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Proper Problem Identification Leads to a Proper Solution
"When Value is in Doubt - Find Out!"
Value in Doubt? Find Out!
Decorating and lifestyle trends have changed over the last decade or two and have impacted valuation services. Many homes do not have a dining room to accommodate Grandma’s big, antique, matched dining room set. Modern homes and apartments have large closets which negate the need for large and bulky bedroom sets and armoires. Baby boomers are downsizing and letting the family heirlooms go. Families are smaller, with fewer brothers and sisters among whom to divide possessions. Supply is increasing and demand of decreasing for many object types.
Changing technology makes things obsolete more quickly. Old dinner china with gilt rims or metallic decorations cannot survive the microwave and dishwasher. People have little interest in polishing old silver plate. Modern families aren’t attached to many family heirlooms and often don’t want them. Unfortunately the stuff that people want to sell is often the same stuff people don't want to buy. The list of objects that are losing value is long. The value of many vintage and antique items, once cherished, has fallen precipitously.
There are many exceptions to the trend of declining market value. There are many Chinese and Russian objects, good mid-century objects, and many rare and very unusual objects in great demand that are appreciating in value. A competent appraiser should be as knowledgeable as typical market participants regarding the relevant market and demand forces for comparable objectsType your paragraph here.
Each appraisal problem is absolutely unique. Person property appraiser competency is based on competent problem identification and the appraisal process being properly applied. Each assignment starts by a competent identification of intend use and users in communication with client at the time of the assignment. Intended use provides the context for making the competent and informed judgments that are necessary to competently conclude problem identification and complete the assignment. The presenting appraisal problem of the client must be competently identified and understood in order to accept the assignment and determine the scope of work necessary to complete the assignment competently, e.g. to develop credible opinions worthy of belief by intended users. The personal property appraiser must understand what actions or decisions will be taken by the client (intended use), as well as the needs of identified intended users of the appraisal report.
Every competent general personal property appraiser must follow the all important appraisal process. There are several critical assignment elements that must be identified that become the basis for judgments that must be made while following the appraisal process. Each assignment element (client, intended use, intended users (and their needs), effective date of valuation, value type and definition, relevant property characteristics and all other relevant assignment conditions). All of this must be identified and considered before the appraiser can determine whether or not they are competent to complete the assignment. Only then can the appraiser determine the scope of work (eg appraisal process to follow) that will be necessary to develop credible assignment results. Only then can the appraiser report their analyses, opinions and conclusion meaningfully and without being misleading. All of this must be done in accordance with the Uniform Standards of Appraisal Practice (USPAP).
Determining the value definition that is most relevant to intended use and users allows the appraiser to take the next step in the appraisal process: to determine the appropriate market and market level to investigate. There are many market levels in which personal property is bought and sold since personal property is movable. Each market level has unique conditions that apply. The market chosen to investigate must be relevant to and meet the conditions established by the value definition most relevant to intended use and users.
Problem identification judgements require the appraiser to choose which of the three approach(es) to value are necessary and consistent with intended use and users and the value definition. Objective data gathered by investigating the appropriate and relevant market using the sales comparison approach to value guides the appraiser to select comparable sales to analyze (and adjust for differences). Following the appraisal process provides for an objective, market oriented basis of support for the appraiser's value conclusions (retained in a work file).
Only after the problem has been competently identified can the appraiser determine if they have the knowledge and experience to complete the assignment competently. Only then can they proceed to determine and complete an appropriate scope of work. The general antique and personal property appraiser must be sufficiently competent with typical residential contents, ordinary household goods and most types of rare objects. Competent appraisers must know and then disclose any lack of knowledge and experience that may preclude that ability to complete the valuation of a property type or assignment type. Appraisers must do everything necessary to develop credible assignment results. The appraiser must own and take complete responsibility for their opinions, analyses and conclusions and disclose and necessary assumption and limiting conditions.
The client should be able to understand the appraisal report properly and determine it is sufficient, relevant, adequate, appropriate and complete (worthy of reliance). The report cannot be misleading. A general antique and personal property appraiser must be competent with the property types, assignment type (intended use), methodology and legal and other conditions that apply.
Fortunately the Uniform Standards of Professional Appraisal Practice (USPAP) reflects and follows the appraisal process step by stem, and establishes the minimum rules and standards for all appraisers in order to protect the public (potential clients). STANDARD 7 establishes the minimum specific requirements of compliance for opinion development and STANDARD 8 establishes the minimum specific requirements of compliance for reporting assignment results.
Novotny is an AQB Certified National USPAP Instructor and has been since 2002. He was the first personal property appraiser in the USA to achieve this important certification that allows him to teach the minimum appraisal rules and standards of USPAP to other appraisers which are updated biannually. USPAP and the appraisal process is the driving force behind every judgment the appraiser makes.
USPAP follows in perfect order the appraisal process. USPAP informs the appraiser which judgements are necessary in order to develop and report credible opinions worthy of belief by clients and intended users. Every appraisal report, whether oral or written, must be properly understood and meaningful relevant to intended use.
Valuation services since 1979
Click the link below and scroll down
for good information on the above listed "intended uses"
There are advanced appraisal issues that apply to complex valuation issues. Novotny has published several articles in the Journal of Advanced Appraisal Studies that are cited, explained and that can be read by clicking the links provided below.
Often there are challenging and unusual assignment conditions that apply to some appraisals. For instance, sometimes property is stolen, or is totally destroyed and cannot be inspected. Such assignments are a Novotny specialty. See his published article that resulted from him serving as an expert witness during the litigation of the massive La Conchita landslide of 2005 just south of Santa Barbara with over 20 plaintiffs - click: Equivalent Sampling: The Valuation of Loss Claims with Limited Property Descriptions, Novotny William M., ISA AM, Journal of Advanced Appraisal Studies, Foundation for Appraisal Education, Chicago IL 2008.
To better understand the competency requirements of appraisers read this article: When Does USPAP Require a Competency Disclosure? Novotny William M., ISA AM, 2011, Journal of Advanced Appraisal Studies, Foundation for Appraisal Education, Chicago IL
It is important to understand that clients must have good reason to trust an appraiser: Find out more: Read What Makes an Appraisal Worthy of Belief? USPAP! Novotny William M., ISA AM, Journal of Advanced Appraisal Studies, Foundation for Appraisal Education, Chicago IL 2008