USPAP 2016-2017

The Appraisal Foundation and the Appraisal Standards Board recently released the third exposure draft for the 2016-2017 edition of USPAP.  the changes do not look overwhelming with changes to the definition of Report, some edits to improve clarity and to maintain the public trust.

I attend the upcoming TAFAC meetings here in DC on Thursday and Friday and hope to report some good progress on new personal property qualifications shortly.

To read the full exposure draft, follow the source link below the block quote.

The third exposure draft background information from the ASB is
The ASB’s plan for the 2016-17 edition of USPAP includes reviewing and revising as needed the following areas of USPAP:
  • Definition of Report
  • Edits to eliminate confusion regarding report drafts
  • Revisions to STANDARD 3 to enhance consistency with other Standards and to clarify the dates identified and reported
  • Edits to eliminate confusion regarding confidentiality
  • Other edits to improve clarity and enforceability of USPAP
The ASB believes it is fulfilling its work plan and addressing the needs of appraisers and users of appraisal services by proposing the revisions contained in this Third Exposure Draft of proposed changes for the 2016-17 edition of USPAP.

Of paramount importance to the Board when considering any potential revisions to USPAP is the issue of public trust in the appraisal profession. This umbrella of public trust, therefore, remains the primary consideration of the ASB in putting forth the concepts contained in this document.

Each member of the Board will review each and every comment submitted in response to this exposure draft. Based on the feedback received, the Board may issue a Fourth Exposure Draft sometime after its public meeting in October meeting in Washington, DC. If that occurs, the Board will again solicit comments leading up to its first public meeting of 2015 which will be held in New Orleans on February 6, 2015. At that meeting in February, the ASB plans to adopt any changes to be made for the 2016-17 edition of USPAP. Any such revisions to USPAP would become effective on January 1, 2016, and revised USPAP course material should be available by fall 2015.
Source: The Appraisal Foundation


Good, Better, Best Appraiser Workshop Filling Fast

The Gallery at the Potomack Company before an auction
We now have registrations for 10 of the 15 available seats for the Nov 8 & 9 Good, Better, Best Appraiser Workshop, plus a lot of inquiries and interest.

We still have over 8 weeks to go before the workshop. With limited available seats, and if you or a fellow appraiser are interested in attending, I highly recommend to register sooner rather than later and risk being put on a waiting list.

As I mentioned in earlier posts, please keep in mind this is not a lecture based workshop, but a program with guided discussions and hands on inspection of items of interest to each participant. Yes, as a class we will look at a mixture of antiques, contemporary pieces, Asian and fine art. Additionally attendees will also get to review and inspect any items of interest which are on hand in the Potomack Company gallery.

As a group we do interesting things such as comparing a good antique to one which has been restored or altered, or compare a revival example to a period example. We put items under an ultra violet light to detect damage and repairs. During day 1 of the Workshop we also discuss worksheets, forms, tools, market trends, dealing with clients, and other appraisal management practices. We will also discuss contracts, fees, preparations logs and many other documents, websites/links for finding values, and glossaries useful to the personal property appraiser.

This is an excellent opportunity for experienced appraisers who wish to expand their specialty areas by participating in a hands on program to inspect personal property of interest and expand their knowledge base. It works equally as well for the new appraiser looking for methods and tips on inspection and who just might need hands on training and confidence to make their practice take off.

We award 16 PDCs for the class, with half the credits within the valuation area to assist with USPAP qualifications/re-qualification. If you are not interested in taking the class, please tell a fellow appraiser or a new appraiser in you region about the workshop.

This is a unique workshop, as it has been planned as a discussion based program, not a day of lecture and slides, but actually classroom and instructor interactions along with hands on identification training from the on hand consignments at the Potomack Company. This is a one of a kind program.

Feel free to reach out to Jane or me or CLICK HERE for more information, but dont wait long, as the available seats are limited.

The Good, Better, "Best" Appraiser Workshop

Saturday November 8th and Sunday November 9th, 2014
1120 North Fairfax Street 
in beautiful downtown Alexandria, VA.

