Understanding the Auctioneer and the Appraiser Roles
in Estate & Probate
By Cindy Isennock

Baby Boomers stand to inherit billions of dollars in the coming years. The popularity of living trusts and sophisticated tax planning methods have created a greater demand for and participation of qualified appraisers and auctioneers. Understanding the role of the auctioneer/appraiser is paramount in gaining credible information and giving service to clients.

An appraisal, for either a living trust or for probate, is more credible to the IRS than an opinion from an heir, an owner or even a letter from a real estate agent. Audit rates for federal estate tax returns are approximately 20 percent, almost 10 times the audit rate for income tax returns. Each federal estate tax return is “hand-screened” by experienced estate tax examiners to be classified for audit. The IRS expects the number of estate tax returns to grow as the population ages. Substantial penalties (20 to 40 percent) are applied for significant under- or overvaluations of property. Tax and circuit courts often look to the appraiser with superior credentials and methodology along with local experience as the best resource for accurate information. There is a non-exhaustive list of when appraisals are needed. Some of the most common needs are when property is sold to a relative, partitioning of an estate among heirs or beneficiaries, prior to listing a home for sale, partial interest (typically income property), federal or state estate tax returns, gifts and trusts, and determining the basis for capital gains. Appraisers who work hand in hand with attorneys, accountants, trustees, executors and administrators have knowledge and experience with these complicated issues. Appraisers are trained and licensed and are required to continue their education to remain accredited to practice their trade. The professionally recognized organizations, guilds and associations set very high standards to which appraisers must adhere. The unified standard of practice and procedure (USPAP) is the industry’s ethical measure. In looking for an appraisal firm with which to affiliate, choose the appraisers who describe themselves as USPAP compliant.

The auctioneer can quickly and effectively put money into the estate or directly to the heirs and beneficiaries. Auctioneers today are educated marketing professionals who are well-versed in their field. Trained and licensed in their occupation, auctioneers are highly technologically informed and very detail-oriented. Creating a win-win situation through tried and true practices dating back to ancient Greece, modern auctioneers spend many long hours to prepare for and to orchestrate a single auction. The auction industry is the last true vestige of “Free Enterprise” competition that exists, and that allows for the auction sale of everything from livestock to mansions. Auctions eliminate lengthy turn-around time for sellers, and buyers are able to buy at the price they determine. When discussing your client’s needs with the auctioneer, you can expect a few things, first and foremost being respect for the seller. No matter what the circumstances might be, you will find that the professional auctioneer has had numerous similar experiences and can assist in making a difficult time less stressful. Knowledge of the marketplace is a strong asset in changing times. Auctioneers are skilled in watching trends and can advise you when to sell or to hold an item for the best price. Active promotion is the best way to stimulate interest and attract more buyers. Auctioneers know how to reach the marketplace. The Auction method of selling recognizes the time value of money. It is the only method of marketing Real Estate and Personal Property that allows a seller to convert assets to cash in one day, both quickly and effectively.

The relationships you make today will be your business of tomorrow. Affiliating with auctioneers and appraisers may give you another value-added service that today’s clients are seeking, a one stop approach for caring for the needs of families both young and old.

previous	next
Publications : Bar Bulletin: May, 2003