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.
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.