Are you aware of the most sustainable income generating markets for appraisers that will guarantee consistent income for the next 10 or 15 years? Are you scheduling jobs back to back and hiring other professionals because you are swamped and need help to keep up?   Are you ready to learn the insider secrets, strategies and what really works in your profession?  Are you knowledgeable in your field but don't know how to do the business and make money?  Are you ready to become a competent and qualified appraiser accumulating status and repeat business with the IRS, CPA's, Trust Officers, Insurance Companies, Financial Planners and Bankers?

Never before has there been a more exciting time like this for appraisers. This workshop is something for you to get excited about!  You won't be disappointed.

This very unique “hands on” workshop teaches the Appraiser how to:

Session One:
Close the Sale and Determine The Scope of Work
Prepare Contracts and Obtain Deposits
Prepare for the On-Site Inspection and Learn How to Deal With Client Challenges
Research Using New Methods and Learn New Technological Techniques
Learn About Valuation Theory.  (Appraisal Foundation's proposed course requirements).
Session Two:
Simulate an Appraisal Inspection
Learn Property Identification and Analysis Techniques
Advance Product Knowledge and Advance Specialty Area Knowledge
Learn How to Use Ultra Violet Light to Detect Restorations
Learn How to Write Property Descriptions and Condition Reports

You will receive sample contracts, forms, glossaries and documents which are used everyday by successful and experienced appraisers and be provided with a CD of all forms and they will also be included in your Course workbook.  You will receive 16 Professional Development Credits and a Certificate of Completion.

Attendees will have the rare opportunity to completely inspect and study the furniture, fine art, sculpture, decorative arts, porcelains, pottery and much more at the Potomac Company Auctioneers.

The workshop is a natural progression after taking the Core Courses because it is designed to get the appraiser into the mainstream appraisal profession fast.  New Appraisers will have the opportunity to simulate an appraisal inspection and gain the confidence and skills needed to act like old pros, while old pros will add new skills needed to expand a practice and advance your qualified status in the appraisal industry.  We teach you how to do the business in the real world and cut through the mustard!

The workshop instructors are Todd Sigety, ISA CAPP and past President of The International Society of Appraisers.  Todd is also the Director of Appraisals for Potomac Company Auctioneers.  Jane Brennom, ISA CAPP past President of The Gulf Coast Chapter and past core course instructor for ISA.

Contact us for pricing and availability. We purposely keep the class sizes small to enhance interaction and discussion during the workshop. Click on the link below to check out who we are, about the workshops, and for further information and registration. Website:   www.appraiserworkshops.com or call us now at 703-836-1020.
Registration information is on the Appraiser Workshops website, just follow the source link.

Source: The Appraiser Workshops


The Growth of the Online Art Market

The UK wealth management group Spears has takes an interesting look at buying art online and the recent partnership between Sotheby's and eBay and how technology is changing the paradigm of buying art. Now it is not an in-depth coverage of the art market, but it does reinforce various trends we have been seeing with online purchases, auction house strategies and the art market.

Spears reports
Sotheby's and eBay partnership signals booming online art market

The collaboration will enable collectors to bid on world-class art from the comfort of their own home or on the go with their smartphones

When we think of art, what comes to mind? Monet's spectacular water lilies? Michelangelo's heroic David?

With David Hockney's celebrated foray into iPad art and the ongoing success of the Art Everywhere movement, where digital works of art have been projected onto stations across the UK, the days of the artistic supremacy of paint and canvas, marble and bronze are clearly numbered.

Technology is providing the art world with new tools for expression, with more and more artists pushing the boundaries of art, looking outside of what is perceived as "traditional" to incorporate other aspects into their work.

And it is not only the creative process that has been affected by the influence of technology. The manner in which art is produced, distributed, promoted, conserved and supported has also shifted as a reaction to the world's transition into a socially-connected digital society. The internet makes art easier to share, drawing it out of galleries into the wider public sphere.

In a further move towards bringing fine art to the masses, Sotheby's and eBay have recently announced a partnership that will enable collectors to bid on world-class art from the comfort of their own home or on the go with their smartphones.

Starting this autumn, most of Sotheby's New York auctions will be broadcast live on a new section of eBay's website. Eventually, the auction house hopes to extend the partnership, adding online-only sales and streamed auctions taking place anywhere from Hong Kong to Paris to London.

