What Fair Market Value is NOT

September 25, 2014 | Julie Hall

As an appraiser, I have to understand the definition of Fair Market Value (FMV). As confusing as FMV can sometimes be for the professional, I can imagine how convoluted it must be for the lay person.

Under the United States Treasury regulation 1.170-1(c), Fair Market Value is defined as:

The price at which the property would change hands between a willing buyer and a willing seller, neither being under the compulsion to buy or compulsion to sell and both having reasonable knowledge of relevant facts.

That definition simplified everything, didn’t it? I think not.

For someone who does not understand that definition and all that it implies, it can be left up to their own imaginations to fill in the blanks and specifics, which can be a very bad thing. The person who does not understand will conjure up crazy, inflated “values” that are not values at all; they are merely asking prices they found online. This is NOT Fair Market Value.

If you are at an estate sale and you and the seller exchange $20 for an item, and neither of you are being forced into this exchange, that $20 is the FMV for that day and moment. If both you and the seller have all the basic facts, the item is a flat screen TV that works and you agree on a price, and you are not being forced to buy or sell, it was a mutually agreeable transaction. This is Fair Market Value.

Let’s talk about other things that are NOT Fair Market Value:

It is not what you paid for an item (most people pay high retail and not FMV).
It is not wishful thinking. True values are arrived at with careful research and methodology.
It is not family lore. We know the stories of how “valuable” mom always said an item was, but that is not fair market value. Many of our older moms may not understand how very different things are today, or why younger women have little interest in their prized possessions.
It is not outdated appraisal values that were probably written for insurance purposes or in a much healthier market.
It is not what you think it should be, nor the amount of money needed to pay bills.
It is not the asking price you see on a similar item on the internet or Ebay. Asking prices are just asking prices. We’re interested in what it actually SOLD FOR.
It is not based on sentimentality (how much you, or a loved one, cherished it).
It is not about how old it is or how long you’ve had it. “Old” doesn’t necessarily mean it has value.

Everybody seems to have their own idea of fair market value, but very few I hear about are actually “fair.” At the end of the day, the market is what it is. All we can do is our very best to educate our clients, even if they don’t want to hear what we have to say.

Bottom line: An item is worth what someone will give you for it. Always enlist the help of a professional to guide you through, when you don’t have the answers.

Julie Hall, The Estate Lady®, is the foremost national expert on personal property in estates, including liquidating, advising, and appraising. http://www.TheEstateLady.com She is also the Director of American Society of Estate Liquidators®, the national educational and resource organization for estate liquidation. http://www.aselonline.com.

No part of The Estate Lady® blogs, whole or partial, may be used without Julie Hall’s written consent. Email her at Julie@TheEstateLady.com.

The Value of Kindness in a Value-Less Estate

September 16, 2014 | Julie Hall

The old song “Break It to Me Gently” reminds us that any time bad news is coming, we’d rather hear it gently and compassionately than point-blank and hurtful. Many times in life we will be the deliverer of, and recipient of, less than stellar news. How we deliver it, and how we receive it, is a testament to our personal and professional character.

When we are called into an estate, we walk in completely objective, prepared to tell our clients the truth of what we see. The trouble is that sometimes our clients do not want to hear what we have to say. They may feel, because they paid so much for an item, it should have increased in value. They may feel that if they have an antique, it must be worth a fortune.

We hear the stories of “mom always said this was worth a fortune.” The family folklore gets juicier with the passage of time; therefore the items must be super valuable. How difficult to be the bearer of bad news, but we must remind our clients politely not to shoot the messenger.

Sometimes, hopefully not too often, we hear stories of estate professionals who are simply too direct or gruff with elderly clients. These professionals have lost their sensitivity somewhere along the way. Some might insult the client accidentally or intentionally. Some slam down the values of their items. Some say “no one would ever want this stuff” or “you don’t have anything good enough for me to sell.” What these professionals have forgotten is the art of being tactful and kind.

It is professional and right to be honest and upfront. It is good to guide the client to a place where they have some solutions, even if you yourself cannot help them.

