Appraisal According the USPAP (Uniform Standards of Professional Appraisal Practice), an appraisal is “an opinion of value”. An appraisal report is written documentation of the same. Appraisals are not precise measurements, but informed judgment supported by fact.
The professional appraiser produces reports that are useful to individuals, courts, and business. An appraisal report contains a clear description of how the appraisal is to be used (intended use) and the results the appraiser was asked to provide(objective). Some uses for appraisals include:
Obtaining adequate theft or fire insurance coverage
Capital gains tax liability on the sale of property
Federal estate tax liability
Federal gift tax liability
Federal income tax deduction for charitable contribution
Equitable distribution of property in divorce or between claimants
Damage claims losses (e.g. transit related damages); or damages caused by fraud
Value for use in the anticipated purchase or sale of property
Self-Contained Appraisal: Provides the greatest amount of data and sales analysis to support value conclusions. This type of report is necessary for litigation and taxation matters such as charitable contributions and is required by the IRS for charitable contributions and other federal functions.
Summary Appraisal: Summarizes the data and sales analysis supporting value conclusions. It contains enough information to clearly demonstrate due diligence and logical conclusion. This is usually the approach uses for insurance coverage, and when there are other intended uses.
Restricted-Use Appraisal: Used in an assignment in which there are no intended users of the report other than the client. It is an abbreviated report for client information in anticipation of sale or purchase, or if you just want to know the value of what you have for personal satisfaction.
Replacement Value is the amount it would cost to replace an item with one of similar and like quality purchased in the most appropriate market within a limited amount of time. This is the value that is used for insurance purposes, and is the highest valuation figure for personal property.
Fair Market Value is defined as the price the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. This is the value required by the IRS and for federal tax functions.
Market Value is defined as the most probable price a buyer will have to pay, and that the seller is most likely to receive, for an item of property within the defined marketplace at a particular point in time. This is appropriate if you are interested in buying or selling an item.