Personal property: Valuing the Invaluable
Condition. Age. Rarity. These are the basic criteria considered when appraising an item for sale.
Finding the value of invaluable items is simple in theory and difficult in practice—it’s also what Megan Mahn Miller calls her bread and butter. The Minnesotan built her brand in the auction industry as a successful appraiser and licensed Auctioneer specializing in Rock’n’Roll and Hollywood memorabilia for her self-titled company, Mahn Miller Collective Inc.
Miller holds a Master Personal Property Appraiser designation (MPPA), a degree in art history from the University of Minnesota, and esteem as an instructor of Graduate Personal Property Appraiser (GPPA) courses for the NAA.
Condition, age, and rarity are the basic criteria considered when appraising an item for sale. Determining the value of an item like a bulldozer is often straightforward as there are formulas to calculate life cycle and depreciation as well as sales on similar pieces of heavy equipment to look to for estimates.But, how do Auctioneers find values to sell those difficult pieces of property? Whether assessing a piece of memorabilia or evaluating a rare treasure found in grandma’s attic, how do you determine what priceless items are worth?
“I’ve had to come up with strategies through trial and error, listening to other people, and finding resources to find a way when there is no other sale to find the value,” she says.
While memorabilia, works of art, and collectibles might seem so precious that its worth cannot be determined, everything has a value, according to Miller. That value is most often determined by comparing like quality items that are for sale or recently sold in the market.
Miller calls it the “Concept of Parallel Properties.” Appraisers and Auctioneers should look for something of similar magnitude and characteristics for direction on the item they are attempting to evaluate. If you are selling the Declaration of Independence, for example, and The Constitution recently sold at auction, then an Auctioneer can use the sale of the latter historical document as a benchmark for their sale.
From this point, Miller says “The X-Factor” needs to be applied. “The X-Factor” is the basic value of an item plus journalism’s 5 W’s. The who, what, where, when, and why of an item. Appraisers and Auctioneers must research an item to know its property characteristics. What are the elements that create an X-Factor value beyond the intrinsic value? Items that are historical, belonged to a celebrity, are trendy during the time of sale, invoke nostalgia or infamy may be worth more.
“Each piece of property has some intrinsic value. Let’s say this chair is worth $25 so its intrinsic value to be sold at auction is $25. What if I told you it was Ringo Starr’s chair?” she says. “Well I’ve sold Ringo Starr’s chair and I can tell you it’s not still worth $25 because people will pay more.”
Auctioneers must use the current market, X-Factor, and parallel properties to price difficult items, adjusting the price up or down depending on the elements.
“It becomes an art because there’s not a direct equation I can lay on top of it,” Miller says. “If this chair is worth $25, but it sells for $100, I can’t say everything across the board is worth 4X its intrinsic value. I’d love it if I could, but we have to take into consideration a whole bunch of different elements.”
When conducting research to price a difficult item, it is better to be over-informed. Expand your study by going out of your comfort zone of where you normally look for values. Increase your knowledge and resources by networking and collaborating with other Auctioneers. Using Miller’s tips can help auctioneers have confidence in their ability to establish legally defensible values and valid arguments on price points for
Increase your knowledge and resources by networking and collaborating with other auctioneers. Using Miller’s tips can help Auctioneers have confidence in their ability to establish legally defensible values and valid arguments on price points for priceless property.
This article was an excerpt from a presentation given at the 2017 NAA International Auctioneers Conference and Show. Want even more tips on diversity or hear more regarding this topic? Full audio of the presentation will be available in the NAA Knowledge Center soon. You can also check out other valuable NAA content here.
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