Valuation Methodologies Flashcards

Which value is typically the lowest for a heavily damaged vehicle that will be declared a total loss?

Answer: Salvage value

Salvage value is what the damaged vehicle brings as-is, usually far below its pre-loss value.

Liquidation (forced sale) value differs from fair market value primarily because of what?

Answer: A shortened marketing time that forces the seller to accept less

Liquidation value assumes a compelled sale under limited exposure time, typically producing a lower price.

In the cost approach for a restored classic, which is the correct basic formula?

Answer: Replacement cost new − total depreciation

The cost approach estimates replacement or reproduction cost and subtracts all forms of accrued depreciation.

Why does restoration cost often exceed the market value of a restored common classic vehicle?

Answer: Buyers typically will not pay a dollar-for-dollar premium for restoration expenses

Market value is set by buyers, who often pay less than the total invested in restoration.

What is an 'extraordinary assumption' in a vehicle appraisal?

Answer: An assumption about uncertain information that, if found false, could change the conclusions

An extraordinary assumption presumes uncertain information is true, such as an engine being original when unverified.

When the market for a particular collector model is rising rapidly, which adjustment may an appraiser apply to older comparable sales?

Answer: Time (market conditions) adjustment

A time or market-conditions adjustment updates older sales to reflect price changes up to the effective date.

Which statement best describes 'numbers matching' in classic vehicle valuation?

Answer: The original engine, transmission, and other major components match factory records, often increasing value

Numbers-matching vehicles retain original drivetrain components verified by stamped numbers, typically commanding a premium.