It is the “best of the best” in this industry that can do all of these things with a kind face and a gentle heart.

There are ways to lower the boom without lowering the spirit. Certainly there are those who feel being blunt is the way to go. These believe that our clients need a firm voice and words to make them understand their possessions are not going to be worth much, since we know their expectations are too high. After all, some people are harder to convince than others; you would be correct in that thinking.

But as with all things in life, there is a balance that we professionals must once again recapture, which many of us have forgotten because we are all pressed for time and we multitask at every turn. We’re tired and always in search of that perfect estate. Sometimes you get it. Sometimes you don’t.

Food for thought: How would each of us like to be spoken to if we were faced with selling our own possessions or the possessions of a parent? What if the items a professional slammed belonged to our moms?

It is far easier to see our side of things because we do this every day. It is far more difficult to take a moment and step outside of ourselves, to see how it feels on the flip side. This one act will separate you from the mediocre and make you among the elite in this industry.

No part of The Estate Lady® blogs, whole or partial, may be used without Julie Hall’s written consent. Email her at Julie@TheEstateLady.com.

Seven Attorneys for Seven Siblings

August 27, 2014 | Julie Hall

Consulting on an unusual estate recently, I was informed there were 7 beneficiaries, 4 of which were also co-executors. Can you imagine that many co-executors? What a nightmare! This estate also had personal property, which the family felt to be very valuable, but it wasn’t. There was a bunch of land to be divided, or sold and divided among the children.

Naturally, when you have that many cooks in the kitchen, everyone has different thoughts and opinions. This is why co-executors is not necessarily a good choice. In my opinion, estate settlement is much harder when you hand decisions to people who can’t come to a conclusion and end up fighting, or potentially going broke doing so. Some wanted the land intact; others wanted it subdivided. You can see where this story is going and it isn’t good.

The siblings had indeed reached an impasse. One long distance heir, who had little to do with mom while she was alive, was the first to get an attorney involved, then everyone else followed suit. It just gets messier from there.

I have been doing this for a very long time; I hope you don’t think I’m crazy when I share with you that people and their behaviors are getting worse. Their behavior is often out of control, along with other emotions, sometimes even getting physical. It makes me wonder.

What on earth could be so grand that it’s worth destroying themselves, as well as other relatives and relationships? Don’t these people know they are going to have to carry the burden of their decisions for the remainder of their lives?

Don’t get me wrong.

I’d love to have a slice of land or the proceeds from it.

Who wouldn’t?

But not at this cost.

It just isn’t worth it!

The attorneys will do their jobs well, and whatever inheritance there is will dwindle with legal fees.

Interesting observation: While the inheritance is decreasing, the emotions and angst will only increase and be prolonged, sometimes for the rest of the lifetime, long after the estate has been settled.

Is there anyone to blame in this scenario? Fingers can be pointed all day long. In the end, it comes down to the original decision maker who did not specify what should happen to the property and named so many co-executors. Big mistake which caused even more strife for those left behind.

I ask you plainly … Is it really worth it?

I couldn’t possibly make this stuff up!

No part of The Estate Lady® blogs, whole or partial, may be used without Julie Hall’s written consent. Email her at Julie@TheEstateLady.com.

10 lbs. of Flour in a 5 lb. Sack

August 15, 2014 | Julie Hall

Downsizing may be in vogue, but the very sound of the word can make one cringe, including me, and I help people with it every day!

Funny thing how we humans accumulate so much. We hardly notice how out of hand out accumulations have become until we stop, look around, and then panic as we begin the downsizing/selling process.

I have noticed a commonality among my older boomer clients. They have so much in their homes, because they absorbed their parents’ and their grandparents’ possessions. They did not really sort through them; they did not discard much or donate much to charity. They simply absorbed the bulk of it into their own lives and homes. Was this done out of

OBLIGATION?

SENTIMENTALITY?

TRADITION?

Fast forward 50 years … oh my goodness, what do we do with all this stuff now?