The pairing of the prestigious auction house and the internet shopping giant beloved of bargain-hunters has surprised many, with fine art purists displaying a wary scepticism towards the use of e-commerce in the art world. This scepticism is somewhat corroborated by the 2003 abandonment of a previous partnership between the two companies with the admission that there were simply not enough people willing to buy art online.

However, a decade later, the online art market is booming. In 2013, online bidders competed for 17% of the lots offered by Sotheby's, with the total number of lots bought online rising 36% from the previous year. In April, Sotheby's sold 'The Birds of America', a JohnJames Audubon folio for $3.5 million, a record for an online purchase in a live auction.

For many, online buying has become second nature, with customers increasingly willing to spend large sums over the internet without having seen an item in person. It is access to this enormous market of tech-savvy buyers - eBay has 145 million users - that Sotheby's hopes to tap into with this pairing.

The pairing of Sotheby's and eBay appears to signal a shift in the somewhat rarefied world of art and antiques, opening the enjoyment and possession of fine art up to the masses. Only time will tell whether the venture will succeed. However, with the growing dominance of online consumerism, this pairing could be a further step in resigning the bang of the gavel to a thing of the past.
Source: Spears


Sotheby's Doubles Guarantee Maximum

The Art Newspaper is reporting that Sotheby's is aggressively positioning itself as the top auction house by doubling the maximum level of outstanding guarantees from $300 million to $600 million. Additionally Sotheby's management has also approved a higher level for credit agreements, increasing from $850 million from the previous level of $600 million.

The moves are mean to grow the business.  But perhaps Sotheby's has a short memory as guarantees can be a useful tool to engage consignors, or if used incorrectly and too freely they can also become a financial hardship as what occurred only a few short years ago at the auction house.

The Art Newspaper reports
Sotheby’s moves to "grow the business"

Sotheby’s has taken an aggressive financial position ahead of the next major sales seasons in London in October and New York in November. The company has doubled the “maximum permissible amount of net outstanding auction guarantees” from $300m to $600m, according to an SEC filing on 25 August.

The auction house has also increased its liability from $600m to $850m in “aggregate commitments under the credit agreements”. These agreements are with “an international syndicate of lenders led by General Electric Capital Corporation”, according to the filing.

The moves follow a capital allocation plan announced in January, in which the company established separate financial structures for its two main businesses: Agency (auction and private sales) and Financial Services (which mainly deals with loans to collectors and dealers who offer art as collateral). As of 22 August, the “Agency” credit agreement was increased from $150m to $300m and the “Finance” agreement was increased from $450m to $550m.

The capital plan has been interpreted as a bid to drive shareholder value in the face of criticism from “activist investor” Dan Loeb, who has since joined the Sotheby’s board. The auction house, which is a public company, has also been under pressure from Christie’s, its privately owned rival. Christie’s held the most expensive auction of art ever on 13 May with an evening sale of post-war and contemporary art that totalled $744.9m. Sotheby’s equivalent auction realised $364.4m.

The recent refinancing is “part of Sotheby’s renewed effort to take advantage of opportunities in the marketplace to grow the business”, says a spokesman. 
Source: The Art Newspaper


A Quick Look at the Musical Instrument Market

As professional appraisers, it is important to know the markets trends of many types of property, even if it not within our specialty area.

Quartz takes a quick look at the growing high end musical instrument market. The article notes the number of violinists in China may drive the market in the near future, and that prices are already so high for fine instruments, even the best professional musicians can not afford them. The record price is noted for a Stradivarius violin which sold in 2011 for $15.9 million.  Recently a Stradivarius viola (one of 10 known examples) failed to sell, which had a rather high $45 million reserve.

Quartz reports
The “Macdonald” viola is one of only 10 Stradivarius violas in existence, and one of only two violas crafted by the famed luthier Antonio Stradivari during his “golden period” of production. The 18th-century instrument would be highly coveted by any collector attempting to complete an all-Strad string quartet.

This, according to the auctioneers trying to sell it, should make it the most valuable musical instrument in history. But this summer, the offers received by Sotheby’s and Ingles & Hayday failed to meet the viola’s $45-million reserve price.

