In addition to benefitting from a trove of data, Hagerty Insider also relies heavily the expertise of veteran market watchers, including Dave Kinney, appraiser and publisher of Hagerty Price Guide. In this column, he will answer often-asked questions about collector car values and buying and selling. Have a question of your own? Ask in the comments section.
For this installment, Dave starts with an elemental but often misunderstood aspect of the business:
What is a classic car appraiser, and when do you need one?
Even though my “day job” is being an appraiser, I always felt the collector car market would be better off if more people had a basic understanding of what things are worth, which is why I began publishing a little guide. That book—today known as the Hagerty Price Guide—has helped democratize information about car values. The proliferation of online auctions where experts often weigh in on car values in realtime, along with publications like the one you’re reading, have the same effect. Today, even a casual observer can get a pretty good sense of what a particular vehicle is worth.
Appraisers, however, still play an important role whenever “pretty good” isn’t good enough.
Simply put, an appraiser’s job is to estimate a value of something—art, houses, businesses, jewelry, you name it. “Something” didn’t seriously include collector cars until the 1980s—around the time headline-grabbing sales like the Harrah’s auctions alerted people to the fact that old cars could be worth serious money. Don Peterson, who passed away last September at the age of 92, didn’t quite invent the genre but is one of the best known from these early days.
In those dark ages of what we’ve come to call the collector car market, a trusted appraiser had a major leg up on the typical observer. Very few people in this time followed collector car values, and those people generally focused on prewar metal because that was where the big money was.
Today, appraisers like me get called in when variables throw off a standard valuation. Sometimes, the variables have to do with the car: A price guide can tell you how much to ask for your 1968 Ford Mustang. If it turns out that Mustang was driven by Steve McQueen, or has documented extreme low miles, or has unusual colors or options, you probably want to call an appraiser. Other times, the variable has to do with your life, particularly the sort that involve contracts and lawyers—divorces, estate planning, sales of entire collections.
The actual appraisal process is straightforward. We often look for what is known as a Market Example (or what was until recently referred to as Market Comparison) approach. In other words, the approach using comparables or “comps.” The two other possible approaches to valuation are the Cost Approach (very recent restorations or Resto Rods are two examples) or the Income Approach (how much money does the car make for you; this one, obviously, is quite rare with collector cars).
An appraisal must be for a specific purpose, and work toward a type of valuation. Think of it this way: that 1968 Mustang we referenced above, just like your car, has more than one value, depending on the circumstances driving the appraisal. There are, for instance, specific considerations behind the value of a charitable donation or for a collection that’s part of an estate. That said, the most common valuation used is “Fair Market Value”, and with few exceptions, that is what most courts and government entities demand (think taxes and divorce).
No matter the specifics of the appraisal, it’s important to keep in mind that they are an opinion of value—nothing more and nothing less. That opinion should be researched and documented, with the valuation findings detailed in the appraisal document. An appraisal is not legally binding until a court, judge or other legal entity such as a binding arbitration says so.
Before you hire an appraiser, it’s important to, well, appraise them. In most jurisdictions, there is little regulation guiding who can call themselves an appraiser or, for that matter, a “certified appraiser.” Certified by whom? It’s up to you to look into accrediting organizations and to compare credentials. There are large, multidisciplinary appraisal societies who have continuing educational requirements, as well as small, self-credentialing groups that have adopted some of the language of the big groups. There are independents who do not belong to any credentialing or educational appraisal organizations.
Ask your friends or colleagues about appraisers they know, or even better, have used. Was their work professional? Well thought out? Did it answer the value question asked?
Look at their website for credentialing information. Do they offer information about their services and possibly normal costs? Is their work done confidentially? Can you call their office and ask questions about their process, record keeping and costs? Are they well known and respected in the hobby? Do they attend related events, and keep current with the market and its continuing changes?
Keep in mind that the costs for an appraisal will rise if travel is involved. Not a big deal if the collection is 10 or more cars, but it could be a deal-breaker if the job is just one or two vehicles.
Finally, look for the red flags. If they brag about being the best, their long list of clients, or make other unverifiable claims, you might wish to look elsewhere.