When I am called to assist a family with their downsizing challenges, I go in to ascertain values and the market, resources and options. However, the one thing I am always faced with is this eye-opening issue:

If a client currently lives in 3,000 square feet,

and they are downsizing to 1,000-1,200 sq. ft.,

logic dictates they will need to get rid of two-thirds

of what they currently have

to fit comfortably in their new home.

Therein lies the mystery. They still seem to think that letting go of:

6 pieces of furniture,

8 crystal vases,

grandmother’s china service,

and 9 framed prints

is all they need to discard.

“We can squash the rest of it into our new place.”

I don’t want to be the bearer of bad news, but …

You can’t fit 10 lbs. of flour in a 5 lb. sack,

any more than

You can fit 3,000 square feet of stuff

into 1,000 sq. ft. of house!

It just isn’t going to happen, no matter which way you squish it.

You could try anyway, but you will dislike your overcrowded new home, create tripping hazards, and not want to show off your new place.

“Why not let go?!”

Deal with it head-on and do it sooner, rather than later, when someone else has to do it for you.

Enjoy your new home; don’t make the mistake of taking too much. Don’t put stuff in storage, and don’t pass the buck to your kids or relatives that do not want or need the extra stuff.

There is a season for everything. Now is your season to let go and start over, fresh and simplified.

No part of The Estate Lady® blogs, whole or partial, may be used without Julie Hall’s written consent. Email her at Julie@TheEstateLady.com

The Expense of “Free”

July 31, 2014 | Julie Hall

Everyone is trying to pinch pennies. But I wouldn’t be doing my job if I didn’t send up a warning to be extra careful if something is “free.” A “free” something will almost always lead to strings attached or something expensive coming later, like a repair, further services of some sort, or worst … it could be a scam. In the professional world, “free” is used to attract you and extract your personal information so they can use it to get money out of you for something else. Here in the 21st century, your information can also be used against you in the cyber world.

It is equally important to realize that paying for a valued service versus a free service does have its differences. A free service (such as an estimate, consultation, product, etc.) will only provide you with a fraction of the information, leaving you hanging for more, but then you will have to pay for it, often in more ways than one. A paid service will get the job done to completion the first time, if you choose the right professional.

Everyone is always attracted to “free” but should we be?

My late father had a saying, “If it’s free, take two.” He was a Depression baby. I am not. This is the thought process of many people. But no, I will not take “two” because I don’t want to clutter up my home with things my child won’t want one day, and I don’t want right now. I won’t do that to my family.

What possible trouble could “free” cause?

Let’s take a closer look at the repercussions…

What if something goes wrong?
What if the service or information is inaccurate? Where does the liability lie?
What if you get hurt, someone else gets hurt, or property (such as your home) gets damaged?
What if they don’t complete the job, or the job goes for months with no accountability?
What if you dislike the results or get really bad information?
What if you hired family, friends, or neighbors? That relationship will never be the same.
And finally, what is your recourse if no money changed hands?

Many times, people have ulterior motives for offering something for free. Not always, but a good bit of the time, it’s true, even in my own industry (as well as every other industry).

“Free” is never free. It just sounds good. Free can mean hasty mistakes, and free can mean costly mistakes. Sometimes free can be very expensive.

No part of The Estate Lady® blogs, whole or partial, may be used without Julie Hall’s written consent. Email her at Julie@TheEstateLady.com

Don’t Let Your Dentist Operate On Your Knee

July 10, 2014 | Julie Hall

Our house is starting to need some work. There is exterior trim that needs to be painted, the siding needs power washing, and the gutters need to be cleaned out. I would love to have some new landscaping in the front island and three light fixtures I would like replaced because they are old; the house needs an overall facelift.

Then there’s me. I could use a little sprucing up too. My lower back feels like it was thrown in a wood chipper and spit out, probably from all my years of estate work. I have arthritis in my neck and hands, and a little bone in my foot that is protruding slightly (arthritis from pointy high-heeled shoes I just had to have way back when). My hair needs the gray roots covered over and a few more highlights added, but I haven’t had the time yet.

I’m not complaining. I’m making a point.

