One Antique Can Have Three Different Values Depending On Whether It Is Insurance Fair Market Or Resale And Percentage Fee Appraisers Are A Red Flag

You inherit a lovely old clock, a vase or a piece of jewelry, and you decide to find out what it is worth. One person tells you one number, another gives you a very different one, and a third quotes something else entirely. Nobody is necessarily lying. The reason is that one antique can legitimately have three different values, depending on the question being asked. Knowing the difference can keep you from overpaying, underselling or insuring your treasure for the wrong amount.

The three values most people run into are insurance value, fair market value and resale value. Each has a purpose, and mixing them up is one of the most common mistakes owners make.

Insurance Value

Insurance value, often called replacement value, answers this question: what would it cost to replace this item with a similar one if it were lost, stolen or destroyed? Because it reflects shopping for a replacement through a retail source, such as a dealer or gallery, it is often the highest of the three numbers. It is meant to make sure your coverage is large enough to put you back where you started.

This is the number to use when you are insuring an item or adding it to a policy. If you used a lower figure, you might not be paid enough to replace it. Insurance appraisals should be written, should describe the item in detail and should state clearly that the purpose is insurance.

Fair Market Value

Fair market value answers a different question: what would a willing buyer and a willing seller agree on, with neither under pressure and both reasonably informed? It is a concept used in many legal and tax settings, such as estate matters, divorces and charitable donations. For tax purposes, the IRS has rules about when and how donated property must be appraised, so ask a tax professional if you are donating something of significant value.

Fair market value often falls below the insurance figure, because it is based on what items actually sell for in the open market rather than the cost of buying a replacement from a retailer. It is a realistic snapshot of a normal sale between two parties who are not rushed.

Resale Value

Resale value, sometimes called liquidation or quick-sale value, is what you could expect to get if you sell the item now, often to a dealer or at auction. A dealer has to pay you less than they plan to charge a customer, because they need room to cover costs and make a profit. An auction can bring a higher or a lower price, depending on the crowd and the day. This number is frequently the lowest, and it is the one that surprises people most when they try to sell.

That gap explains many disappointments. An owner has an insurance appraisal in hand, takes the piece to a dealer and hears a much lower offer. The dealer is not necessarily cheating. They are talking about a different kind of value.

Why One Item Can Have Three Numbers

Picture a handsome antique chair. If it is stolen, the insurer needs to know what a similar chair costs in a shop. If the family is dividing an estate, they need to know what the chair would bring in a normal sale. If the owner wants to sell next week, a dealer will offer what they can profitably resell it for. Same chair, three situations, three sensible answers.

The lesson is to always ask what a number is for. When someone tells you what something is worth, ask which kind of value they mean. If the answer is vague, ask for clarification.

Who Can Appraise

Anyone can say they are an appraiser, so it pays to look for credentials and experience. Qualified appraisers often belong to professional organizations, follow recognized standards and have training in the type of item they value. Look for someone who specializes in your type of object, whether that is furniture, jewelry, fine art or another field. Ask about their background, how they research values and whether they will provide a written report that states the purpose and type of value.

A dealer or auction house may be happy to give you a free opinion, and that can be a great starting point. Keep in mind that their opinion may be tied to a potential purchase or consignment, so it is not the same thing as a formal independent appraisal.

The Percentage Fee Red Flag

One warning sign deserves special attention. Be wary of any appraiser who wants to be paid a percentage of the item’s value. The problem is obvious when you think about it. If the appraiser earns more when the number is higher, they have a reason to inflate it. Professional appraisal organizations generally prohibit this kind of contingent fee in their codes of ethics, and a reputable appraiser charges an hourly, daily or flat fee instead.

Also be cautious of anyone who offers a free appraisal and then pressures you to sell to them right away, or who will not put their findings in writing. A trustworthy professional is happy to explain their fee up front and to document their work.

Practical Steps

Decide why you need the appraisal before you call anyone: insurance, estate, donation or sale.
Tell the appraiser the purpose, and make sure the report states the type of value.
Ask about fees ahead of time and get the arrangement in writing.
Choose someone with experience in your specific type of item.
Avoid percentage-based pricing.
Keep photos, receipts, family history and any paperwork that supports the item’s story.
Do not treat one number as the answer for every situation. Update insurance values from time to time.

The Bottom Line

When two people give you very different numbers for the same antique, it may simply be a mismatch of purpose. Insurance value, fair market value and resale value each answer a different question. Know which one you need, find a qualified person who charges a clear fee, and keep your expectations realistic when it is time to sell. That way, the number on the page will never take you by surprise.

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