Monday, August 8, 2016

ASK AN INSTRUCTOR: I have a client who wants ‘estate sale or liquidation value’ of furniture and not a full appraisal report. I believe I know the answer, which is a full appraisal report needs to be completed under USPAP, but I wanted to clarify this with you.

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Question:
I have a client who wants ‘estate sale or liquidation value’ of furniture and not a full appraisal report. I believe I know the answer, which is a full appraisal report needs to be completed under USPAP, but I wanted to clarify this with you.

Answer: The answer is slightly different than you thought. It hinges on the use of the word “full”. What one considers full may not be the same as another’s point of view. A “full” report is what one does every time they complete an assignment; you can’t do half of a report. I’m assuming the question really deals with the extent of the report. There are choices.

You could provide your client with a restricted appraisal report, one that simply states facts and does not summarize or expand upon them. This usually means the report is a little “leaner,” or not as exhaustive. It covers all the elements of the ISA report writing standard and the Standards of USPAP 7 and 8, but it is somewhat simpler, depending on the scope of work and what the client desires. However, a restricted report must not have a third party, so it could not be used for the IRS or an insurance claim or coverage (USPAP Advisory Opinion #11 provides an excellent chart of the differences between a Restricted Appraisal Report and an Appraisal Report).

Any opinion of value is considered an appraisal, but if you are an estate sale liquidator, you do have another option. You can put on your other hat (world’s greatest liquidator) and treat it as an estate sale situation providing your client with pre-sale estimates, just like auction pre-sale estimates. This would not be an appraisal report and is probably what your client wants or needs. However, you can only do that if you are indeed an estate sale liquidator or auctioneer. You must be very clear on which hat you are wearing and that your client does not perceive you as an appraiser. USPAP Advisory Opinion 21 covers this in detail. Valuation services done in other roles, not as an appraiser, are acceptable. Your obligation is not to misrepresent your role. This can be done through disclosure, notification, or careful distinction when speaking to the client. So perhaps the client is asking for something simpler which you might be able to accomplish.

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