This may seem like an inappropriate time to be thinking about appraising your stamp collection — after all, the stamp market has slowed to non-existence except for online selling, and few people are heading out and about to meet appraisers in person. However, as many people might find themselves with extra free time, the time may be ripe to think seriously about organizing your collection and undergoing the (frankly) arduous process of creating an inventory. My goal is to manage your expectations and walk you through the mechanics of appraisal from my own professional experience.
An appraisal is an opinion of value based on facts. There are several reasons one would need or want an appraisal: estate tax filing, insurance, donation, equitable distribution, (i.e. divorce). Not all appraisals arrive at the same valuation. The two most common valuations are fair market value and retail replacement value. Catalog value — whether Scott, Stanley Gibbons, Yvert & Tellier, or whatever catalog is your preferred source — is almost NEVER the appraisal valuation.
The I.R.S. definition of fair market value is: “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” Retail replacement value is that price for which you could go out into the retail market and replace the item today. As you can see, catalog value does not appear in either definition.
Estate and donation appraisals always use fair market value. Equitable distribution gets a value very similar to fair market value. Insurance appraisals get retail replacement value.
An effective date for the appraisal must be specified. For donation appraisals, the effective date is the date of the actual donation. For insurance appraisals, the effective date is the policy date. For estate appraisals, it is either the date of death or the alternate date of death (date of death plus six months). Or, in the case of a damage or loss appraisal, the date of such loss or damage. The estate attorney will generally choose this date.
Figure 1. I regularly teach an elective “What is My Collection Worth?” at the APS Summer Seminar. This information (and an example inventory) is also available for APS members on C3a (stamps.org/learn/c3a-online-learning). It’s well worth a look if you need an idea of how to make an inventory of your collection.
Before we get into the mechanics of the appraisal, we need to get organized. There are two main reasons for getting organized. The first is that you need to know what you’ve got. Most stamp collections are a mess! Most appraisals — estate or otherwise — that I walk into have no organization whatsoever. Without prior organization (which can be time-consuming, yes), people in this situation, even thoughtful collectors, are really at a loss as to where to start. So, do yourself a favor and organize your collection. The second reason for getting your collection organized is that if you don’t, the appraiser will. And, he’ll be on the clock! Time is money, as they say.
It is best to prepare an inventory of your collection. An entry of “One Scott U.S. album” is not sufficient. But an inventory listing every stamp you own is TMI in today’s jargon (too much information). You should list each album, binder, stock book, etc., and write a brief explanation of what each contains. If there are especially noteworthy items, these should be noted. The more detail, the better. If you know the catalog value of the contents of these items, include it along with the name of the catalog and the year it was published,(Figures 1 and 2).
Figure 2. An example inventory: Remember, there’s a balance between too much information and too little! When estimating the catalog value of your collection, keep track of the name and year of the catalog for future reference, and be realistic.
If you think your collection is valuable (who doesn’t?) you should consider insuring it. You’ll be better able to name an insurance value if you organize your collection and get an insurance appraisal first. This can prevent over- or under-insuring your collection. This directly affects the insurance policy premium. An appraisal may also be needed to determine the value of an insured damage or loss.
If you find yourself in the position of estate executor, let the estate attorney guide you as to whether an appraisal of the stamp collection is needed. I hope it goes without saying that you need to take proper care of the collection. Avoid excessive heat, cold, or moisture.
You need to find a “qualified appraiser.” This is someone who has the education and experience to write philatelic appraisals. A qualified appraiser should also be USPAP qualified (Uniform Standards of Professional Appraisal Practice). These standards are established by the Appraisal Foundation, a U.S. government body. This certification must be renewed every two years. The appraiser should also be a member of a professional appraisal organization like the Appraisers Association of America (AAA). These organizations may also be contacted in order to find a qualified appraiser in your area at www.appraisersassociation.org.
Once you have decided upon an appraiser you should expect to sign a contract for the services. The appraiser’s fees will be enumerated in the contract. Yes, you must pay for an appraisal. The fee is usually based on an hourly rate. A fee based on the value of the collection is a conflict of interest and must be avoided. And, if the appraiser, up front, offers to buy the collection or offers a reduced fee if he can buy the collection, show him the door! This is a conflict of interest and professionally taboo.
The following language appears in my appraisal reports: “To my knowledge and recollection, I have performed no services, as an appraiser or in any other capacity, regarding the particular object(s) that are the subject of this report within the three-year period immediately preceding the acceptance of this assignment. I have no past, present, or contemplated future financial or other interest in the appraised property.”
