appraisal price v. street price

[fatt-dad]

If I wanted to establish a neutral price for a mandoiln purchase, I'd expect an appraiser (e.g., Gruhn) would be of some help. Let's say they give an appraisal of $3,000.00. That typically represents an "insurance value." I'd guess if Gruhn were to consign that piece, they'd want 30 or 40 percent and if they were to buy it outright, they may only give half or a little over.

What would be an appropriate basis to discount the "insurance value" to get at a fair street price that would be in the interest of both parties. FYI, the potential seller is an estate, so there is no personal basis for them to negotiate a fair price.

Comments?

f-d

[BradKlein]

Maybe the best, though imperfect, solution is simply to describe the exact situation to an appraiser (or appraisers) that both parties trust, and ask them a fair price in this circumstance.

It sounds like you are looking for an answer that is not wholesale, retail, OR replacement...

[Patrick Hull]

Sounds to me like the estate is in a "must sell" situation. They typically need to liquidate assets. So, they would either need to auction it or try to negotiate a private sale. I would be inclined to make them an offer. The fair market value is the price the object can actually command. They may not be in a position to actually get FMV, since they are more or less forced to sell. You can get it appraised, but probably you aren't going to want to pay the price the appraiser comes back with.

[fatt-dad]

There is no "forced to sell" component to this incident - actually, there is no "need" to do anything. It's my desire to offer a fair price and see if the heirs will be interested in the sale. Owing to several unique attributes, I'm struggling to grasp what a fair price would be for the instrument and would entertain some committment to offer XX percent of an appraisal value, thinking that this may represent a fair private party sale price.

Maybe I'm hoping for something like you can find for cars related to mandolins - ha.

f-d

[MikeEdgerton]

Gruhn is the perfect insurance appraiser as he has impeccable credentials and he appraises so much higher than the market on everything I've seen. I don't know if there's a way to quantify what the real selling price is from that number though.

[Goodin]

I think this topic is totally subjective to the situation but in my recent appraisal of an A-jr... Gruhn appraised it at $2500 and I paid $1650 for it therefore a 34% deduction from the appraisal value.

[CES]

F-D,

You may not want to do so, but disclosing the instrument and it's condition on here may get you an excellent idea of street price. Another option, assuming you're not ready to do that at this point, might be to call three music stores (thinking Cafe sponsor types here) independently with the specs/condition and ask what they would be willing to pay for it or even what they would sell it for if it were in their shop. You could then make an offer based on the middle estimate and even present the data to the heirs with an option to confirm your info. Alternatively you could let them do the same. As long as everyone's up front and honest, this could work well. If not, well, then, all bets are off, I guess.

Yet another option would be to find out what Gruhn has appraised similar instruments for lately, then cross reference that with recent selling prices. This would be fairly labor intensive but may give you the "X % of appraisal" formula you're looking for. Unfortunately, I don't think we have a Blue Book yet. :(

Good luck, man, and I hope you've found something good and get a reasonable deal on it!

[foldedpath]

As a buyer, my first question would be "who paid for the appraisal, and what was it for?" Insurance appraisals paid for by the owner are almost always inflated a little (if not a lot). For something like that, I'd treat it basically the same way I'd treat a manufacturer's MSRP for a new instrument: expecting a 30% to 40% discount to reach an actual selling price.

If I was paying for the appraisal as the buyer, I'd still look a discount, on the general principle that an immediate cash sale vs. theoretical worth has to count for something. But not nearly as deep a discount... maybe 10% - 20%.

That's just a very rough outline though, and doesn't take into account how desirable the item would be on the open market; i.e. whether it's the kind of thing that would trigger a bidding war on Ebay, or if it would take months to move on Ebay and finally sell at a depressed price. Some of that would be guesswork, but you can track how the sale of similar mandolins are going over time. As a theoretical buyer, I would pay a premium price for an instrument I really wanted, if I wanted to keep it off Ebay and thought it might sell for even more money there.

[mandroid]

I though Street Price was applied to New sales and is compared to SRP Suggested retail List Price,
or MAP , minimum advertised price .