For each of these endeavors mentioned, I will call in a professional who knows exactly how to do them, because I do not. I will not attempt these tasks because somewhere along the line, I will botch the work and then it will cost more money and time to fix it. I know my limitations. Life has shown me my strengths, and it has also shown me when I should walk away and let a pro do it.

There are many who are do-it-yourself people, and for the most part, I admire people who can get so much done on their own. But I have also seen those who should have quit while they were ahead, for their work was not good. I go to a back specialist for my back, a foot specialist for my foot, a dentist for anything to do with my teeth, and a hairdresser I wouldn’t trade for anything in the world! I would not attempt to fix any of these on my own, for they are not in my repertoire of skills.

You wouldn’t go to a dentist for a knee replacement, would you?

The same is true for handling an estate. Families think they can navigate some pretty treacherous waters on their own. In my experience, many of them have capsized the boat along the way and hurt others in the process. All because they think they can do it or want to save the money that would have been spent on a professional.

“An estate professional knows these troubled waters and knows every aspect of handling the twists and turns. We know the market; we can predict human nature. We can maximize proceeds and preserve the good for you. Even with our commission, we bring in more money than a non-professional. We know the right contacts (local and national), resources and options, plus we guide you through the process. It’s like having an estate expert in your pocket. An excellent estate sale pro is worth their weight in solid gold.” — Julie Hall

Then there are those who know and understand the worth of hiring professionals. They want to pay to get the job done right the first time, so they don’t have it drag on, only to have to deal with it a year or so in the future. They simply want it done, and done correctly the first time.

There is an old saying, “Penny wise and pound foolish.” This applies to much of what I see when families deal with loved ones’ estates. They don’t want to pay a professional, but the mistakes they make are so costly: throwing away valuables, making hasty decisions, giving away things quickly, assuming mom just had junk, etc. They could have hired 4 professionals by the time they are done!

TIP FOR THE WEEK: There are some things you just shouldn’t attempt. Research and find the best estate professional; the right person is very worth the effort to find! Moving forward through a challenging estate situation is paramount to your continued well-being.

No part of The Estate Lady® blogs, whole or partial, may be used without Julie Hall’s written consent. Email her at Julie@TheEstateLady.com

5 Regrets People Make on Their Deathbed

May 28, 2014 | Julie Hall

NOT ONE OF THEM HAS TO DO WITH STUFF!

“Nurse Reveals the Top 5 Regrets People Make on Their Deathbed” http://topinfopost.com/2014/05/12/top-5-regrets-people-make-on-their-deathbed

In the end, it comes down to you preparing to meet your Maker. I have felt incredibly blessed and humbled after watching a loved one die. It is a process of making peace with everything and everyone, before shutting down the shell that carried us so well through life. It is obvious to me that the farthest thing from their minds were their prized, earthly possessions. It is those of us who are left behind that struggle with the stuff, often transferring our affection for the person to their sentimental object(s). Sometimes, we might even think, “Mom or dad would never forgive me if I gave that away,” or “Grandma would be rolling in her grave if I didn’t keep this.”

I don’t think that’s the case. At all.

I think what we may find in the above article is a slice of human clarity. It’s a glimpse into the world of someone who is getting ready to leave it. This glimpse focuses on human interaction and the many decisions we made along the way, and the things we could have/should have done differently. I think it offers the reader food for thought about our very real, very human interactions, and how we could have a better life or how we could offer a better life for others.

In the end, regrets are not what you take with you. Nor will you take your money, your possessions or collectibles or cars. All you take is what you entered the world with, plus all the love you accrued along the way.

The only thing we should be concerned with is leaving a legacy that would make those who know and love us, know and love us more. Go change your world!

No part of The Estate Lady® blogs, whole or partial, may be used without Julie Hall’s written consent. Email her at Julie@TheEstateLady.com

Throwing Money Away Literally

May 16, 2014 | Julie Hall

WHY A SYSTEMATIC APPROACH IS ABSOLUTELY NECESSARY WHEN CLEANING OUT AN ESTATE

Recently, I was asked to handle the daunting task of emptying a hoarder’s home. The home owner had passed away in the home. The sole heir, who lived several states away, required assistance to identify items of value, discard tons of garbage, sort through the piles, etc. The heir’s goal was to empty the home so the real estate could be sold. For anyone walking into this home, myself included, it would be considered an overwhelming situation, let alone for an heir who has no knowledge of how to proceed.

