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What's the Value? Understanding Appraisals

By Dennis Gaffney for Antiques Roadshow, adapted by Liberty Mutual

Understanding Appraisals
When it comes to items like prized collectibles, beloved heirlooms, or antiques, you want to make sure that they're protected. The first step to ensuring items are fully covered by your personal property insurance is accurately assessing their value. Our friends at Antiques Roadshow on PBS have shared some of their expertise on this subject. Kerry Shrives, an Antiques Roadshow appraiser, says that figuring out a value is not as straightforward as many people imagine. That's because in the appraisal business, a collectible or antique actually has not one, but three values: its auction value, its retail value, and its insurance value. Shrives says people are often unfamiliar with the differences between the three terms.

Understanding Appraisals For example, the painting featured in this video has an estimated auction value between $30,000 to $60,000, but the appraiser suggests the insurance value would most likely come in closer to the $60,000 end of the range. So, what's the difference between these values? Here's what Shrives told us:

Auction Value. As the term suggests, an auction value is what a piece is expected to sell for at auction. "Auction value is what a piece would usually sell for on the open market, with nobody being forced to buy or sell," Shrives says. But sometimes at auctions bidders vie for rare and highly desirable pieces, triggering a competitive frenzy that can drive the price of an item much higher than its expected retail value. "This is why the most valuable items are often sold at auction - it's often the best way to realize maximum value for a rare object," says Shrives. With more ordinary pieces, auction prices usually are lower than what they would sell for at a retail shop. An auction value is usually the closest value to wholesale, Shrives says. This is because an auctioned piece is only on sale for a short period of time - until the auctioneer's hammer falls - which limits the demand. Shop dealers often ask, and can get, a higher price on an object because they can put it on display for weeks and months, waiting for just the right customer to walk through the door.

Retail Value. The retail price is the amount an object is expected to fetch in an antiques dealer's store. But this too can sometimes be a source of confusion. Antique owners are often surprised when they see a dealer buy one of their pieces at auction, only to turn around and sell it at a far higher price in their store. People trying to sell their pieces sometimes don't understand why a dealer won't buy their piece at its full retail value. "Dealers can't pay full [retail] value because if they do that they won't make any profit when they sell it," Shrives explains. She says the public should remember that dealers are business people, and that the vast majority of them are offering objects at retail prices the market can support.

Regional Values. To make sure there is no misunderstanding about value, Shrives says that appraisers almost always make efforts to explain which of the three values they are providing, "They'll say, 'In my shop this would go for ...' or 'At auction, this would sell for ...,'" Shrives explains. An addendum that appraisers rarely have time to add, however, is that any final sales price will typically also depend on what region of the country an object is sold in.
"A dealer with a shop on Madison Avenue in New York City has different overhead and different customers than a dealer in Bedford Hills, New York “It all comes down to what the market demand is," Shrives says. "Context is everything."

Insurance Value. For many antiques and collectibles, appraisers such as Shrives also provide what's known as an insurance value, so that the owner can replace an object if it is destroyed or stolen. Insurance values tend to be set at the top end of retail value. That is done, Shrives says, so that those who need to replace goods lost to theft or to accident will have enough insurance money to buy an equivalent item from a dealer at current prices. Unlike retail and auction values, which are often verbal, appraisers issue insurance values as formal written appraisals. People pay for these appraisals because they must be carefully researched and hold up to legal challenges. "You want a value that protects you," Shrives says.

Adapted from an article written by Dennis Gaffney for Antiques Roadshow on pbs.org/antiques

Liberty Mutual Insurance is a proud sponsor of Antiques Roadshow.

February 5, 2014, 9:00 AM

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