Appraisal

[S. Brady]

On Wed, 20 Sep 1995, Bob Simmons wrote:

> Admittedly, I'm insecure on doing appraisals. I have a client wanting to
> donate a Baldwin 'M' (1940) to a museum and I'm struggling with fixing a
> value. Would some of you mind looking over my shoulder and checking my work?
>
> The new price of a Baldwin 'M' is $19,722
> Assuming a life-expectancy of 75 years, the depreciation schedule would
> be $262.96 per year, making the present value (with 20 years remaining):
> $5,259.20, if everything was in excellent condition.

      Actually, Bob, most depreciation schedules assume *average* or
*normal* wear and tear, not *excellent* condition. So, in this case, the
appraised value by the "depreciation" method would be $5259.20. However,
it would be advisable to try a couple of other methods and to consider
the results together with this method, which has definite limitations due
to its assumptions about average wear and tear.
      Another method I like quite a lot is called the "Idealized Value
Minus Costs" method. To use this procedure, assign an idealized value to
the instrument (what it would be worth if completely rebuilt). Many
people feel that this idealized value would be about 80% of the cost of a
new one. That would be 80% of *actual* new cost, not *list price.* Once
you've arrived at this idealized value, you do an estimate of what it
would take to make the piano like new, but also considering remaining
life on the existing components. Deduct this amount from the
idealized value, and you have an appraised valuation *by this method.*
      A third common method of appraisal is to survey the piano market
*in your area* and find examples of similar pianos in similar age and
condition selling recently. Find out what they sold for and see if there
is some kind of trend. Good practice would dictate finding at least three
recent examples. This "current market value" method is the best
of the appraisal methods for determining what the piano would actually sell
for in your market area. One problem (for many of us) with using this
method is the possible difficulty of finding the data on recent sales.
If you have a friend who is a dealer or who buys and sells pianos, a
consultation would definitely be in order, because they would have the
recent experience to draw upon.
      Appraising is an inexact science at best. To quote Don Galt, the
best we can do is to have a "rational approach" to assigning a value to
an instrument. If we can use two or three different rational approaches
and then either average them or at least consider them together, we can
achieve satisfactory, consistent results.
      Ward Guthrie, RPT will be publishing a two-part article on
appraisals and estimates in the November and December issues of the Journal.

Good luck!

Steve Brady, RPT        "The most expert and rapid tuners are...
University of Washington       possessed of a highly excitable,
sbrady@u.washington.edu        nervous, and emotional temperament,
                         verging on the border of insanity at times."
                              -Daniel Spillane, The Tuner's Guide