Perhaps the most-often asked question regarding online appraisals is, "How can you appraise an item that you did not personally examine?"

While it is true that a personal inspection of the property by the appraiser is ideal, often it is not possible or economically feasible to do so. Indeed, all appraisers (online or traditional) are frequently faced with developing an opinion of value without having personally examined the property. Such would be the case if an item had been stolen or lost in a fire. Indeed, our professional appraisal standated (i.e., the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by The Appraisal Foundation of Washington, DC) does not require the appraiser to personally inspect the property. USPAP requires that the appraiser "identify the value-relevant characteristics" of the property, and that can be accomplished with information provided by another, including by a claims adjuster, a repair firm, a colleague or even the owner him/herself.

So, appraising property site-unseen is nothing new. The online appraiser (as does the traditional appraiser in similar assignments when the property is not available for inspection) must recognize and disclose that the appraisal assignment is one being done based on "limiting conditions."

Limiting Conditions
Limiting conditions are circumstances or conditions that could affect the appraisal development process and, possibly, the appraiser's opinions or analyses. Limiting conditions are often brought about when the property is not available for personal inspection by the appraiser, or by ambient conditions, such as the unavailability of electrical power to test appliances and electronic equipment. The primary limiting condition with online appraisals is that the property is not available for the personal inspection of the signing appraiser. Limiting conditions must always be disclosed in the appraisal report.

Extraordinary Assumptions
Limiting conditions will always cause appraisers to base their value conclusions on "extraordinary assumptions" which are assumptions, directly related to a specific appraisal assignment, on which the appraiser bases his/her opinions or conclusions. If false, extraordinary assumptions could cause the appraiser's opinions or conclusions to be in error. Extraordinary assumptions presume as fact otherwise uncertain information about the property such as its composition, condition, or even its very existence. An example might be the appraiser assuming that the china cabinet was in good condition despite not seeing images of all sides of the cabinet. Like limiting conditions, extraordinary assumptions must also be disclosed in the appraisal report.

As does a traditional appraiser when valuing property that has been lost or stolen, the online appraiser bases value conclusions strictly on client-provided information such as verbal or written descriptions, sketches, photographs, etc. Basing a value conclusion on such information requires the appraiser to be adequately satisfied that the information being provided is accurate. For instance, if the client describes a tea service as being made of sterling silver, the appraiser must be sufficiently convinced that the item is, indeed, sterling silver (and not silver plate) in order to continue with the appraisal assignment.

As noted, in order that any user or reader of the online appraisal can be completely knowledgeable of all issues which might have impacted the appraiser's conclusions, it is imperative that any limiting conditions encountered and any extraordinary assumptions considered be well-documented within the appraiser's online appraisal report.