Occasionally, auctioneers are asked to write an appraisal for an estate. Many people do not realize that there are different types of appraisals for personal property, and the appraised value of the estate will depend on which type of appraisal is being written. Some of the more common are
- Fair market value which is often defined as “The highest price estimated in terms of money which the property will bring if exposed to sale in the open market by a seller who is willing but not obligated to sell, allowing a reasonable time to find a buyer who is willing but not obligated to buy, both parties having full knowledge of all the uses to which it is adapted and for which it is capable of being used.”
- Auction value which may be defined as “An opinion of the gross amount expressed in terms of money that typically could be realized from a properly advertised and conducted public auction, with the seller being compelled to sell with a sense of immediacy on an as-is, where-is basis, on a specific date.
There are many more types of appraisals that can be given, but these are the ones most people considering an auction are interested in. One can readily see the difference between the two. The Fair Market Value takes in consideration an open time frame to sell the property to a person interested in buying it. There is no rush to either buy or sell the property which allows the seller to expect a higher price for it.
On the other hand, an Auction Value appraisal recognizes that the property is going to be sold on a selected date to the highest bidder who often is interested in paying the least amount of money to purchase the item. Sometimes people are interested to purchasing a particular item at auction regardless of the price, but most people go to auctions looking for good buys. While the seller might not receive the most money possible for the items being sold, it does allow the seller to be rid of the items and earn some money as well.
Someone might be asking why sell at auction if he or she could get more for it by selling it themselves. It’s a fair question. The trade-off is the amount of time and effort you will spend trying to get the maximum price for your items versus being able to sell everything at one time. Many people, especially those who have inherited an estate, need to dispose of the property quickly to be able to pay the estate’s expenses or to be able to move on with their lives. In the case of a divorce an auction might be the best way to divide the property, especially if there are disagreements in who gets what. Sell everything and divide the money equally, and if one party wants something they can buy it at the auction.
It’s also important to remember that some items actually will sell more at an auction than they might at a private sale. Anyone who attends auctions regularly can tell of items that brought more at an auction than one could purchase the same item brand new. Sellers can’t count on that, but it does occasionally happen. It only takes two people interested in an item to drive up the price.
If you ask an auctioneer for an appraisal of your property, be sure to identify which type of appraisal you want and why you want it. Remember that an appraisal is just that; it is not a guarantee that you will get that amount for your items. You may get more, you may get less; it all depends on who attends the auction interested in your items. Finally, be sure to discuss the cost of an appraisal. Most auctioneers will give you a free verbal appraisal on individual items, but if you want an appraisal of your entire estate there will usually be a cost associated with that.
We had a great auction two weeks ago and we are now receiving items for our next auction. The date has not been set for that auction which means we still have room for more consignments. Contact us soon if you would like to sell in our next auction.