A Consumer’s Guide to the Appraisal Process for Art and Antique Appraisal Reports
One of the most frequently asked questions I receive from new clients in my appraisal firm is “what is the appraisal process?” This is a very reasonable inquiry as the steps of creating an appraisal report aren’t widely known outside of our field, and the few depictions of appraising we see in popular culture are often highly simplified stereotypes. This article was written to give consumers general information about the typical process an appraiser of personal property (such as an appraiser of art or antiques) goes through to prepare an appraisal report written in compliance with the Uniform Standards of Professional Appraisal Practice, commonly known as USPAP. While each appraisal assignment is unique, and the scope of work will differ depending on the specific circumstances of the assignment, the following is a general description of what consumers can expect when they work with an art or antique appraiser.
To begin with, something very important for consumers to understand is that an appraiser who works in compliance with USPAP is required to be impartial and objective, with no vested interest in the item being appraised. There are a lot of people working outside of USPAP who call themselves appraisers who, in reality, are functioning like dealers, and this can cause confusion for consumers. I am often asked “Can you tell me how much this is worth and then buy it from me?” and the answer is I can’t. There is a fundamental conflict of interest embedded in the question between 1) how much is something worth (there is a much longer tangent about how much something is worth at what specific level of value and for what intended use, but I’ve already discussed this in a previous article) and 2) how much the person offering to purchase said item is willing to offer for it, which of course is impacted by their own goals, such as profit margin for resale.
As a USPAP-compliant appraiser, I can only appraise an item, not appraise and purchase it. In my firm I don’t purchase at all, but it is common for appraisers to also have different roles as dealers or gallery owners. There is nothing wrong with holding multiple professional roles, but the important thing is an appraiser is not mixing their roles with the same object at the same time.
There are many occasions when people want to sell items, and working with a dealer to purchase the items is a practical solution—the main thing to keep in mind is that these interactions where a dealer makes a purchase offer are not appraisals. Dealers have a lot of overhead they must pay to run their businesses and often maintain a brick-and-mortar establishment, so it’s reasonable for them to factor in their own costs and profit margin when they make a purchase offer. That number is what they are willing to offer, not an objective numerical statement of “worth.”
Avoiding conflict of interest issues is another reason why appraisers who work in compliance with USPAP are also prohibited from charging contingent fees, such as fees that are based on a percentage of appraised value. It is typical for appraisers to charge by the hour or a project rate.
The first step in the appraisal process is discussing your project needs with the appraiser and establishing a scope of work. At this stage, the appraiser will communicate their fee schedule to you and, if enough information about the total scope of the project is known, may give an anticipated estimate of project size.
The next step usually includes the appraiser providing you with a contract to review and sign to officially commence work. The contract usually contains details about payment responsibilities and may include a project retainer or deposit amount due at the beginning of the project.
A special note to consumers: Please don’t be offended by language detailing interest charges, etc. for late payments in an appraiser’s contract. It is not personal. 99% of the people I work with are incredibly thoughtful and conscientious, but the 1% we all encounter take up a huge amount of our time trying to collect on delinquent invoices, which is not something most small businesses are well-suited to do. If your appraiser has language about this in their contract, it is not implying nefarious aims or insulting your integrity; it is because they’ve encountered situations where it was needed, and the language helps keep overhead costs down for all other responsible clients like you.
Once the contract has been approved, the next step is the appraiser typically schedules an on-site inspection with you to photograph, inspect, and catalogue the items to be appraised. The inspection is generally conducted at the location where the items are, usually your residence. There are some situations where items can be appraised from photographs and other documentation that you provide to your appraiser electronically. It is always important to confirm in advance with your insurance professional or other key intended users whether an appraisal report prepared from photographs will be acceptable for the specific intended use. Sometimes if the appraiser is not local, s/he may collaborate with a local colleague to perform the on-site inspection as a proxy, with the details of exactly who did what to be included in the appraisal report. For insurance appraisals, it is also a good idea to check with your insurance agent to confirm what your policy’s scheduling threshold is. This is the minimum amount of value where an item needs an appraisal, and knowing this helps your appraiser design a scope of work that is customized for your insurance policy.
