Personal Property Appraisal Theory and Methodology
Personal Property Appraisal Theory and Methodology
This domain tests whether you can define the appraisal problem, select a defensible value premise, apply the approaches to value, and reconcile evidence for personal property. Personal property is movable, often unique, and frequently traded in thin or segmented markets, so method must fit the item and market.
Core rules
- State the value premise before choosing method: fair market value, replacement cost, reproduction cost, liquidation value, or insurance value. Do not use a label without its definition.
- Select the market level the assignment requires: retail, wholesale, auction, or liquidation. A retail replacement conclusion is not interchangeable with an estate tax fair market value conclusion.
- Sales comparison is the dominant approach for most personal property. Use sold prices, not asking prices, and adjust for maker/attribution, date, size, condition, provenance, and market timing.
- Cost approach uses replacement or reproduction cost less physical, functional, and economic obsolescence. It is most useful when comparable sales are scarce.
- Income approach applies to income-producing personal property, such as equipment or collections with rental income; it is rare.
- Identify the item fully: maker, materials, dimensions, marks, construction, condition, restoration, provenance, and attribution status.
Worked example
A 19th-century mahogany card table is attributed to a known cabinetmaker but unsigned. Auction comparables: $8,000 (unsigned, poor veneer), $11,000 (attributed, good condition), $14,000 (signed, excellent). For fair market value at auction, the attributed comparable is closest. Deduct 15% for veneer loss and uncertain attribution: $11,000 x 0.85 = $9,350, rounded to $9,500. Do not average the three.
Traps
Using insurance replacement value for estate tax; averaging unadjusted comparables; treating asking prices as sales; ignoring market level; relying on a price guide without condition/provenance checks; failing to disclose attribution uncertainty.