Valuation Methodologies Flashcards

In a diminished value claim, what does 'inherent diminished value' refer to?

Answer: Loss in market value simply because the vehicle has an accident history, even after proper repair

Inherent diminished value is the stigma-based loss in market value from accident history despite proper repairs.

The '17c formula' used by some insurers to calculate diminished value originated from a lawsuit in which state?

Answer: Georgia

The 17c formula comes from the Georgia case State Farm v. Mabry, named for paragraph 17c of the settlement.

On the common 1-to-6 collector vehicle condition scale used by Hagerty and others, what does Condition #1 represent?

Answer: Concours quality, among the best examples in the world

Condition #1 is concours-level, the finest examples; #6 is a parts car.

A vehicle's 'effective date of value' in an appraisal report means what?

Answer: The date to which the value opinion applies

The effective date is the specific date as of which the value conclusion applies, which may differ from the report date.

An appraiser values a vehicle as if a pending engine rebuild were already complete. This is an example of what?

Answer: Hypothetical condition

A hypothetical condition is contrary to known facts on the effective date, such as assuming completed work that has not occurred.

Which valuation standard is typically used when appraising a vehicle for a charitable donation deduction over $5,000?

Answer: Fair market value

IRS rules require a qualified appraisal stating fair market value for noncash donations exceeding $5,000.

When a comparable sold for $30,000 but lacked a $2,000 factory option the subject has, how should the appraiser adjust?

Answer: Add $2,000 to the comparable

Since the comparable is inferior in that feature, its price is adjusted upward to reflect the subject.