptions and limiting conditions, and ends in a signed certification. Anyone doing this work properly can show you a redacted example without hesitation.

4. What happens to the file afterwards?

Professional standards require the appraiser to keep a workfile, meaning the notes, photographs and market evidence behind the report, for at least five years, longer if testimony is involved, and to keep the assignment confidential. Ask how long records are kept, who can see them, and whether your photographs will ever appear in anyone’s marketing.

5. Will you defend the number?

A value is only as good as the appraiser’s willingness to stand behind it: in correspondence with an insurer, before an IRS examiner, or in testimony if it comes to that. Ask whether they have defended their work, whether they will appear if needed, and at what rate.

This practice’s answers to all five are on this site: the fees page publishes the rates, the services pages state the independence position, and the rest is available on request. Ask.

Common questions

Does an appraiser need a license?
Not for personal property. New York licenses real estate appraisers only; fine art and antiques appraisal is unregulated, which is why the five questions matter. The fee structure, the independence, the report and the file are how you tell the difference.
What should an appraisal cost?
An hourly rate, quoted as a range in writing before work starts; in this region, between $150 and $400 an hour depending on the purpose and the appraiser. It should never cost a percentage of the value. A very low flat fee usually signals a report built from a template rather than from research.
Is a dealer’s or auction house’s free valuation the same thing?
No. A free valuation from someone who might buy, sell or consign the property is a business development tool, and often a good one. It is not an independent appraisal, it will not satisfy the IRS or a court, and the number serves the transaction rather than you.
Can one appraisal be used for everything?
No. The purpose fixes the standard of value: insurance uses replacement value, the IRS uses fair market value, and matrimonial matters generally use marketable cash value. The same object carries different correct figures for different purposes, and a report prepared for one cannot simply be reused for another.

Put the practice to the test

Ask the five questions. The first conversation costs nothing, and inquiries are answered within one business day.

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