| The Basics of Collector Car Appraisals Collector
car appraisals have been part of my business since 1991. I took over the job of doing them
when my Father, then a practicing Attorney, became a Judge and left private practice. I
assisted my Father with his appraisals from the time I was in grade school, so it is fair
to say that I grew-up around the collector car appraisal business. The business has
changed much with “professional” organizations and nationwide services now
available, probably because of the increased demands on professionalism required by
today's users of appraisals.
The most often asked question I get is, "Do I need an appraisal for
Insurance?" The answer is; not necessarily. Some car insurance companies do require
an appraisal of any collector car, when you are doing stated value insurance. Stated value
insurance is a policy that allows you and the insurance company to agree on what the car
is worth at the time of issuance of the policy as opposed to some book value less
depreciation as is commonly done on late model cars. Stated value insurance is the norm
for collector cars but the requirements to establish the value are different from company
to company. I find that the major insurance companies such as State Farm require an
appraisal for any collector car while the specialty insurance companies such as Hagerty
Classic rarely requires one or J.C. Taylor which requires them for cars over $20,000.
Check with your insurance company and compare with others before calling the appraiser,
you may be able to save some money.
Most of my appraisals are the result of some legal need. Divorces and death are my
bread and butter with insurance accounting for most of the remainder. Lawsuits are another
source of appraisals but they can be a real can of worms. Bear in mind that a good
appraiser is going to ask why the appraisal is being done. The reason for the appraisal
should be included in the final report. The value of the vehicle should not be impacted to
any real extent by the purpose of the appraisal but it may impact the methodology used to
determine value.
The Three C's
All appraisals should include what my dear friend Donald Peterson of Classic Car
Appraisal Service in Roswell, GA calls the “three C's”: Categorization,
Condition and Comparables.
Categorization is simply the proper identification of the car. This may seem obvious
but I can assure you that it can be both difficult and critical to setting a correct
value. Some of the information that would fall under this heading is obvious such as:
make, model, year, and body style of the subject vehicle. I also include the VIN (Vehicle
Identification Number), although on some vehicles, particularly early cars, a chassis or
engine number was all that was used. The VIN will normally have little impact on value but
it is the unique identifier of the subject vehicle. The VIN can have an impact on value
when it tells information about the vehicle in question. For instance, the VIN could
identify a real muscle car with rare features as opposed to one that was created long
after leaving the factory. Muscle cars, Ferrari, Corvette, Bugatti, and Duesenberg are
just some of the marques that require positive identification of the VIN to verify the
cars authenticity. I've often found that what the owner of the car thinks they know about
their car differs from the facts presented by the numbers on the car. Year of production,
model, colors and correct engines can be identified by numbers stamped on vehicles and all
are potentially relevant to value.
All appraisals will involve an examination of the vehicle; this is the second
“C” for Condition. It is necessary to examine the car thoroughly. I've had
instances where a physical exam was not possible but I will clearly state this in my
report. I have also had many car owners try to give their own description of a car,
thinking this should suffice, which it does not. No reputable appraiser should accept the
owner's description of the car without some sort of third party examination. If an exam is
not possible, then that should be explained in the report.
An examination should include running the car, inspecting it from every possible
perspective and verifying numbers where applicable. Sometimes running a vehicle is not
convenient and this is the one item I'm willing to concede. I like to photograph a car
from several different angles including detail shots. With today's digital technology, I
transfer photos right into the final report. In addition to the photos the final report
should include a detailed description of every aspect of the vehicle. I like to rate items
on a scale of 1-6 with 1 being the best and 6 being beyond saving. This scale is widely
used and is as close to an industry standard as exists today. The purpose of the detailed
report is that someone not familiar with the car should be able to get an accurate mental
picture of its condition at the time of examination just by reading the report.
The final area that must be covered in an appraisal is Comparables. This would cover
the sources of information used to gauge the market for this vehicle. Price guides,
auction results, classified ads, and actual first hand knowledge of private sales would
all fall into this category. If doing an appraisal were as straight forward as looking in
a price book, then there would be little need for appraisers. The fact is values are a
fluid concept. The guides often do not agree with one another on value and many vehicles
are worth different amounts under different circumstances. It is the job of the appraiser
to sort out all the information, determine the final value, and be able to back-up that
opinion.
Other items that I like to include with my appraisals, when they apply, are a
professional resume to back-up my qualifications, an explanation of who ordered the
appraisal and why, and when dealing with a vehicle that is about to be sold, I sometimes
include advice on how to maximize sale value.
Selecting an Appraiser
Today's emphasis on “professional” organizations to back-up the
qualifications of experts in a field has reached the automobile appraisal industry but not
without complications. There are several organizations that claim to set the
“standard” for collector car appraisals yet no one organization has emerged as
truly dominant. I prefer to not associate with any organization and rely on my own record
of accomplishment. Yet, some people feel a need for some professional association
affiliation. If you need a professional association, my best recommendation is to find
someone who is an ASA member. The American Society of Appraisers (ASA) is most recognized
for their involvement in the antiques and collectables world. Those experts on furniture
or art at the major auction houses will most likely be ASA members. The same techniques
that apply to appraising an antique table also apply to a car. The ASA also requires
actual class time in appraisal methodology and sets professional standards for all
appraisals. The problem is that the society does not judge members on specific knowledge,
at least as it would apply to the automobile world. I have a friend who has been a guest
speaker to ASA meetings on the subject of real property appraisal as it applies to
automobiles, yet he is not a member. His explanation for this is that it is not necessary.
At this time, I tend to agree.
So, what should you do about picking an appraiser? First, do they know anything about
the car being appraised? No one can be an expert on everything but does the candidate have
access to experts when needed? I won't verify Corvettes for authenticity; I'm not
knowledgeable enough on the cars to do it. I also will not verify a Ferrari. I will refer
these tasks to outside experts. I can place a market value on a 308 Ferrari without
outside assistance but I would seek a second opinion if it were a Ferrari 340 America with
providence. Granted, you cannot count on all appraisers to be honest about what they know
but ask for a resume and look for club affiliations and activities to give guidance on
where their expertise lies.
Ask for references. That tried and true advice holds for appraisals just as it does for
doctors. I've done work for banks, insurance companies, attorneys and individuals and I'm
glad to have you talk to them. Any reputable appraiser will provide references.
Lastly, talk cars with the appraiser. How can you be a dog show judge if you are
allergic to dogs? Make sure your appraiser is a car lover and real follower of the market.
You have to be involved in the minutia of the collector car market to understand all the
nuances and read the direction of the market. This can only be accomplished by someone who
loves the subject. Believe me when I tell you, I do appraisals for a love of the subject
not because I'm making a financial killing in the appraisal business. |
