My friend Terry Mangum said something similar and he’s exactly right: It is not worth what it won’t sell for. In other words, a piano listed prominently for sale for $10,000 and remaining unsold is not worth $10,000 — because if it was, it would have sold.
Auctioneers seem to encounter this situation somewhat regularly — “I want you to sell my $10,000 piano … which I have been unable to sell — I’m hoping you can get me $10,000 for it.” Of course, it’s very likely not to bring $10,000 as it has already been proven to be worth much less.
Relatedly, there is the other common phrase, “It’s only worth what someone is willing to pay for it …” Therefore, our so-called $10,000 piano which sells for $1,700 isn’t a $10,000 piano selling for only $1,700 but rather a $1,700 piano previously mistakenly marketed for $10,000.
Appraisals are performed by one (or more) of 3 methods: “Sales comparison approach,” “Cost approach” and/or “Income approach.” Nevertheless, appraisals are many times no better than an educated guess. Someone could certainly appraise this piano at $10,000 but is it worth $10,000? Maybe only in this one appraiser’s opinion.
These opinions are also tied to an “effective date” which means that estimate is only good for that particular date (precise moment, in fact.) As such, our piano here could be worth $1,700 on one day and conceivably $10,000 on another day. Values generally move slowly through time — up and/or down.
We wrote about six months ago about how various values have changed (and continue to change) from 20-30-40 years ago: https://mikebrandlyauctioneer.wordpress.com/2019/08/09/auctions-changing-ages-and-tastes-indeed/.
Further, in one of our most-read blogs, we offered that there was somewhat of a science to this evolution in value tied to the ever-changing age of the typical buyers: https://mikebrandlyauctioneer.wordpress.com/2015/08/10/what-some-collectors-cant-find-buyers/.
We also noted prior that while the Uniform Standards of Professional Appraisal Practice (USPAP) provides prudent appraisal guidelines, there is no governmental mandate that any personal property appraisal (even Internal Revenue reports) is USPAP compliant: https://mikebrandlyauctioneer.wordpress.com/2018/08/13/auctioneers-the-irs-and-appraisals/.
Additionally, no state requires any sort of license to appraise personal property. Appraisers often poke fun at sellers, neighbors, co-workers, family, friends and the like who offer values to owners — while the appraiser’s own opinion may not be much more substantiated.
Property is not merely appraised for what it would sell for … as appraisals are often done to quantify insurance value, retail value, wholesale value, liquidation value, in-place value, and others … as we noted in our article from 2011: https://mikebrandlyauctioneer.wordpress.com/2011/07/03/auctioneers-as-appraisers/.
Lastly, auctioneers who sell personal property are uniquely positioned to offer reliable opinions on estimated sales prices of a similar property. To repeat our central theme here, if something has been adequately offered for sale in the marketplace and remains unsold — it’s almost proof positive that subject property is actually worth less than that price.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.