Hog Wild Appraisal Problems
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Saturday, March 2, 2024 in News, Ask an Instructor, Education
Yesterday I received the following voicemail message:
“Potential Client calling from Nashville Suburb. I have a hundred-thousand-dollar hog I need appraised for insurance purposes. That’s what I paid for it so I would expect that it would appraise for that. I have all of the paperwork to show what I paid for it. What would you charge to come out and appraise the hog? Give me a call on the fee for that. 602-333-4545.”
My mind was racing; Did he say “hog”? Was this a prank call? My son was with me as as I listened to the message a second time on speaker phone. No, Alexander confirmed, he said hog. We instantly started googling.
According to nationalhogfarmer.com a Yorkshire Boar sold for $270,000 in 2014, so it was possible. But, who spends $100,000 on a pig and why? He had a funny accent that sounded very East Coast. Maybe he was laundering money for some nefarious crime organization or attempting to commit insurance fraud? But what if this was a legit call? And a potential customer that needed help? I do not know of any credentialed livestock appraisers in Nashville, so a referral is not possible.
The wheels started turning. When did he buy this hog? Had it been purchased for mating? For good eating, I mean really good eating? Had it run past its “prime” and was now “hog washed up”? (Sorry, bad dad joke) How do I judge the health of a hog? Or is it called a boar? Or a pig? (Google again- a boar is a male hog. That solves one problem). I’d shown a pig once at the county 4-H Fair when I was 14. Was I competent under USPAP to appraise this hog/pig/boar? Um. . . . .no! Could I become competent? Phone a friend? It was for insurance, not an IRS charitable contribution. That made the scope of work different, and perhaps the competency requirement? I think the IRS defines a “qualified appraiser” as someone having “2 or more years of experience in valuing the type of property being valued” (IRS Pub. 561). Did the same rule apply to insurance appraisals? I do not think so. Besides, there were papers and purchase receipts I could rely on. Oh wait, what if those were forged Mafia papers. Maybe I could do this? Maybe I couldn’t? Ahhhhhhhh!!!!
As appraisers we all get calls that make us pause and challenge us to think beyond the “ordinary” appraisal solutions. For all the fine art appraisers out there, imagine a call for the appraisal of a valuable artwork where there is an inconvenient (or convenient) gap in provenance between 1890 and 1950. Ugg! What are your ethical and/or legal obligations?
While ISA’s Core Course Manual is excellent, it does not (and cannot) provide the answer to every appraisal problem we face. The answer to these unique appraisal problems may not be simple or clear. In fact, the best answer is often NOT the simple answer. Yet, it is exactly these types of challenges that give us the most grief.
So, what do you do? The first step is always to get your mind racing. Ask the right questions? And then after you have thought about the problem, go back and ask more questions? The second step is digging into your Core Course Manual, talking with other appraisers, consulting your USPAP FAQs and Advisory Opinions. Then, go back and ask more questions. Ultimately, the key to difficult appraisal problems is asking the right questions and realizing that the best answers may be hazy answers. Not everything is black and white. Not every answer is clear. As professional appraisers, we need to train our minds to work through complex appraisal problems. This takes practice.
Before ISA’s Annual Conference in Montreal next month, Meredith Meuwly, ISA CAPP and I will be presenting an Advanced Appraisal Methodology Course. This totally new and updated Advanced Appraisal Course will have fresh appraisal case studies to work through with colleagues, in-class exercises to practice your appraisal writing skills, and the chance to ask some of your burning appraisal methodology questions. The course is open to ISA AMs and ISA CAPPs. While it is filling up quickly, there is still room. We would love to have you join us! Let’s go hog wild!
Kirsten Smolensky, JD, ISA CAPP