Wednesday, December 2, 2015

ASK LEON: Should I reject assignments due to my "competency"? If so, how do I gain experience in these appraisals if I'm required to reject them?

ISA members are invited to send in their questions on all things appraising and education to Leon Castner, ISA CAPP. Leon will share his answers on the ISA Now Blog. Please send questions to leoncastner@comcast.net.

Question:
I just completed another organization’s 7-hr. online USPAP course. I am very curious if something said was an organizational opinion or a general USPAP requirement.

While the instructor was talking about “competency,” she mentioned one must make the case in the cover letter as to why you are qualified to write this particular appraisal assignment. Particularly, she expressed concern that generalists don't know what they don't know and should be extremely wary before accepting assignments. She gave this example: if you are asked to appraise a Picasso and you have only appraised a couple, then you should NOT accept the appraisal. Only someone who has appraised hundreds of Picasso's would be qualified to handle this assignment.

This really freaked me out. So many questions ran through my head. How can you gain experience if we can't accept assignments? Doesn't the CV state appropriate information regarding qualifications? Why did I just earn my dual AM designation if I don't have enough experience appraising the "heavy hitters" to accept (if only I would be that lucky!) such an assignment?


Answer: Yes, the competency rule states that you have 3 choices when confronted with any assignment:
  1. You are competent to do it and tell the client you are.
  2. You are not competent and you refuse the job.
  3. You are not competent, but you will take steps to do the job competently. This means any number of options, which are left up to you and the client. You can take steps to become competent yourself (hard to do in a short time frame), work with a qualified appraiser or team to do the job, or a combination of the two. That’s how we gain knowledge in other areas: we accept challenges and then become proficient enough to finish the job. No one can decide how many items one must do to claim competency. I would venture to say that what the instructor said might have more to do with authentication than appraising, although her point is that a generalist is not an expert in everything (which I agree with completely). However, just because one is a fine art expert doesn’t mean they can automatically do every piece of art either. Everyone has limits. You must confront them when asked to do an assignment and then decide if you can take steps to do the job competently. You must disclose those steps to the client and in the report.
Question: What role does provenance play in valuing an item? I had an inquiry about an appraisal for insurance replacement of custom tailored textiles made for political figures in a local history collection.

Answer: Great question. It would take a book to answer it. Provenance is a value characteristic of an item that the market deems very significant. One of the problems, however, is that for insurance coverage it is very difficult to put a replacement cost on the item since, in a sense, it is not replaceable. One can either compare the item to other items (parallel market) or estimate the cost to replicate/duplicate them if lost. The owner might want to insure them for the potential market value based on what similar items bring in the marketplace. For example, the opera glasses Lincoln used at the Ford Theater are just $200 opera glasses. They could be replaced easily. However, the exact opera glasses that he held in his hands brought over $400,000 when sold. If you were the new owner, wouldn’t you want them insured at $400,000 rather than $200? That’s provenance.

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