The appraiser will have to personally inspect the entire stamp collection. This cannot be done from photos or computer scans. As you should know, condition is everything. The appraiser must note condition and will have to see both the front and back of each item to be appraised. The appraiser doesn’t have to write down the catalog number of every stamp in the collection but will have to have a good reason for not doing so. Here’s where we must say, get real. It is not economically practical to spend any time evaluating several hundred stamps with a minimum Scott value of 25¢ each. The appraiser can easily lump these into one larger entry in the appraisal report.
Technically, every item listed in an appraisal report should be accompanied by three or more comparables. Comparables are examples of sales prices for similar items. Thus, if your copy of a U.S. C3a is being appraised, the appraiser will have to list at least three different C3a sales in the recent past. If this is an IRS appraisal, photos of those comparable sales are also required. (Figure 3).
Figure 3. If I ever find myself having to appraise a C3a (which is truthfully an unlikely scenario!) I would use images from recent sales as comparables. This is courtesy of Siegel Auction Gallery’s Power Search™ — a useful resource for appraisers and collectors alike.
The appraiser is not an authenticator. We assign valuations based on the readily apparent identification of a stamp or cover. As an appraiser I will routinely check stamps with a perforation gauge if that is an issue for identification. I will not, however, use watermark fluid to check for watermarks. I will also use a color gauge when appropriate. If you’ve got expensive items where identification could be an issue, get certificates of authenticity and keep them with the stamps.
In this digital age, there are some helpful things for appraisers that did not exist when I first started performing appraisals over 25 years ago. Many stamp auction companies now archive their sales. The appraiser can search these archives for comparables. One good source is Siegel Auction Gallery’s Power Search™. You can enter a specific stamp by catalog number and even specify a range of dates to be searched. Eastern Auctions in Canada is another good archive source.
Once the appraiser has examined the collection, they will list everything on an appraisal report with the appropriate valuations for each item or group of items and a total indicated. The valuation section will be followed by an analysis section. This is very important. It is the appraiser’s rationale for why they chose the values given. Market conditions will also be discussed. More about this later. The appraisal process takes time. Depending on the size and complexity of the collection the inspection phase could take hours or days. The valuation and report preparation will typically take 2–3 times as long as the inspection phase.
An appraisal report is a rearward-looking document. The valuations are based upon historical activity. An appraisal report will specifically state that it makes no claims about values going forward. That said, however, there can be issues. Our current world climate, with COVID-19, is a good example. Except for online sales, there is no market. Stamp shows have been canceled for the foreseeable future; even the APS headquarters are closed, except for internet sales and other remote APS services! [Editor's note (June 10): The American Philatelic Center is currently operating all of its member services.]
I recently performed two estate appraisals where the dates of death were in September and October 2019. These were to be the effective dates of the appraisal reports and both appraisal reports were written using those dates. At that time, the stamp market was in fine shape. Now, in March/April 2020, the estates are trying to sell the collections and are finding no markets. The internet auction market seems to be alive, but I’m finding that estimates given by the auction houses are very cautious. One appraisal report was delivered before the stamp market disappeared and one after. For the first one I’m doing some client hand-holding. They need assurance about what to do. For the appraisal delivered after the collapse, I recommended in the appraisal report that they wait until after things cool down if they can.
Most appraisals that I conduct require a lot of travel in order to physically inspect the material. In this climate, it is unreasonable to expect an appraiser to catch a flight, Scott Catalogs in tow, to another city. However, in the case that an appraisal is necessary during this crisis, there are a few additional considerations. All surfaces — including albums — would have to be sanitized. The appraiser would have to wear surgical gloves. All in all, the best course as I see it is to postpone the appraisal and, if necessary, apply for an extension to the estate filing deadline.
As stated earlier, an appraisal is an opinion of value based on relevant facts. You as a collector must be realistic in your expectations of the appraised value of your collection. Who of us buys stamps at the full catalog price? Then, why should we expect that, magically, our collections are now worth full catalog value? If a dealer is to be able to sell stamps at a discount from catalog value, they must buy that material at a price below their offering price to you, the buyer. We must also be realistic with our heirs. We do them a disservice if we lead them to believe that our collections are worth a fortune if they really aren’t. Because, after you’re gone, your heirs will expect to sell your collection for this “fantasy” fortune. As an appraiser, I’ve been in too many encounters with distraught executors over a less-than-expected appraisal valuation. You must understand that huge collections of U.S. mint sheets and plate bocks, post-1940, are worth less than face value. First day covers, post-1940, have very little value. And, an awful lot of stamps in the average collection have the minimum catalog value of 25¢. Keep in mind, this is just a hobby!
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Editor's Note: The article "Appraising a Stamp Collection (Especially in times of crisis)" was published in the May 2020 issue of The American Philatelist, available exclusively to members of the American Philatelic Society. Click here to view the full issue.