appraisals

FAQ

What is an appraisal?

An appraisal is the process of developing an opinion of value, estimating cost, or calculating the present worth of future earnings (ISA, 2014) based on an informed opinion by a qualified appraiser and supplied in a formal written or oral report. Value is obtained using a variety of information including but not limited to: the artist, provenance (history of ownership), purchase price, recent selling prices of similar comparable items, condition, rarity, historical significance, aesthetic beauty and authenticity.

When is an appraisal required?

An appraisal is required for determining adequate theft or fire insurance coverage, various tax functions with the Canada Revenue Agency such as income tax deduction for charitable contribution, and for equitable distribution of property in divorce or estate division . It is recommended that an appraisal be done every three to five years, or sooner if market changes are evident, to keep values current. Appraisal reports are generally accepted by government, insurance companies, banks, lawyers, galleries and museums.

Artwork donations valued over $1000: when you donate property to a registered charity (such as the LAC), you qualify for a tax credit based on 75% of the fair market value of the property. If the deduction is $1000 or greater, you are required by Revenue Canada to have a fair market value appraisal and the charity’s policies should also require an appraisal. Capital gains taxes must be paid on the difference between the fair market value and the price at the time of purchase.

What is the difference between an appraisal and a consultation/evaluation/valuation?

An appraisal is an opinion of value based on specific criteria around a specific intended use, objective and purpose. Different uses of appraisals require different approaches to determine value and result in different value amounts. An appraisal is a formal valuation service completed in a manner that is independent, impartial and objective. For example, a client’s insurance company is requesting an appraisal report for proper insurance coverage. Appraisal reports are a detailed and lengthy (often 14-40 pages) and typically take a few weeks to prepare, but each appraisal is unique.

A consultation/evaluation/valuation is a more informal sharing of information and consulting regarding physical and other characteristics of the artwork which typically include (media, condition, age, etc.), identifying the artist and biographical information, market data, comparable sales records, etc. that can be determined by a thru studies and experience in the field and readily apparent identity. No consult is the same and it varies based on the client’s needs as well as the available information.

An example of a valuation can often more broadly  answer the questions: “How old is this work of art?”; “Is this an original or a print?”; “Do you think this is worth having a written appraisal done?”; “Is this artwork worthwhile restoring?”; “How should I go about selling this work of art?” A consultation is not an appraisal and is limited by on the spot or short research conducted in advance and are usually done by photographs, via email or in person by appointment and under limiting conditions. The fee for a consult is less than an appraisal as the scope of work is less, however it is an affordable alternative to getting an overview and answering some general questions about a work of art.

What does it mean to be a qualified appraiser? Do all appraisers have similar qualifications?

Appraising requires an understanding of the theory, principles and standards that pertain to both valuation and evaluation. Appraising is an inexact science requiring study and the application of a learned methodology (ISA, 2014). The profession is governed in both Canada and the United States by standards set by the Appraisal Standards Board at The Appraisal Foundation called the Uniform Standards for Professional Appraisal Practice (USPAP), and theories and principles set by professional associations. A qualified appraiser can appraise any type or period of art provided they have or acquire the necessary knowledge. 

How much does an appraisal or evaluation cost?

In-person, email or phone consultations/evaluations/valuations are $50-75 and an appointment must be scheduled if in-person. Should you choose to have a formal written appraisal report completed, appraisal costs are based on the time and scope of work required to complete the assignment according to the clients intended use of the appraisal, i.e.: for insurance or the CRA, etc. Therefore each appraisal fee is determined case by case and an estimate is given in advance based on the hours to complete the assignment. Hourly rates are as follows: In Office $100/h, In Field $150/h. The more information about the work of art supplied in advance by the client, such as photographs, receipts for purchase or repairs, previous appraisals, identification, provenance, etc.  that can aid in the report may help to lessen the time and costs associated. It is against ISA code of ethics and USPAP to charge a contingency fee or a percentage based on the value of the artwork, please keep this in mind should you seek the services of another appraiser. Additionally, appraisal reports for income tax for the Revenue Canada must be completed by a “qualified appraiser” and be USPAP compliant in order to be accepted. Read More…

What information should I prepare and what do I need for my in-person consultation or appraisal?

A personal inspection of the work is required in most cases to identify, condition and photograph, so plan to bring the work with you for inspection. You will be asked to fill out an intake form/questionnaire to aid the appraisal process.  For an accurate appraisal, it is important to provide as much information as possible in advance regarding the artwork including the artist’s name, title of the work, date created, media (i.e.: oil paint on canvas), damage, wear or repair, is it signed, edition, how you obtained the work and what you know about its history.

What are the service term?

Chad Riley is the Director of the Leamington Arts Centre (LAC) and performs appraisal services in affiliation with the Leamington Arts Centre (LAC).

A consultation and any values expressed or implied by Chad Riley, in no way constitute a formal written or oral appraisal. 
The values provided by Chad Riley in such cases are based on personal observations, readily apparent identity, familiarity with the assets or research conducted on the spot. In such cases, Chad Riley may or may not use online resources to conduct basic market research on selected assets included in the evaluation/valuation and assumes the values found are accurate. The valuation time period may vary, research and consideration period, all, which constitute constraint and limiting conditions.

During the evaluation examination period, any incorrect assumption made by Chad Riley or incorrect information provided by the client may alter or change opinions and conclusions. 
Furthermore, the intended use of an appraisal and approach to value used are directly linked, a change in the use will impact the value conclusion. Chad Riley is providing client with marketability information on the personal property being evaluated and in no way can guarantee a sale price or other expected outcomes.

The liability of the appraiser for this appraisal report will be limited solely to fees rendered. The appraiser’s contractual obligations are complete with the submission of the services.

Possession of any information received does not carry with it the right of publication. No part of the contents of a report or consultation (especially any value conclusions or the identity of the appraiser) shall be disseminated to the public through advertising, public relations, news, sales or other media without the prior written consent and approval of the appraiser.

All information concerning this appraisal is regarded as confidential by the appraiser. I retain a copy of this document along with my original notes, and I will not allow others to have access to these records without written permission of the client unless so ordered by a court of law.

All in-person consultations are $50 and require an appointment. Due to the time and nature of the services, walk-ins will not be accepted.

A written estimate will be prepared for all appraisal services and signed by both parties and a 50% deposit will be required on all services before any work begins. For larger assignments over $1000, payment in full is required.

Travel costs within the surrounding ares of Leamington are charged at the standard hourly rate for travel time plus mileage using the accepted Revenue Canada rate of 54¢ per kilometre.