Tom DiNardo, certified sommelier and appraiser - “Value Opinions are not truly an appraisal”
What’s in a wine appraisal?
Tom DiNardo of Wineryandwineappraisals.com sheds light on the differences between professional wine appraisals and non-professional “appraisal” which are actually “an opinion of value”. True appraisals by certified appraisers have a high legal and regulatory significance.
SellWineGuide: On your website http://wineryandwineappraisals.com/ you stress that in many occasions people are not getting professional appraisals, what makes the difference between a professional appraisal by a certified appraiser and say an appraisal by just a sommelier?
Tom DiNardo: Sommeliers training is intense, respected, and vital to the wine industry. I should know, as I am one. The difference between a sommelier offering what you call an "appraisal", is that their value opinions is not truly an appraisal. The sommelier's opinion is truly what is known in the appraisal profession as an "An opinion of value", which does not conform to known appraisal methodology.
Example: When someone sells their home and needs a formal house appraisal they hire real estate appraiser for the formal appraisal (official valuation), however they can always go to their local real estate broker and ask, "What is my house worth", and receive an unofficial broker price opinion. However, this broker price opinion carries no legal weight. Typically a wine appraiser completes a minimum of 18 months of appraisal methodology training by an accredited appraisal organization. Once this training is completed the appraiser receives their appraiser designation. While the appraiser's designation is important, it is the federal Uniform Standards of Professional Appraisal Practice (USPAP - congressional law established in 1986) accreditation that is essential. The USPAP accreditation requires re-certification every two years. Additionally USPAP requires demonstrable, professional expertise in the appraiser's field of knowledge such as wine. This is where the wine appraiser's curriculum vitae (training, experience, diplomas and professional certificates) come in to fulfill and meets the required USPAP criteria. This process can take years. Appraisal organizations are NOT in the business of training wine appraisers, and therefore they provide no training in wine, oenology, viticulture, or wine making, and therefore when an appraiser touts that they have "a wine appraisal designation from an appraisal organization" this is virtually meaningless without the requisite knowledge of wines. There are more than a few wine appraisers out there that have no professional education, experience, and or demonstrable knowledge in wine, and yet they claim expertise as a wine appraiser and wine appraisal expert. Watch out for these frauds and charlatans. Wine appraisers also pull "market comparables" (wine valuation information) from multiple sources. If the wine is destroyed, an insurance claim filed, and the damaged is no longer available (i.e. available in the open market), then the wine appraiser may legally use comparables from a similar wine from the same appellation. So when an appraiser concludes a value in a professionally prepared wine appraisal report a great deal of research, investigation, and valuation conclusions conforming to the requisite USPAP law takes place.
SellWineGuide: Generally speaking how does a typical appraisal process look like, how much does it typically cost?
Tom DiNardo: The appraisal process is quite complex and varies greatly with each new wine appraisal client's assignment. For example, as a wine appraiser I have appraised a single bottle to well over 30,000 in a particular collection. Now throw in the possibility of counterfeit wine identification, or potential wine damage resulting from heat, freeze, flood, or fire in an insurance claim and the wine appraisal assignment just became extremely complex. Additionally, a wine appraiser may offer other services to his clients that are particularly relevant to insurance claims such as Cause and Origin Investigations, Scope of Damage Evaluations, and professional wine assessments. These services require even more training and education on the part of the wine appraiser, which I obtained in my former career as a peace officer, and through my Certified Insurance Fraud Investigator (CIFI) training.
SellWineGuide: Many people use Wine-searcher.com to benchmark wine prices – what is your methodologies for evaluating the market value of a wine
Tom DiNardo: A wine appraiser uses the appraisal methods previously outlined above. When consumers go to Wine-Searcher.com, which by the way is a terrific web site, the consumer mistakenly believe that the prices they are seeing advertised for a particular wine are representative of the wine's fair market value. This is NOT at all true, and a real mistake on the part of the consumer. The advertised prices on Wine-Searcher.com are merely "the asking retail price" advertised by the particular wine shop. If the consumer does a little investigation by actually contacting a particular wine shop, they soon discover that many of the Wine-Searcher.com advertising wine shops, advertising particular wines, actually do NOT have those wines in stock. This is what is known in retail as a "sales gimmick", or if the wine is legitimately stocked it may be a "loss leader".
SellWineGuide: What are the main benefit of having a wine collection appraised? Do you feel it adds increases the potential sales price for a collector looking to sell?
Tom DiNardo: For all of the reasons I had mentioned above, I factually know that having your wine collection appraised by a true wine appraiser or designated wine appraisal expert is essential if the consumer intends to use the wine appraisal report for any official use (i.e. legal issue, banking, insurance, etcetera). Legally, the only way a designated wine appraiser's wine appraisal report can be challenged is by another equally qualified wine appraiser who performs another wine appraisal report that conforms to the federal USPAP requirements. Regarding your point about increasing potential sales prices, no appraiser ever guarantees the sale of an item appraised in a wine appraisal report. The appraiser also will mostly likely clearly note this in the "Limiting Conditions" area of the wine appraiser's wine appraisal report. All of this being said, wine appraiser's appraisal report provides a truly factual, officially sanctioned, basis for the consumer to legally stand on when they attempt to sell their wines. It should also be noted that this is what also separates a designated wine appraiser from online wine retailers and or wine auction houses that claim on their web site to offer "wine appraisals". (1) They typically have no appraisal methodology training whatsoever, and no certified appraisal designation. (2) Their actual training in wines may be extremely deficient. (3) The online wine retailer's goal is actually to buy your wine collection, which itself is a USPAP violation. USPAP requires all wine appraisers to be objective, impartial, and have no "stated interest" (i.e. an arm's length transaction) in the wines being appraised.
SellWineGuide: Provenance is one of the stickiest issues in appraising wine – what are some of the main industry thumb rules for attributing value reduction/increase for provenance issues?
Tom DiNardo: I completely agree that provenance is a "sticky issue" when it comes to an oenophile's wine collection. Much like the question of prior ownership, as well as provenance, a wine appraiser cannot factually or legally determine these factors. As such, a wine appraiser may make a statement about provenance in their wine appraisal report like, "On this date my client reported to me that their wines have been stored properly in an appropriate temperature and humidity controlled environment for the duration".
SellWineGuide: Any additional tips for people looking to appraise or sell their collections to stores and auctions?
Tom DiNardo: When hiring a qualified wine appraiser ask them about their training in wine, formal education in wine, experience in the wine industry and as a wine appraiser. Of course, ask for their qualifications (curriculum vitae). There are many frauds, hoaxers, and charlatans out there that claim to be wine appraisers and they are not. Once again, be aware of online wine retailers, auction houses, and Internet wine auctions that claim to offer wine appraisals and therefore violates USPAP due to their vested personal interests in acquiring your wine collection. Caveat Emptor (Buyer Beware).
About Tom DiNardo
Tom is an internationally acclaimed sommelier, spirits & wine appraiser, wine auctioneer, wine educator, wine expert, expert witness, and wine judge for many wine competitions. Mr. DiNardo is a freelance wine writer for the Wine Enthusiast, Decanter, and Santé Magazines, and other wine journals. Tom DiNardo now serves as V.P. of Outreach for the Natl. Assoc. of Professional Appraisers (NAPA), and he is also a certified insurance fraud investigator (CIFI). Tom DiNardo is perhaps best known by his Internet wine personality - The Wine Zealot. You may contact Tom at http://WineryandWineAppraisals.com or call (855) 946-3825.