Their article is entitled The Persuasive Appraisal, and based upon increasing appraisal standards set forth by appraisal organizations and USPAP.,The need for effective report writing is an area where the profession needs additional guidance and improvement. The Persuasive Appraisal article is therefore not only timely, but needed.
All proceeds from the sale of the Journal support the educational initiatives and scholarships of the Foundation for Appraisal Education. The cost of the journal is only $55.00, a bargain for the amount of content supplied. The 2012 edition contains 19 articles and 300 pages of content. For more information visit www.appraisaljournal.org to order your copy.
The next excerpt will be from an article written by Lisa Cambier entitled The Valuation and Institutional Placement of Artists' Archives. Look for the excerpt to be posted in the next week or so.
Castner and Newman write
Click HERE to order the Journal of Advanced Appraisal Studies - 2012 (or to order previous editions, 2008-2011).
The third area is a description of the information analyzed as well as the appraisal methodology and reasoning that supports the conclusion. This is arguably the most crucial area and one often ignored or described in boiler plate language that does little to support the conclusion. According to USPAP 8-2-a-viii, the appraiser must provide sufficient information to enable the client and intended users to understand the rationale for the opinions and conclusions, including reconciliation of the data and the approaches to value (cost, sales comparison, or income.) This is where the rubber meets the road.
Many appraisers spend the bulk of their billable time doing research. We use our subscription data bases, auction and gallery websites and catalogues and our Rolodex. We call galleries and we talk to auctioneers. We compile volumes of information, causing ink and paper shortages or we get lost in the recesses of the Internet, following link upon link in hopes of obtaining the last elusive piece of a puzzle. Once we get the information we need, we often shut down the process, record a single value, and send the file to storage.
This data gathering adventure is coupled with mental gymnastics. The appraiser is collecting and rejecting data, some appropriate and some not. A roadmap begins to develop starting at point A and ending at point B. The steps can be varied and they may not be recorded. The process makes sense to the appraiser because the hunt has become personal. But explaining our process to a client or third party may be too complex, too time consuming, or maybe even too obvious. What is obvious to the appraiser however may not be obvious to the client. Unfortunately, it may not even be obvious to us if we’re called on to defend our report in court five years down the road.
Our job in an appraisal is to provide an opinion based on facts as they are known within the profession. We make an assertion and back it up with documentation. For example, stating that an item is made of rare, exotic wood only known to originate in a select region during a certain period might require the proof of a US Forest Service wood test, especially if the value of an item would increase dramatically.
Once the facts are established, they must be prioritized to build an argument. Is provenance a more important value characteristic in this particular category of property, or is form? What about maker? Or origin? Or even material? How much of a difference does each one make? To what extent do they contribute to the whole? How does the marketplace view things?
This process is described differently by different organizations. The Internal Revenue Service’s Preferred Object Identification Format for Art Valued Over $20,000 says an appraisal done for them should provide the basis or reasoning which led the appraiser to a specific value. This doesn’t mean that we just state the approach to value (which is certainly part of the overall process), nor does it mean that we say something like “I used comparable sales” or “based on my own experience in the marketplace.”
The appraiser must provide the basis for the conclusion; that is the specific market data used to support the value. We have to let the user know which transactions were relied upon, what the state of the market was at the time of the transactions, and how that information relates to the subject property. The IRS is not looking for a simple listing of comparable sales; they want to know why the comparables were chosen and how they relate to the subject property. In other words, it’s our job to provide the dots and then connect them. Show the work!
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