Fair market value is determined by comparing the piano being appraised to recent actual selling prices of other pianos of like brand, model, age, and condition. In the chart "Prices of Used Pianos," I and my staff have attempted to approximate the fair market value of pianos of various types, ages, and conditions, though I stress that we do not have enough data to do more than make rough estimates.

Note that insurance appraisals are often for "replacement cost." This is the cost of a new piano of the same or comparable make and model, not the fair market value of the used one.

A depreciation schedule, an example of which is provided here, shows how much a used piano is worth as a percentage of the actual selling price of a new piano of comparable quality (or of the same brand and model, if still in production and of the same quality).

Depreciation Schedule
Age (Yrs)Percent of New Value
WorseAverageBetter
1758083
2727780
3697477
5636871
10525760
15434851
20364144
25293437
 Verticals only
30222730
35-70152023
 Grands only
30-70253033
 Steinways
1758083
2727780
3707578
5667174
10586366
15505558
20424750
25343942
 Verticals only
30283336
35-70253033
 Grands only
30313639
50303538
70283336

 

Idealized value minus the cost of restoration is the difference between the cost of a rebuilt piano less the cost to restore the unrebuilt one to like-new condition. As an example, if a rebuilt piano of the same or comparable model costs $15,000, and it would cost $10,000 to restore your piano to like-new condition, then according to this method your unrebuilt piano is currently worth $5,000.

These three methods of appraising will typically yield three very different values. Which you choose to use will depend to some extent on your reason for having the piano appraised (buying, selling, insuring, etc.). Professional appraisers will sometimes use all three methods, then average them to obtain a final value.

When considering a used piano being sold by a private, non-commercial seller, keep in mind that many such sellers really have no firm idea of how much their piano is worth, and have made up something based on little more than a wish. Therefore, don't let a high asking price keep you from making a more reasonable offer. Ask the seller how they arrived at their asking price. If you can back up your offer with your own technician's appraisal (including a list of the things that need to be fixed), credible listings of similar pianos, or other evidence of the piano's true value, you stand a good chance of getting the piano at or close to your price.

Appreciate or Depreciate?

Some piano manufacturers market their instruments as "investments" and tout their potential for appreciation in value. If that's the case, then why a depreciation schedule? Do pianos appreciate or depreciate?

It depends on how you look at it. Imagine parking a sum of money in a savings account earning 2 percent interest at a time when inflation is at 3 percent. Each year, the balance in the account grows . . . and loses purchasing power. This is something like the situation with pianos. After a large initial drop in value during the first five to ten years (because, unless given an incentive to buy used, most people would prefer a new piano), used pianos lose value in comparison with similar new ones at about 1.5 to 2 percent per year. However, because the price of everything (including pianos) is rising in price at 3 or 3.5 percent per year (the rate of inflation), the value of your used piano will appear to rise by 1 to 2 percent per year (the difference between the depreciation and the inflation).

Why do we figure depreciation from a comparable new piano instead of figuring appreciation from the original price of the used one? Theoretically, it could be done either way. But the price of a comparable new piano is easier to look up--one might have to do a lot of research to find out what grandma paid for her piano. And the price of the new piano embodies all the inflation that has occurred between the original purchase of the used piano and the present, avoiding the trouble of having to look up the change in the cost of living during that time. The case is even stronger for using this method with foreign-made pianos: Tying the value of a used piano to the cost of a comparable new one makes it unnecessary to calculate the changes in the currency exchange rate--and sometimes changes in the currency itself!--that have occurred since the used piano was new.

Figuring depreciation from a comparable new piano is not without its own problems, however. With so many piano brands of the past now defunct or made to entirely different standards (usually in China), the task of figuring out what constitutes a "comparable" new piano can sometimes be formidable, if not impossible.

 

FALL 2009 -- page 57

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