Evaluator

An independent expert who appraises the value of property for which there is limited trading. The role is crucial in assessing the value of unique assets, such as antiques in an estate or rarely traded stocks or bonds.

Definition

An Evaluator is an independent expert who specializes in appraising the value of property that is infrequently traded on the market. Evaluators are essential in determining the worth of unique or rare assets such as antiques, estates, or rarely traded stocks and bonds. Their expertise ensures that these valuations are as accurate and fair as possible.

Examples

  1. Antiques Evaluation: An evaluator may be hired to appraise the value of a collection of antique furniture and collectibles in an estate.
  2. Rare Stocks or Bonds: An evaluator might assess the value of stocks or bonds that are not frequently traded, such as shares of a private company.
  3. Art Valuation: An evaluator can determine the current market value of rare artworks for insurance or sale purposes.

Frequently Asked Questions (FAQs)

What qualifications should an evaluator have?

Evaluators typically have specialized education and extensive experience in their field of appraisal. Professional certifications like those from the American Society of Appraisers (ASA) or the International Society of Appraisers (ISA) often denote credible expertise.

How do evaluators determine the value of rarely traded assets?

Evaluators use a combination of market research, comparative analysis, and professional judgment to estimate the value of rare assets. They may consider factors like historical prices, scarcity, condition, and market demand.

Can an evaluator’s appraisal be challenged?

Yes, evaluations can be disputed if there is substantial evidence suggesting that the appraisal is inaccurate. This often necessitates a second opinion or a reevaluation from another expert.

How is the fee for an evaluator determined?

Fees for evaluation services vary; they can be a flat fee, an hourly rate, or sometimes a percentage of the appraised value, depending on the complexity and type of property being appraised.

  • Appraiser: A general term for anyone who assesses the value of real or personal property. An appraiser can specialize in various fields, including real estate, personal property (e.g., antiques, jewelry), and business valuations.
  • Valuation: The analytical process of determining the current (or projected) worth of an asset or a company.
  • Market Value: The estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller.
  • Assessment: The determination of the value of property for the purpose of taxation.

Online References

Suggested Books for Further Studies

  1. “Valuing a Business: The Analysis and Appraisal of Closely Held Companies” by Shannon P. Pratt
  2. “Art as an Asset: Policies and Practice” by Nannette V. Maciejunes and Lynne McChristian
  3. “The Complete Antique Collector: A Comprehensive Guide” by Barbara S. Cohen
  4. “Financial Valuation: Applications and Models” by James R. Hitchner

Fundamentals of Evaluation: Business Law Basics Quiz

### What does an evaluator specialize in appraising? - [ ] Commonly traded assets - [x] Infrequently traded assets - [ ] Real estate only - [ ] Household gadgets > **Explanation:** An evaluator specializes in appraising assets that are not commonly traded on the market, such as antiques or rarely traded stocks and bonds. ### What certification might denote a credible evaluator's expertise? - [x] American Society of Appraisers (ASA) - [ ] Certified Public Accountant (CPA) - [ ] Financial Planning Association (FPA) - [ ] Chartered Financial Analyst (CFA) > **Explanation:** A certification from the American Society of Appraisers (ASA) often indicates credible expertise in property appraisals. ### What type of fee arrangement is not commonly used for evaluators? - [ ] Flat fee - [ ] Percentage of appraised value - [ ] Hourly rate - [x] On commission of sales > **Explanation:** It is uncommon for evaluator fees to be based on commission of sales; they are typically flat fees, hourly rates, or percentages of the appraised value. ### Which factor is least likely to be considered by an evaluator when appraising an item? - [ ] Historical prices - [x] Retail markup - [ ] Condition of the item - [ ] Market demand > **Explanation:** Retail markup is less likely considered by evaluators who typically focus on historical prices, condition, and market demand. ### What major aspect differentiates an evaluator from a general appraiser? - [ ] Nature of assets appraised - [ ] Legal associations - [ ] Geographic location - [x] Frequency of market trading of assets > **Explanation:** The primary distinction lies in the frequency of market trading; evaluators focus on infrequent or rare asset trades. ### How can the accuracy of an evaluator's appraisal be verified? - [ ] By requesting their certifications - [ ] Consulting market databases - [x] Seeking a second opinion from another expert - [ ] Considering the flat fee charged > **Explanation:** The accuracy can be best verified by seeking a second opinion or reevaluation from another expert in the field. ### What is the primary purpose of an antique evaluation? - [ ] Casual appraising - [ ] Market estimation - [ ] Retail pricing - [x] Estate valuation > **Explanation:** Antique evaluations are often conducted for estate valuation purposes to accurately identify asset values. ### What is typically the most challenging aspect for an evaluator? - [ ] Determining fees - [x] Estimating values for unique items - [ ] Conducting condition assessments - [ ] Engaging in market research > **Explanation:** Estimating values for unique items requires extensive expertise and accurate market research, which can be particularly challenging. ### In what scenarios might an evaluator's appraisal be disputed? - [ ] If inexpensive - [x] If inaccurately represented - [ ] If done quickly - [ ] If the evaluator is well-certified > **Explanation:** An appraisal may be disputed if there is evidence suggesting it is inaccurately represented or potentially biased. ### Who typically hires evaluators? - [ ] Retailers - [x] Estate planners and legal executors - [ ] General consumers - [ ] Interior designers > **Explanation:** Estate planners and legal executors commonly hire evaluators to assess the value of unique or rare assets accurately.

Thank you for engaging with our thorough exploration of property evaluation! Your quest for comprehensive knowledge is just beginning.


Wednesday, August 7, 2024

Accounting Terms Lexicon

Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.