Perhaps because $45 million is a tall ask. It’s roughly triple the sum paid for the standing record-setting instrument, a Stradivarius violin sold in 2011 for $15.9 million (and that price was four times the previous auction record for a Strad). One instrument auctioneer told Businessweek that the Macdonald’s “quantum-leap” pricing was out of step with the violin market, which favors slow, steady growth. (The average price of a Stradivarius has risen by nearly 11% annually over the past decade, according to one London instrument dealer.)

There are some doubts about the superior sound quality of Strads: In blind tests, accomplished violinists didn’t shown a preference for Strad violins over high-quality new ones. For their part, Sotheby’s and Ingles & Hayday are holding out for higher offers.

Their optimism may have something to do with the waves of prosperity hitting big auction houses of late. Alternative investments such as art, wine and classic cars have shot through the roof as the global economy has teetered. That has left investors scrambling to park chunks of cash in more unusual places. Instrument dealers, meanwhile, have talked a big game about, for instance, the 40 million violinists in China who will eventually drive up the asset’s price.

Meanwhile, musicians are losing out. Prices for fine instruments are now out of reach for even the most successful concert artists. As such, many resort to courting wealthy benefactors and foundations who grant them access to fine instruments in return for private concerts and added cachet. String players are especially vulnerable because supply is low; unlike pianos, brass and wind instruments, what are considered the best string instruments are hundreds of years old. The lucky few who do own their fiddles, says one dealer, often end up hawking them to fund their retirement.
Source: Quartz


China's Poly Culture Group Shows Strong Results

Skate's just published a report on the first half 2014 financial results of Chinese auction house Poly Culture Group. The results are strong, as well as the auction house has a stockpile of cash totaling $333 million. Although not mentioned in the Skate's report, Poly Culture was one of the supposed bidders in the possible sale of Bonhams as reported by the Financial Times and posted on the AW Blog back in July (Click HERE to read).

According to the report, the auction segment of Poly Culture contributes about 75% of the profits, and the returns are and margins are strong, and when compared to Sotheby's, they are operating more efficiently.

Skate's reports
Poly Culture Group Reports Strong Results, Emphasizes the Growth of Its Art Segment, $333m in Cash to Play with

Poly Culture Group, the largest Chinese auction house listed in Hong Kong and the second largest company in terms of market capitalization in Skate's Art Stock Index, reported its interim 2014 (six months) results today. In short, numbers are good, the firm's art business is robust, and all this is very welcome news to Poly shareholders who have watched the firm's stock trading 20% below IPO price (Poly listed in March, see Skate's detailed coverage of Poly IPO).

The first results reported by Poly since the firm went public on March 6th of this year portray strong growth of both revenues and profits, and a healthy balance sheet. The firm's revenues are up by 15% in RMB terms (16% in USD terms due to Chinese Yuan appreciation to US Dollar this year) for the first six months of the year compared to the same period of 2013. The net income is up by 10% in RMB terms (11% in USD terms). In USD terms Poly generated $169m in the first six months of 2014, of which $84m can be attributed to their art business and auctions segment. This compares to $493m in revenues produced by Sotheby's for the same period (see Skate's coverage of Sotheby's six months results).

In terms of the segment breakdown, the art business and auctions segment remained the largest part of Poly's operations and produced the highest topline growth - 24% in RMB terms (25% in USD terms) for the six month period, now contributing to exactly half of their total revenue (46% a year earlier). Interestingly enough, Poly's net income for 1H 2014 was just half that of Sotheby's for the same period ($34.32m and $71.75m respectively). Given that art business contributes to about 75% of profits of the firm's auction group, Poly operates a much more efficient business model than Sotheby's. With its art business being 6 times less in sales, Poly generates just 2.7 times less profit, making the firm's net art business margins more than double that of its competitor.

Following IPO, Poly has a very strong balance sheet - the firm has negative net debt (i.e. more cash than debt) and its cash position doubled to RMB 2.1 billion (USD 333 million) as of June 30, 2014.

Poly is clearly committed to its art business and auctions segment as the key growth area including focus on developing new categories, looking for more consignments around the world, and expanding auction presence to more Chinese cities.

