Personal Property: Market Evidence and Authentication
Personal Property covers movable tangible property that is not real estate: furniture, furnishings, equipment, collections, and decorative arts. The exam tests fair market value definitions, market-data adjustment, authentication, and the difference between replacement cost and market evidence. Personal property often lacks active markets, so the appraiser must justify comparables and provenance.
Core rules
- Definition of value: fair market value assumes a willing buyer and seller, both informed, with no compulsion and a reasonable exposure period. Liquidation and replacement premises change the conclusion.
- Market approach: auction records, dealer quotes, and private sales. Adjust for condition, provenance, rarity, size, and date of sale; confirm whether the comparable includes buyer’s premium or sales tax.
- Cost approach: reproduction or replacement cost less depreciation. Use it for unique or newly fabricated items, not as a default for antiques.
- Income approach: rare for personal property, but applicable to rented equipment or collections that generate income.
- Authentication: signatures, hallmarks, labels, provenance, and expert opinion matter. A photograph or owner description is not sufficient evidence for a high-value attribution.
- Highest and best use: consider whether the item is worth more as a collectible, as a functional object, or as part of a group.
Worked example
An antique chest has a confirmed auction comparable at $10,000. The subject is in better condition (+8%) and rarer (+5%). The comparable price includes an 18% buyer’s premium, but the subject is being valued on a fair market value basis without auction costs, so the comparable is first normalized to $8,475. Applying the adjustments: $8,475 × 1.08 × 1.05 = $9,611, rounded to $9,600. The reasoning is shown because each adjustment must be explainable, not just arithmetical.
Traps that cost marks
- Treating replacement cost as market value for a collectible.
- Ignoring buyer’s premium, sales tax, or commission in the comparable.
- Relying on an unverified attribution or signature.
- Applying a single per-unit price to a heterogeneous group.
- Mixing liquidation and fair market value premises.