What Does An Appraiser Do?
An appraiser is a person whose job it is to figure out how much money something is worth. Appraisers are hired to carefully inspect an item, compare it to other similar items, and complete research in order to decide its value at a certain moment in time.
Appraisers specialize in a certain area, and can be hired to inspect and figure out the value of several different things, including:
- Real Estate
- Commercial property
- Residential property
- Vacation property
- Vacant land
- Personal Property
- Fine Art
- Gems and Jewelry
- Anything of value that needs a professional judgement of worth
Appraisers must be very knowledgeable in their specific field, as well as making sure they are aware of any changes in market trends, meaning they have to know what is in high demand and what is not.
They must also complete training in the process of how to decide the value of an item. This training helps them use a scientific approach to figure out the value of an item, instead of just giving their personal opinion.
The Uniform Standards of Professional Appraisal Practice (USPAP) provides guidance for professional appraisers to follow when they are working to decide the value of an item. Appraisers must also follow the guidelines of the agency that supervises them, depending on what types of items they appraise, and the state where they work.
An appraiser must look at the specific item they are appraising and determine:
- Its age
- Its condition
- Its unique traits
- Whether it is rare or common
- Whether it is in high or low demand
- The cost of replacement
An appraisal of an item is not just a purchase price. If an item was purchased on sale, it is possible for the appraised value to be higher than the purchase price.
Also, if an item is really old or rare, it is possible for the appraised value to be a great deal higher than the original purchase price.
If an item has gone out of style, been damaged, seen a lot of use, or is technologically outdated then the appraised value can be much lower than the original purchase price.
Sometimes an appraiser must work hard to find similar items to use for comparison, this can require using a computer to search for information, as well as reaching out to private collectors and museums.
An appraisal can be used for many different reasons, including to:
- Get insurance in the event of:
- Price an item for sale
- Value items for estate planning
- Value items for divorce purposes
After an appraiser inspects an item and decides how much it is worth, they must create documents that describe the item in great detail and explain how they came to their decision about its value. Depending on how an item’s appraised value affects an individual’s taxes, the appraiser must be ready to officially defend their decision.
This paperwork and documentation must be very detailed and include photographs of the item being appraised. In the event the item is lost, stolen, damaged or destroyed, these documents serve two purposes:
- Prove the value of the item to the insurance company
- Provide the details necessary to try to replace or recreate the item
In the appraisal documents, some appraisers also include information about similar items that they used for comparison. This extra information helps people understand why the item was given its appraised value.
Due to changes in the market, what is considered valuable and what is not, many insurance companies recommend that items get an updated appraisal. How often this should happen depends on the type of item and how valuable it is. Some insurance companies have specific requirements for when an updated appraisal must be completed and turned in.
Some appraisers will write up a new appraisal for the same item at a lower price. They do this because they already know about the item, and they can use some of the information from their first report, instead of starting at the beginning of the process.
A successful appraiser must enjoy the research process, be organized, be very observant and able to recognize meaningful details. They must also be diligent problem solvers, especially when working to determine the value of a rare or unique item. Being an appraiser requires excellent written and verbal communication skills, as well as the ability to work independently.
Appraisers must also have a solid understanding and working knowledge of basic math skills and taxes. Many types of appraisers are required to enter information into a specific computer program and maintain digital records, so basic computer skills are also necessary.