The art business segment is by far the most profitable part of Poly's operations, generating 49% gross operating margin versus overall 30% gross profit margin, and is heavily concentrated in mainland China (90% of revenues), with the balance coming from Hong Kong.

Art Business and Auction Business

Poly Auction Beijing will adopt specific strategies according to market changes and increase the sourcing scope and efforts, so as to secure its dominance and market share in leading categories. While taking efforts in improving professionalism and refined services to heighten brand influence, it will opportunistically establish branches and hold special auctions in places including Xiamen, Shanghai and Shandong to cater for local market needs. Priorities will be placed on the 27th and 28th boutique auctions as well as the 2014 Autumn Auction.

Poly Auction Hong Kong will press ahead with its boutique strategy. It will take into greater consideration the demand of collectors in Hong Kong, Macau, Taiwan, Southeast Asia, Europe and the United States to expand the portfolio of international buyers, and enhance overseas sourcing to further expand the variety of items. While focusing on contemporary art to strengthen marketing in Southeast Asia, it will vigorously expand the antique, jewelry and timepiece business in an innovative approach to ensure the success of the Autumn Auction.

Poly Art Centre will give full play to its established gallery channel advantages in Beijing and Guizhou to boost sales. A wholly-owned subsidiary will be established in Hong Kong to upgrade its international business. The priorities in the second half of 2014 include effective sales, well-paced sourcing and a reduction in debts to ensure profitability.

Poly Art Investment will devote to management of the existing projects, and proactively diversify the sourcing and selling channels to ensure smooth project operation. Meanwhile, it will strengthen development of new projects and offer more partnership options to secure business growth, aiming to provide consultation services for one or two additional artwork funds in the second half of 2014.
Source: Skates



Downsizing assistance has become a part of many personal property appraisal practices. As more and more people are downsizing, the need to assist with selecting items to trash, donate, and sell has become important to many collectors and homeowners. Appraisers and other small business have jumped in to assist those needing help.

The NY Times just ran an interesting article on downsizing and some of the professionals who assist with the transitions.

The NY Times reports
THE amount of goods a couple can accumulate over 44 years living in the same house can be overwhelming. And that is what Wendel and Carolyn Thompson, of Columbia, Md., have been grappling with since January as they prepare to leave their split level and move to a retirement community this month.

“We’ll get through this. That’s what I tell myself several times every day,” said Mrs. Thompson, 77, a former teacher and Maryland school nutrition program employee, who raised three children in the four-bedroom house. An avid collector of educational materials, games, gifts and other miscellaneous items like teddy bears, she devotes time every day to deciding what goes in the boxes for giving away, the boxes for the new apartment and the boxes for each of her children — and their children.

“One of my recommendations for handling this,” she added wryly, “is don’t wait.”

But, of course, many people do wait — and wait, said Kimberly McMahon, co-owner of Let’s Move, a downsizing and moving specialist in Fulton, Md., whose company is helping Mrs. Thompson and her husband, 78, a former government statistician, to clear out every nook and cranny.

“Downsizing is the hardest because it is emotionally difficult for people to release their history,” said Ms. McMahon. “It’s the worst anxiety associated with any move.”

Her advice is “that nothing should be off limits. Either use it, love it — or leave it.”

Getting rid of furniture and general clutter can be a daunting task. For those with antiques, silver, jewelry and other valuables, Laurene Sherlock, a Bethesda, Md., antiques appraiser, will advise people of outlets like vintage shops, where owners can consign their precious pieces for sale.

But the value of valuables can be cyclical, warned Ms. Sherlock, who noted that 1950s and mid-modern furniture “is hot, and so is Bakelite jewelry, but something else that people love may just not be popular. A lot of younger people just don’t want to be burdened with the tchotchkes.”

While homeowners can amass impressive amounts, the task of clearing out apartments where people have lived for a long time is not any easier, said Ron Shuma, who runs A+ Organizing in New York City.

“I advise going through each drawer and each closet every six months because it’s so much easier,” he said. “But people typically don’t, and that’s where I come in to help people realize what are treasures, and then we get rid of the rest.”

