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VALUE REVIEW™
Published by Semler Appraisals & Estate Liquidations
A Professional Service for the Valuation of Personal Property
Winter 2000 Vol. 2, No. 1
Loss of value
We are sometimes asked to determine loss of value (LOV) in damage
claim appraisals. LOV is the amount of worth an item loses due to
damage. However, LOV cannot be determined until the item has been
professionally repaired or professionally restored. After the repairs
are completed, the quality of the repair is also taken into consideration.
Typically, the better the repair job, the lower the loss of value.
Mathematically, the loss of value is calculated with the following
formula: LOV equals the value of the item before damage minus the
value of the item after repairs.
Depreciating property (most furniture and bric-a-brac) normally
does not suffer LOV after being professionally repaired. Appreciating
property, such as antiques, might suffer LOV. There are several
factors that appraisers consider when determining LOV in appreciable
property:
• Pre-existing condition. Pre-existing repairs or damage similar to
the new damage can minimize or negate LOV. For example, one new
chip to the rim of a cut glass vase that already had several chips
would not cause any measurable LOV.
• Severity of damage. There is a difference between a minor scratch
and a missing drawer. A replaced leg on an 18th Century highboy
is significant, but a repaired surface scratch on the same piece
is not a major drawback.
• The type of damage. Is this type of damage normally acceptable to
collectors? Glass and ceramics in pristine condition are more desirable
and command higher prices than damaged pieces. When it comes to
antique furniture, however, collectors are more forgiving and accepting
of repairs and restorations.
• Quality of repairs. Invisible repairs using appropriate restoration
techniques are vital to preserving the integrity and value of a
damaged piece. Any deviation from this level of professionalism
will adversely affect the repaired item's final value.
Property may or may not suffer a LOV. Consider having an appraiser
examine items before and after repairs are made to determine if
there is any loss in their value.
Price, Cost and Value
Although often used interchangeably, these three words are not synonymous.
Price is the amount of money asked for. Cost is the amount actually
paid. If you go to a garage sale and see an item with a $10 sticker
on it, $10 is the asking price. If you are a good negotiator, you
might pay only $7.50, the buyer's cost.
Value is always justifiable, but cost and price are not. Example:
You go to an auction and bid on an item that you like, but that
you know little about. There is fierce competition with other bidders.
The knowledgeable bidders drop out at about $100. You finally win
the bid for the item at $250. The value of the item is not $250;
it is the cost. The value, what is most commonly paid by informed
purchasers, is $100. Another example: At an estate sale, you notice
a dirty glass vase in a dark corner. It is tagged with just a few
dollars asking price. You quickly snap it up, pay the full price
asked, bring it home, clean it, and discover a Lalique mark. In
this instance, price and cost are the same (you didn't haggle),
but the value is much greater. You, either as a knowledgeable buyer
or as just a lucky purchaser, have paid well below what a serious
collector would have spent.
Sometimes prices are set high in anticipation of being lowered as
an inducement to the buyer to make a purchase. Sometimes prices
are high because the seller thinks an item is genuine, when in fact,
it is a reproduction. If you make a purchase and pay what an item
is worth, cost equals value. But cost is not synonymous with value.
What's an Antique?
To some, an antique is a work of art, piece of furniture, or a decorative
item made before the Industrial Revolution of the 1800s. Others
assume that items over 100 years old are antiques. This "100-year-old"
rule applies to items being imported into the US. If the objects
are older than 100 years, no tariffs are due. The Customs laws do
not actually mention or define "antique". Many people
take a broader view of "antique" and define it as something
"belonging to an earlier period of time". An alternative
approach is to divide items into the following categories: appreciable
(growing in value) and depreciable (decreasing in value).
Comings & Goings
Semler Appraisals welcomes Rhonda Tollstrup, Associate Member of
the International Society of Appraisers. Rhonda's specialty is Orientalia.
Jay Oakes is moving to Colorado. If you need an ISA-trained appraiser
in the Denver area, keep her in mind.
Hours of Operation
For the convenience of our clients and yours, we are available for
appraisals and consultations between 8:00 AM and 8:00 PM weekdays,
and 9:00 AM to 1:00 PM on selected Saturdays.
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