05:06
Faizan
More than one equipment appraiser has been stymied by clients asking for equipment appraisals at "auction value." That's a tough one! Auction value, you see, isn't an appraisal value at all. USPAP requires compliant appraisals to define any value used in the appraisal report and to cite the authoritative source of the definition. And to date, no respected authoritative source-whether the IRS, any of various legal codes, courts, or appraisal organizations-provides a definition for "auction value." And there's a reason for that: Auction is a method of selling items, not a definition of value.
Yet the myth of "auction value" lives on - There is, in fact, as you may know, a definition of "auction value" listed in Wikipedia, but as we all know, however popular and useful Wikipedia is, it is not generally considered an "authoritative source" and certainly not one that most folks would want to march into court with.
So when faced with the inevitable request for an "auction value" equipment valuation, the most prudent recourse is to shift instantly into appraisal education mode, explaining that an auction is a manner of selling goods, not a definition of value, and that "auction" is no more a viable definition of equipment value than "shopping mall" or "flea market" would be.
Sometimes, it's important to understand what something is before we can accept what it is not. To begin, then, with our deconstruction of "auction value," let's take a look at one commonly accepted definition of an auction - Webster's states that an auction is "A sale of property to the highest bidder."
We all know that there is a lot more to an auction than this simple and straightforward definition contains. Auctions may involve seller buy-backs, reserves, minimum bids, house bids, credit bids, buyer premiums, auctioneer commissions, run fees, marketing fees and so on. It may even be inaccurate to assume that items always sell to the highest bidder. Not all items that appear to have been sold in an auction actually do sell; occasionally, a top bidder doesn't finalize payment and therefor, the item has not actually been sold. Even when items are actually, technically, irrevocably sold, however, the monetary amount that changes hands does not necessarily represent the value of the item.
In addition, the incredible flexibility of the auction method allows the marketing and selling of a wide variety of items under countless different scenarios, any of which might supply a different selling/buying price and many of which presume different values. Some of these scenarios might include:
Yet the myth of "auction value" lives on - There is, in fact, as you may know, a definition of "auction value" listed in Wikipedia, but as we all know, however popular and useful Wikipedia is, it is not generally considered an "authoritative source" and certainly not one that most folks would want to march into court with.
So when faced with the inevitable request for an "auction value" equipment valuation, the most prudent recourse is to shift instantly into appraisal education mode, explaining that an auction is a manner of selling goods, not a definition of value, and that "auction" is no more a viable definition of equipment value than "shopping mall" or "flea market" would be.
Sometimes, it's important to understand what something is before we can accept what it is not. To begin, then, with our deconstruction of "auction value," let's take a look at one commonly accepted definition of an auction - Webster's states that an auction is "A sale of property to the highest bidder."
We all know that there is a lot more to an auction than this simple and straightforward definition contains. Auctions may involve seller buy-backs, reserves, minimum bids, house bids, credit bids, buyer premiums, auctioneer commissions, run fees, marketing fees and so on. It may even be inaccurate to assume that items always sell to the highest bidder. Not all items that appear to have been sold in an auction actually do sell; occasionally, a top bidder doesn't finalize payment and therefor, the item has not actually been sold. Even when items are actually, technically, irrevocably sold, however, the monetary amount that changes hands does not necessarily represent the value of the item.
In addition, the incredible flexibility of the auction method allows the marketing and selling of a wide variety of items under countless different scenarios, any of which might supply a different selling/buying price and many of which presume different values. Some of these scenarios might include:
Posted in: business