When Hanan Watson, 71, decided to downsize after 35 years in a large two-bedroom Murray Hill apartment, she found that “it is very difficult to sell or even give away many things. Charities can be extremely particular about what they are willing to take.”

Continue reading the main story
She donated some of her art to a nearby community art center, gave some items to relatives and friends and got a lot of assistance from Mr. Shuma in getting rid of larger furniture.

“There are a lot of challenges, for example, the glut of ‘brown furniture” — even good-quality mahogany — which fetches pennies on the dollar,” Mr. Shuma said. “The best thing is for a family member to take it.”

But with careers and young children, fewer 40- or 50-something offspring want to acquire bulkier items or take on the task of sorting and disposing of unwanted goods in their parents’ homes. In the last decade, baby boomers, more used to paying for services than their Depression-era parents, have been increasingly willing to spend money for outsiders to help them pare down their accumulation.

The price of such services can vary widely, from $60 an hour in major metropolitan areas except New York City, where the cost can run as high as $200 hourly. In other areas, downsizing help can run $40 an hour. Sorting, packing and moving typically runs from $4,000 and $10,000, depending on the locale, according to specialists.

Despite the cost, the demand for downsizing is strong, according to the National Association of Senior Move Managers. In 2014, the association reported that 50 percent of those contracting for services with its members were older adults, and 30 percent of the initial contacts leading to contracts were from the senior’s family.

An additional 20 percent of business comes from sources like senior housing communities, which have increasingly been establishing programs to help seniors pare back and streamline their belongings before becoming community residents. In 2007, Erickson Living, a major retirement community provider, started a program in Novi, Mich., to advise older adults who had signed up to move to the Fox Run retirement community.

The program, called Erickson Realty and Moving Service, is offered at the 18 Erickson retirement communities around the country, and helps older people with real estate agents, repair people, organizers and movers to smooth their path out of their longtime homes and into smaller spaces.

Last year, the program helped 230 of the 340 people who moved to Erickson properties in Virginia and Maryland, said Sharon Baksa, its regional sales director. The program provides up to $2,000 in relocation expenses — sometimes more.

“We play the role of the surrogate family member,” said Ms. Baksa, who helped start the program in Michigan. “We handle between 1,800 and 1,900 moves a year over all.”

Choosing the retirement community, the Charlestown Retirement Community in Catonsville, helped the Thompsons in Maryland focus on sorting and jettisoning belongings.

“When we set an August date then we knew we had a goal, and we had to meet it,” Mrs. Thompson said.

The downsizing credit was an incentive for the Thompsons, who started in February with a once-a-week visit, for three to four hours, to help sort belongings and get unwanted items out the door. By April, they had increased the declutterer’s schedule to twice a week to meet their target of an August move, and preparing their house for sale by the fall.

Continue reading the main storyContinue reading the main story
They did not have high-end valuables that would warrant an estate sale, but, instead, had one yard sale and then gave away many of their items to family, friends and charities like Goodwill and Habitat for Humanity. Most retirement communities and organizing professionals maintain a list of organizations and what they will accept.

Churches or temples also help. Marc J. Rosenblum, a retired lawyer and economist, has been clearing out his late wife’s belongings and various household goods from his McLean, Va., contemporary home with advice from his synagogue, Temple Rodef Shalom.

“They provided suggestions for where to allocate items, for destinations like a homeless shelter in Bailey’s Crossroads, Va., and a nearby thrift store,” said Mr. Rosenblum, 78. He first consulted a downsizing specialist, which, he said, “saved a lot of time, and helped me pick up some good ideas, including a furniture auctioneer.”

He handled the downsizing task largely on his own, but others like the Thompsons say they welcome the help and the prompting for what many see as an onerous, time-consuming job.

Even with the help, “it’s one step at a time,” said Mr. Thompson. “And I don’t see the end yet.”

For people thinking about beginning the task, here are some ideas from Kimberly McMahon, of Let’s Move..

■ Write some organizing time on your calendar.

■ Set a timer to get started.

■ Start small, even if it’s matching up a cup with a saucer.

■ Get a friend to help.

■ Fill a trash bag once a week.

■ Call and book a donation pickup for the next day.
Source: The NY Times