Types of Appraisals
There are two basic types of appraisals prepared for insurance purposes. The Insurance Acquisition Appraisal is most often prepared in anticipation of securing insurance coverage and usually occurs before a loss or claim is filed. The Insurance Casualty Loss Appraisal is most often prepared after a loss and subsequent claim has been filed and is often a “hypothetical” or “extraordinary circumstances” type of appraisal. It is so called because of the many limiting conditions and critical assumptions that must be made to estimate the value of the item immediately prior to the damage or loss.
There are several approaches that can be considered if you need information to help you sell an item. Depending on the amount of detail you need, how quickly you need to sell the item and whether you intend to show the buyer the appraisal; the one of the following types of reports will meet your needs.
Restricted Use Reports
There are several different types of reports that fall into this category, but they all share some basic features. They are “restricted” to use by the client only with all third parties specifically advised that reliance on the information by anyone but the client could be misleading and therefore renders the report invalid. None of the various reports has enough information for anyone not familiar with the items to be able to use it accurately. In some of the reports the appraiser is acting as a consultant with no attempt made at impartiality or protecting the interest of possible third parties. Most are written as summary reports; some may be “broad market” valuations.
Market Value Appraisals
There are several types of appraisals in which the “Market Value” or “Fair Market Value” is used to determine the monetary worth of the item. This means that the condition of the item, obsolescence and desirability are considered in establishing the value in the appropriate pre-owned or secondary retail market. In some cases that market may include the “collector” market; in other cases it might mean the “scrap” market. Some appraisers, jurisdictions and organizations use the term “Fair Market Value” and “Market Value” interchangeably; these reports provide the specific definition used by the appraiser for each type of appraisal.
Appraisals for Federal Functions
Appraisals prepared for IRS use require very specific methodology and very careful research and reporting. There are five basic types of reports that fall into this category and the value definition as well as the market research for each type is different. All of these appraisals include detailed descriptions, quality grades and digital images in a self-contained appraisal format. Each is extensively researched, documented and prepared to the level required by the Department of the Treasury Revenue Procedure 66-49, Treasury Regulation Section 1.170A-13, Revenue Procedure 96-15 or other statutory requirements as appropriate.
For a full listing of all of the appraisals we perform, please see our "Appraisal Services" section for a full description of the various types of appraisals and reports.
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