Types of Appraisal Valuation

Depending upon the purpose of appraisal, the value assessed to an item or items of personal property may differ. The four major types of valuation used by personal property appraisers are:
  • Replacement value for insurance purposes
  • Fair market value for IRS purposes
  • Marketable cash value for equitable distribution (e.g. divorce)
  • Liquidation value in bankruptcy situations

In a series of blog posts will address these four types of appraisal valuations.

Replacement Value
Generally, the highest value used in appraising is replacement value. This value is most commonly used for insurance purposes and has been defined by the AAA (Appraisers Association of America) as “the amount it would cost to replace an item with one of similar and like quality, purchased in the most appropriate marketplace within a limited amount of time.”

In the event of a loss, a person would not be expected to wait a long time for a bargain to appear or to do extensive shopping. It’s assumed that the person would go out and purchase the same or similar item within a short amount of time, and for this convenience they would pay a higher price. Consequently, replacement value is generally the highest value for an appraised item.

Related Posts
Types of Appraisal Valuation: Liquidation Value
Types of Appraisal Valuation: Marketable Cash Value
Types of Appraisal Valuation: Fair Market Value

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