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Refinishing/Repairing & Diminution of Value

by BRENDA MURRAY, ISA, AM - At Your Service Appraisals

 

Does repair, conservation and refinishing deserve a diminution or loss of value? This is a multifaceted question with a multifaceted answer. The simple answer is, it can decrease or increase the value. It all depends on the item, the item’s original condition and the quality of repairs.

 

I’m sure we all have one of these lovely antique Edwardian “Downton Abbey” dining tables in our homes. I, myself dress for dinner every night (I wish). Enough of my fantasy life. Let’s say your company moves one of these Downton Abbey tables. However, it’s finish was already scratched and flaking off prior to a move and now it has some new transit scratches.

 

Since the tabletop must be refinished, if it’s done properly, it can be considered “betterment” and actually increase the value. If the tabletop was already moderately to severely damaged table’s value was low. It had decreased due it it’s prior condition issues. After repairs, the table could increase in value and does not warrant a “loss of value” settlement. Betterment is defined as “an improvement that increases the value of property and is more extensive than mere repairs”.

 

Sometimes simply touching up the new transit scratches is most appropriate. If the claimant wants the table refinished, they might have to pay the difference between the touchup repairs and complete refinishing. This all depends on the coverage they’ve chosen but betterment is like “over repairing” a piece. That being said, refinishing may be the only way to bring the piece back to the original condition or at least as close as possible. 

 

You simply can’t just touch up the scratches or refinish one small area. If a leg is broken, there’s no need to refinish the entire piece. If the top has a long deep gouge the top, often times it must be refinished. You can’t spot refinish the table if the new transit damage requires a deeper more serious repair or refinish. Like I stated earlier. It’s a multifaceted issue.

 

Original condition matters greatly. The value of a claimed item depends on its pre-move condition. Those inventory sheets are golden when it comes to determining diminution or loss of value. If betterment is achieved, there is a strong chance that a loss of value is unwarranted. As an adjuster or repair technician, I’m sure the goal is to return the item back to its pre-move condition. In some cases, repairs improve the item, not diminish. Loss of value should be determined by asking “after repairs what’s the difference between what this item would have sold for as opposed to what it would sell for now?”  If the Edwardian dining table was in fair or poor condition prior to the move, it may be worth only $1,500. If it was in excellent condition, it might be worth $5,000-$10,000. If you take the $1,500 and make it almost look like the $5,000 table, you have increased the value.

 

Art is often a different story. On some art pieces, repairs/conser-vation (no matter how well performed) render the item low in value. It’s just like an automobile. If it’s been wrecked, even if you can no longer see repairs, it has still been wrecked and the value of the automobile is shifted. Art is often the same way. Collectors value items in pristine condition. If they’re damaged, even a little, the value drops drastically.

 

One tiny piece of foliage on a Capodimonte basket of flowers renders it valued at about half or less of its value were it in original perfect condition. Odds are this piece cannot be repaired. The loss of value on this piece of Capodimonte with new transit on top of the old damage depends on the amount of new damage. It was worth very little to begin with.

  

There is no cut and dry percentage in determining loss of value. It’s based on many things. What is the item worth? What was the original condition of the item? How well was it repaired? The simple answer is that any item can decrease or increase in value. It depends on the item along with the quality of repairs performed as well as the original condition. Loss of value appears to be a hot topic lately as I’ve seen many claimants asking for an LOV after repairs.

 

Many ask for an LOV before even seeing the quality of repairs. Sometimes it’s fairly simple to determine the LOV before repairs are done. If I’ve worked with a repair technician in the past and seen the quality of their work, it is easier to predetermine an appropriate LOV. If I have no idea whether the repairs are going to be successful, it might be better to wait until repairs have been completed before determining an LOV.

 

If your claimant is asking for a diminution of value, it might be best to have an appraiser determine the value first in order, to determine the appropriate loss of value awarded. It’s pretty impossible to determine loss of value without first knowing what the value of the item is to begin with.

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