It’s important to value our assets correctly, whether these are fixed property or open land. The same applies when valuing a movable asset such as old furniture, appliances, and aged porcelain.
For how else could we insure them correctly, and substantiate an insurance claim after a total loss. Avery Associates offers a professional valuation service particularly, but not just for probate and inheritance tax purposes.
We have many clients who are executors trying to distribute assets fairly, among heirs entitled to equal shares of a deceased estate. Of course, they may each have their own agendas, making it doubly important to be able to justify valuations.
Four Classic Ways for Valuing an Asset Depending on Circumstances
Let’s say for example we wish to value a house for insurance, sale, or inheritance tax purposes. Here are the four main methods we could consider:
1… The replacement cost of building an identical house on the same piece of land, say after total loss from a devastating fire.
2… The depreciated value of that construction cost, because after all it is no longer new having stood there for many winters and summers.
3… The comparable value similar properties have exchanged for recently. In that case, we would have to factor unique aspects of the subject house.
4… The investment income we might receive if we rented the house out, for the time it would remain habitable before we pulled it down and built a new one.
However, if you were a professional valuer like Avery Associates you might have difficulty convincing the interested party otherwise, it they have already made up their own minds based on a loose understanding of one of those methods.
Assessing the Fair Value of Movable Assets
Movable assets, broadly speaking are anything that’s not permanently attached to the ground (like a house). Or intended to be permanently attached to something that is (like a built-in cupboards anchored to a wall).
Valuing an asset fairly can be even trickier when clearing a house for probate, and getting affected parties to agree. Especially if that asset is unusual, rare, or in exceptional condition. Let’s take this old car for example. How would you assess the worth?
What Is the Value of Something Like That in a Seller’s Mind?
We were clearing a hoarded house when we stumbled over that old car slumbering behind a pile of old newspapers stacked close to the ceiling. They dated back to when that old wreck was a gleaming new limousine that did the owner proud.
Someone fortunate to inherit that dusty opportunity might be tempted to wonder how much can I get for that if I sold it right now? Well, we googled that car and discovered its soul mate in the Royal Vintage Car Museum of The Maharaja, Udaipur.
Now THAT one could be worth £100,000 because of the historical connection, but the one we found in that hoarded garage was not in that league. This line of reasoning provides us with two extreme value points. These are (a) a tidy sum, and (b) the scrap value of the metal.
The Gap that Forms between Buyers and Sellers
The gap is the difference between (a) what a potential seller wants and (b) a potential purchaser is willing to pay. Or, how we might value it for probate purposes, compared to an heir with ‘pounds in their mind’. Consensus is only possible when parties are willing to come closer together.
Value and Beauty are Subjective in People’s Minds
All of us place our own different values on things, depending on our economic position, income, culture and needs. Let’s say for example we inherited that old car, and decided in minds it was worth £10,000, just for the sake of the argument. Let that be our reserve price.
Now, if someone offered us £9,500 take-it-or-leave-it we would have two choices. We could (a) accept the offer, or (b) decide to wait for a better one. If we accepted the lower offer, we might be able to make up the £500 shortfall by investing the £9,500 wisely, or renting the garage out. If we did not, well then all we would have is an old car standing in the garage.
How Avery Associates Adds Value to Estates or House Clearances
We introduced this light hearted example because we hoped to illustrate the value of using a professional value when in doubt. Our clients tell us they readily recover our fees through greater certainty. And that this enables cash to flow faster, and estates to settle sooner.
Whatever your need, why not give us a call now on mobile 0208 640 00 44, or fixed line 0800 567 7769 to discuss valuing your asset. All it will cost is a little of your time, in exchange for a clearer vision of the road ahead. You are also more than welcome to send us an email message, which we will attend to as soon as we can.