Another thing to keep in mind is that if you have a firm deadline for your appraisal report, which is typical in legal intended uses like estate appraisals, it is a good idea to reach out to your appraiser as early as possible to make sure they are available to work with you and meet your deadline. There actually aren’t that many of us working as USPAP-compliant art and antique appraisers, perhaps several thousand across all of North America, so we often are juggling a complex client workload with multiple overlapping legal deadlines. If your items to be appraised fall into a very specialized category, there may only be a few appraisers with the appropriate subject matter expertise to have the competency to appraise them. You will be glad if you don’t leave this to the last minute!
Once the inspection is complete, the appraiser returns to their office, and the really complex research work begins. Sometimes clients may assume that the on-site inspection is the majority of the appraisal project and the rest of the process is very quick, but the subsequent steps are the most meticulous and time-consuming for appraisers.
We first need to add our pictures into the appraisal report file, which can involve reviewing multiple images of the same item (for example, paintings often photograph differently with and without a flash) and selecting the best photographs for each appraised item, along with any relevant detail photographs such as an image showing a close-up view of the artist’s signature on a painting.
We need to make sure our on-site cataloguing is edited and properly formatted, often with expanded cataloguing after we research the specialized databases and other connoisseurship resources back in our offices. There are sections of the appraisal report describing the scope of work that need to be written with the specific details of each appraisal assignment, and the appraiser’s USPAP certification statement needs to be completed for each appraisal assignment.
Only then do we really dig into the valuation research and analysis part of the appraisal process. The intended use of the appraisal report guides the level of the market used in the valuation research. If the appraisal report is for insurance, the appraiser will likely be researching retail asking prices of items similar to those appraised. These can be paintings available in an art gallery, which often do not have publicly available pricing. The appraiser may need to contact the gallery directly to inquire about the price of a painting advertised as “please inquire.” Galleries sometimes decline to provide this information to appraisers, which can create research challenges.
If the intended use of an appraisal report is for estate purposes, the appraiser will probably be conducting research by searching through databases of auction records for auction sales of similar items that sold near the effective valuation date of the appraisal report.
A crucial element in this research is considering how similar the results in the data set are relative to the appraised items and making upward and downward adjustments based on the differences. Depending on the intended use of the appraisal report, the appraiser also often writes a narrative explaining their research and analysis. Along with the actual appraisal report, the appraiser is required to keep a workfile for the appraisal assignment for a minimum of five years.
Once all the research for the appraised values is complete, the appraisal report still needs to be proofread for typos and other errors before it is issued. This can be quite complex for larger projects where the report can be over 100 pages long. Once the proofreading is complete and the appraiser issues the report, it is then sent to you. Many consumers like receiving their appraisal reports as a PDF digital file. An invoice for you to pay for the remaining project time is usually sent around this time, either before the appraisal report is sent or concurrently. You’ve now successfully completed the process of having an appraisal report prepared!
About Sarah Reeder
Sarah Reeder, AAA, ISA CAPP is Co-Editor of Worthwhile Magazine and CEO of Artifactual History® Appraisal. Sarah is a Certified Member of the Appraisers Association of America and a Certified Member of the International Society of Appraisers with the Private Client Services Designation for working with high-net-worth individuals. She is author of the book Ray Eames in 1930s New York, Co-Host of The Art Elevator Podcast, and the creator of the online course SILVER 101: Quickly Learn How to Identify Your Sterling Silver and Silverplate to Find the Valuable Pieces and Sort with Empowered Confidence, available on-demand at https://artifactualhistory.teachable.com/p/silver-101. Sarah can be reached at https://www.artifactualhistory.com/ and @artifactualhistory