I agreed to do the job. We went in and systematically approached the entire estate, attacking the most dubious areas first. Handling a hoarder’s estate is, quite literally, an archeological dig. We unearth one layer at a time. We work through the system, we follow the proper process that we have perfected, we sort as we go, and we report back to the heir/executor what we find. In short, if there is something of value hidden, we will find it for the family. Sadly, much of what we find that used to have value no longer has value, because it has been destroyed from being buried for decades, exposed to critters, relentless fungi, deterioration, etc.

I don’t mind sharing with you that this was a grueling job, even for this professional with decades of experience. Progress was slow since the home was in very bad shape with rodent nests and “evidence” of them, and the home smelled. Naturally we took all health precautions, but it is difficult especially early in the process because there is no room to sort, organize, etc. Room by room, we used the same method; over the course of 9 days we found some pretty spectacular things.

Our systematic approach might seem overkill to some, but had we not taken our time to go through a logical sequence and particular order, we never would have found over $40k in cash (in places that another clean out company would have just discarded without looking, or donated without taking the time to search every nook and cranny). We found an extensive coin collection, cash, some jewelry, sterling silver hidden in a cubbyhole no one knew was even there. We found guns and what I call “uniques & oddities” that were just fascinating to uncover.

Imagine us heading into a walk-in attic that was up to our elbows and higher in places! Clearly, the elderly client had not thrown anything away for generations. While the digging part and the smelly part and finding the dead critters part were less than thrilling, someone had to do this for the client; it might as well have been my company.

While I was totally focused working in this estate, I had several very important thoughts I would like to share with you.

1. How fortunate for the client, and the attorney representing this client, that they chose a professional who was honest. That cash would have and could have easily disappeared if they chose an estate person who was unethical and unprofessional. When I took that money to the law office, they knew they were dealing with a person of integrity. One has to earn their impeccable reputation.
2. Thankfully, we do have a systematic approach in place to uncover everything. What if we had mistakenly thrown away the cash? What if we never found it and it ended up in the dumpsters?
3. You get what you pay for. If you hire a clean out company that just throws things away, you could be making a grave mistake.
4. For Do-It-Yourselfers: There’s nothing wrong with this approach. However, you can become emotional, creeped out, and overwhelmed, and decide to start throwing items away quickly to get finished. I spend a lot of time pulling things out of the trash that my clients have thrown out, because they don’t know the values.

The moral to the story: It took more than one lifetime to create the mess we “un-created” in a little over a week. Most families could never have finished in so short a time if they did it themselves, and would certainly have made unintentional mistakes which could have been costly. Search for and research any estate company you are thinking about using. They are worth their weight in gold if they have a great reputation!

No part of The Estate Lady® blogs, whole or partial, may be used without Julie Hall’s written consent. Email her at Julie@TheEstateLady.com

“Buster”

February 18, 2014 | Julie Hall

If you are squeamish about critters, cleaning out an estate is just not recommended. Just as we inhabit a home, our little friends (furry and 8-leggers) inhabit right along with us. We just don’t think about it, because we don’t see them. An occasional spider and other insects are normal, and believe it or not, little field mice are near in proximity too, unless you have a cat. I’ve even had a client who lived symbiotically with a huge black snake she named “Frank,” because Frank took care of all the little mice in and around the house. The client went so far as to explain that “Frank” was a far better companion to her former husband because Frank never was in a bad mood, complained, or hogged the remote!

Handling as many estates as I do, we have become accustomed to dealing with our little friends. We find them too often and, most of the time, they want nothing to do with us and just go away. We prefer it this way! But I have to tell you about my experience with a mouse.

