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Tuesday, March 3, 2015

Ask Leon: How can I appraise something that is reportedly non marketable?

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

Question: How can I appraise something that is reportedly non marketable? I have been asked to appraise paintings owned by a government agency for insurance coverage.

Answer: The answer is found in the Core Course manual in lesson 3 (page 3-8). One normally uses the cost approach to value or estimate the cost of non-marketable property. As we know, the cost approach is based on the cost to reproduce (reproduction), produce an equal substitute (production), or the cost to purchase. In the event of a painting owned by a government agency that can’t be sold, here are a few guidelines:
  1. What would it cost to have a competent artist duplicate the painting? (This assumes the original artist is deceased and can’t paint another.)
  2. What would it cost to have an artist make a suitable equivalent? (The artist should have a similar standing within the art world as the original artist.)
  3. What would it cost to purchase the piece if it were available in the marketplace? (One can use the sales comparison approach to gather data and adjust for inflation, location, timing, or find similar paintings available in the marketplace at retail settings.)

Trivial Pursuit
Misconceptions taken from our Core Course Exam
These statements are ALL TRUE!
  1. The value to be determined for divorce cases is based on individual state or Provence laws.
  2. The IRS qualified appraiser definition does not include a requirement to be at least 25 and a resident of the US.
  3. Change in condition is not a type of obsolescence. It is physical depreciation.
  4. Auction company estimates are not values. They are used as marketing tools or a guide for buyers and sellers. They may have no relationship to the real value of an item.
  5. Authentication is not absolute. It is an informed and recognized opinion.

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