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- “When one cannot appraise out of one’s own experience, the temptation to blunder is minimized, but even when one can, appraisal seems chiefly useful as appraisal of the appraiser.”
We would agree. If a quality appraisal is wanted and/or needed, a quality appraiser is required. This is why so many auctioneers also work as appraisers.
Auctioneers chiefly work for sellers in procuring buyers and assisting to establish market value. Auctioneers are good at appraising property because they are “right there” when property sells, and have a keen sense of the market by working with so many buyers and sellers.
While market value is the predominate valuation used in appraisal, there are other value types such as insurance value, retail value, wholesale value, liquidation value, in-place value, etc.
Market value is defined as:
- The estimated amount for which a property should exchange on the date of valuation between an educated buyer and a reasonably motivated seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without undue influence.
Appraisal involves answering a question. People want to know what something is worth, in order to adequately insure it, sell it, buy it, donate it, tax it, collateralize it, etc. Appraisers answer such questions so the public can make informed decisions.
Auctioneers are frequently asked to appraise real and personal property for court actions such as estates, guardianships, bankruptcy, divorce and other civil cases. Too, auctioneers are asked to appraise real and personal property for individuals for insurance, prospect of sale, donation, etc.
It is not unusual for sellers to ask auctioneers, “What’s that worth?” or “What’s that going to bring?” in discussing selling property at auction. Even prospective buyers will ask auctioneers, “What’s that going to sell for?”
In the United States, it is important to note the following:
- Every state licenses and/or certifies real property appraisers
- No state licenses and/or certifies personal property appraisers
What this means is, for an auctioneer to appraise real property, outside of a court order or other exemption, some type of license is going to be necessary. What this also means is, for an auctioneer to appraise personal property, there is no license necessary.
With that said, there are institutions and some courts which require appraisers of real or personal property to hold some sort of certification and adhere to the Uniform Standards of Professional Appraisal Practice (USPAP) protocol.
USPAP was originally developed in 1986-1987 by representatives from several appraisal organizations in the United States and Canada. Soon after, the “copyright” for USPAP was donated to the Appraisal Foundation. The Appraisal Foundation is comprised of three independent boards:
- The Appraisal Standards Board (ASB) establishes the Uniform Standards of Professional Appraisal Practice (USPAP).
- The Appraiser Qualifications Board (AQB) establishes the minimum education, experience and examination criteria for appraisers.
- The Appraisal Practices Board (APB) identifies and issues opinions on recognized valuation methods and techniques.
Currently The Appraisal Foundation has nine sponsors:
Also worth noting here are the three traditional methods for appraising real and personal property:
- The Sales Comparison Approach: Like property sold recently in the same neighborhood (market) as the subject property is used to estimate value.
- The Cost Approach: The cost to build (or manufacture) new is estimated. Then, the subject’s depreciation is subtracted to estimate value.
- The Income Approach: Net income of the subject is divided by a annual rate of return to estimate value.
The appraisal business is big business for many auctioneers. Some auctioneers earn as much or more in income appraising property as they do selling property. Maybe as Marianne Moore suggested, the more appraisal education and experience an auctioneer has, the more he or she will be qualified to serve the public.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.