My assistant, who has been with me over a decade, was opening boxes in the attic of a 1930s estate. Together we were up there sorting through what could be saved or sold, and bagging up what was clearly garbage. When boxes have been up there as long as these had been, everything becomes brittle and starts to disintegrate in your hands. She held up an old Xerox box with the lid open to show me there were old mason jars inside and nothing else.

Out of the corner of my eye, I saw pink fluffy stuff (which turned out to be insulation material), shredded pieces of newspaper, and small bits of fabric formed in what looked like a bowl. Just as I started to tell her that it looked like a mouse nest, and to be careful, the biggest mouse I ever saw climbed up, balanced itself on the rim of the box, and attempted to stare me down! She was very big around the middle, and clearly we had disturbed her soon-to-be birthing place.

In a split second, with neither myself or my assistant freaking out, the mouse leaped from the edge of the box, with the grace of Greg Louganis dismounting a diving board. I had never seen such speed and agility.

It all happened so fast there was no time to shriek or freak. The mouse flew through the air like the man on a flying trapeze, landed with a small thud on my bust, and had the audacity to use my chest as a trampoline for her final dismount. As soon as she hit the ground, she was gone. Not even a bow did she take. Just a dirty look and who could blame her?

As with all strange things we find in estates, we had to give her a name. There could be no better name than “Buster.” To this day, we affectionately recall Buster and Frank, and the variety of other critters that cross our paths, making each new estate experience far from boring.

No part of The Estate Lady® blogs, whole or partial, may be used without Julie Hall’s written consent. Email her at Julie@TheEstateLady.com

Exercise Discernment When Cleaning Out Mom & Dad’s House

January 14, 2014 | Julie Hall

Don’t take things just to take them!

Boomers, take heed. As our parents pass away, the temptation to sock away their belongings is great, but take the time to really think about what you are doing. Don’t keep it because you think your children or grandchildren might change their minds one day. Don’t get stuck paying for ludicrous storage bills that far outweigh the value of what you place inside there. Don’t fall into the trap of being a storage for your kids either. In the blink of an eye, you will be wanting to downsize; the time has come to hold yourself accountable in all of this. It’s either you who will do it or your children will do it, so why not do it for them?

TAKE only what is really special to you, because the kids will most likely not change their minds and it will be sold off for pennies on the dollar, when it falls in the hands of your children.

TAKE photographs, because they take up less space but you still have the memory of the item(s).

TAKE into consideration that if your children say “no,” they don’t want these items. They really mean “no.”

TIPS: Don’t sell, give away, or donate anything until a professional has examined it. So many boomers throw away or give away personal possessions worth a small fortune, simply because they don’t know the values. Tell everyone “no” until the appraiser has reviewed everything. The cost to pay a personal property appraiser is nothing compared to the value you could find, not to mention the peace of mind it will give you!

KEEP the following:

Anything that can provide family history.
Family heirlooms if they are wanted and will be cherished. Don’t force heirlooms on the children if their hearts aren’t in it.
All items of perceived monetary value. Hire that appraiser to find out for sure!
Family photographs
Rare or unusual items (some antiques fall into this category). If someone has room for them and wants them, that’s fine. It’s okay to sell them if no one wants them.
Jewelry. Have items appraised first for fair market value, not replacement value.
Items with historic significance. You may donate if no family wants them.
Important documents. These must be kept together until they are all sorted through by the executor.
Collections (gold, coins, guns, stamps, etc.). Always have them evaluated by a professional. It is unusual to find appraisers for different specialty collections.
Antiques, artwork, paintings, sculpture. These must be evaluated by a professional.
Military items. These items are sought by collectors but may also be vital to family history.
Safes, safety deposit boxes, and their contents. Have a key or know where keys or passwords are located.
Anything you cannot identify. Have a professional look at it for you.

Don’t take things just to take them. Select a few sentimental items that are small enough for you to use or display in your home. Great family or marital strife can develop if you take too much. Remember, the more you take now, the more your children will have to deal with later.

No part of The Estate Lady® blogs, whole or partial, may be used without Julie Hall’s written consent. Email her at Julie@TheEstateLady.com