[Rob Gerety]

One interesting little fact would be what value the Estate had the item on its inventory for.

Is this an arms length transaction - or are you an heir basically buying out the other heirs?

Why not just figure out what the fair market value is in your view as a buyer - like you would at an auction - and offer that? Or maybe the estate should just put it up for auction and you can bid.

[kelvin]

It seems to me that unless it is a brand or type of mandolin that is very rare or at least not very common you should be able to determine what it will sell for by looking at the classifieds here on the website. There are all different types of mandolins posted for sale. It seems to me that mandolins sell for pretty much what they are worth on this site. If it is overpriced it does not sell. Appraisal value and selling price are usually very far apart unless dealing with something very rare.

kelvin

[Big Joe]

I do quite a few appraisals for insurance and individuals wanting to buy or sell product. An insurance value is a bit different from a cash value on a retail basis, which is different from a wholesale value that a dealer would pay for an instrument. There are a lot of factors that go into doing a fair and reasonable appraisal. The appraiser has to have the credentials to do the work and be accepted by the insurance companies. In addition, the reputation of the appraiser is vital. If one gives a false or stupid appraisal the value of the appraisal becomes worthless and the appraiser will likely no longer be accepted by the agencies that rely upon thier opinions.

Understand that ANY appraisal from ANYONE is an ESTIMATE of a particular value on the day the appraisal was made with the best information available to the appraiser. It is vital the information be correct to the appraiser. I don't like doing appraisals without seeing the instrument when possible. The interested parties can often, and without malice, misrepresent the product. The seller will indicate it is in better condition, the buyer worse. Seeing the instrument....or at the very least....some very good photos will help in the process.

When I do appraisals I do a good number of photos of the instrument, and if applicable, the case and any other pertinent items. I also photo any provenance that may be available. I do my research on the item and then write my appraisal on a particular sheet and sign it personally. I also keep a copy of all photos and the letter in my computer for future resource for the owner, if needed. I send or give two signed copies to the person requesting the appraisal and e-mail the photos and a copy of the appraisal should they like. This gives them the papers they need to take to their insurance company and one for the safe deposit box. Should something happen and the originals are destroyed or otherwise not available, I have a copy available for the owner.

When you get your appraisal just tell the appraiser what your goal is..ie...you want to make a fair offer to purchase a particular piece. If you can provide the needed information the appraiser should be able to give you a value for all 3 of the major aspects of its value. Actual cash value is often the most volatile. Prices can rise or fall very quickly. In the last two years we have seen prices slip as much as 20%, but they are on the rise...though not real fast at the current time. Knowing its retail value and wholesale value will give you a good range to know where you should be at a low end and a high end.

There are a number of people around the country who do appraisals. I would say most are very concerned to do a good job to get fair pricing for all concerned. That being said, you may find some differences in valuations from area to area and market to market. Remember that for ALL appraisers it is an estimate of value and the only real guage is what anyone is actually willing to pull the money out of their pocket at that moment to buy that product. Since an appraisal is an estimate, it is what one would expect it to bring, but they are not writing a check when they do the appraisal. I hope this information helps.

[fatt-dad]

Thanks Big Joe! I also had the fortune to speak on the phone with a very well respected mandolin appraiser today. I was able to disclose the maker and such. It's just too premature for me to get into any details at this point as I don't want to flare up any MAS on my part and it may not even happen. I was asked to give some sense of what I was willing to pay, which I did a few weeks ago. I haven't heard back and was wondering whether I went too low.

Here's a few things I learned today on the phone: An insurance appraisal must be pertinant to an instrument's value any where in the country and should consider the demand (likely rise in price) that may affect the value over the near term. Contrast a sale price in NYC to a sale price in Richmond, Virginia (my home). Contrast the demand for a teens paddle head to a 20s shakehead, for example. The demand for the snakehead is always greater, so that demand will factor into the appraisal. Carlson-signed Flatirons are another example. (This mandolin is neither.)

You guys (gals) are family enough that if this happens (20 percent liklihood?) I'll give a full report. In the interim, I'll try to be patient.

Thanks for the feedback!

f-d