By Michael Osacky, USPAP Compliant Appraiser of Vintage Sports Cards & Memorabilia, Lead Appraiser for PSA (Professional Sports Authenticator)
People call and email every day about appraisal reports. Each person has a different use case/objective of why they need an appraisal report. The first question I always ask is, “What is the purpose/objective of the report?” There are typically 3 different purposes/objectives for an appraisal report. Let’s go through them below.
• Estate Planning – A family has a large collection that needs to go into a living trust or will. The attorney or tax adviser will usually recommend the collection get appraised if it’s over a specific dollar value.
• Donation – The owner of an item or collection has chosen a worthy organization to receive the item(s). They would much rather donate than sell. However, for the individual to get a tax write-off, an appraisal report must be completed by a USPAP Compliant appraiser. The appraiser must fill out IRS Form 8283 and submit it with their taxes. The IRS will then review the form to make sure a USPAP compliant appraiser did indeed fill out the form.
• Insurance Purposes – Years ago, collectors would keep their card collections in a home safe or bank safety deposit box. With the escalating values of trading cards and sports memorabilia, collectors are no longer comfortable owning a six or seven-figure collection without having it insured. Many insurance companies are now requiring appraisals on collections above a certain value.
Regardless of the objective, an appraisal report is NOT a verbal guess on the value. I attend card shows all over the country and many booths have signs that read “Free Appraisals”. Those are verbal guesses. An appraisal report takes time and is based on comparables and other data. Appraisal reports cost money. Verbal appraisals at a card show do not. These verbal appraisals are intended to either get you to sell or consign. One important note about USPAP compliant appraisers. They can NEVER buy what they appraise. There is a conflict of interest to do so. Nobody should be providing appraisals and trying to buy at the same time.
The values stated on the appraisal report can be very different depending upon the objectives listed above. For a donation appraisal, Fair Market Values are used. This is because the IRS needs to approve the tax write-off based on the effective date of the appraisal. Ideally, the “comps” used should be within 12 months of the effective date. Insurance coverage appraisal uses retail replacement values. (RRV) These values tend to be higher than Fair Market because we don’t know when the claim will be made. We have no idea when the fire, flood, break-in, etc is going to occur in the future. The client needs to be protected. When the insurance carrier decides how much to pay out on the claim, they look at RRVs or asking prices. Therefore, insurance appraisals tend to have higher values.
Values pre COVID are thrown out the door because the sports collectibles market has exploded higher during the stay-at-home orders. However, we can use a pre covid comp and try to back into a value. For example: the same card we are asked to appraise in a different grade has sold a few times in the last 3 months. We can look and see how the card has appreciated since the beginning of the pandemic.
The real value of an appraisal report is to use it for one of the objectives listed above. Of course, it’s important to know the value of an item or collection, but what you do with the report can be advantageous.
There are a few other important values that a USPAP compliant appraiser can bring to the table.
• He/She can determine if a card is a reprint or authentic.
• He/She can advise if a card or a collection of cards should be graded.
• He/She can advise on proper storage methods/techniques.
Don’t be afraid to ask any questions you may have before engaging the services of an appraiser. The decision to hire and have somebody review the collection that has been in the same family for multiple generations can be uncomfortable. You will ultimately find the right person after getting all of your questions answered.