Each different appraisal has to do with the market under which an item is to be valued. We all know there is always a price difference between credit and cash, well the same is true for appraisal between, Insurance, Market, Estate or marital dissolutions.
The most common appraisal is for Insurance Coverage of valuable items. In this type of appraisal, we look at what this item or items similar to this have sold! Or in the last several years. We then add value to them based on the increase in value over the same period of time. We call this Replacement Value. These items could include any type of collectible or jewelry or cars and trucks. For example: Item selling today !or $1,000.00 would have a replacement value of approximately $1,600.00 – $1,800.00. The value is projected higher as typically the insurance appraisals are done every five years — and the appraiser will use the historical value appreciations to project forward what the item would cost to replace at the end of five years. Also, your premium does take into account the current and appraised value as part of their measure of risk – should the items be lost or stolen.
Next would be appraisal for Estates. This type of appraisal would be of Fair Market Value. It literally means, what would someone be willing to pay for this item if it were being sold today? There are many complex databases of sold items to find the same or similar items. But if you wanted to get an idea — a bad ballpark — one can always see what was sold on Etsy or eBay to get a bad idea of value.
The following type of appraisals would also be using Fair Market Value for their appraisals. Divorce Settlements, Bankruptcy’and evaluation of items not for estate purposes, such as items people are thinking of selling but do not have any idea of its value. Actually, as these items are unlikely to be sold — as looming as the method of appraisal is consistent — an equal division of the assets can occur.
Appraisals for Charitable Contributions look at the replacement value of the item in today’s marketplace. This has nothing to do with the original cost of the item. As the person receiving this item, if they were to purchase it, would have top ay more than the original cost.