Monday, June 16, 2014

Oriental Rug Lawsuits and Bogus Appraisals

I just got an interesting inquiry. A Carpet Cleaner is getting sued. One of his crews cleaned a rug in a client’s home and things went south. As expected the rug owner has an appraisal from the place they bought the rug for $10,000. In case you are not familiar with this scam that usually means that the consumer paid no more then $1,995 or 20 cents on the dollar. The cleaner is sharp enough to be looking for an appraiser. I do not know if I will be offered the job or if I will take it. I generally will not take a case if the other appraiser is a friend and I have a lot of friends.
I offer this as a lesson to our newer rug cleaners:
Don’t wash rugs in the home. Every once in a while things go bad and if it is in your shop you have a chance to fix it.
If you get sued check out the appraiser, there are a lot of bogus appraisals on the market.
You can wash in the home for 50 cents to $1.50 with huge risk or in your “shop” for $3 to $5 a squire foot with little risk.
You cannot do better than a mediocre job in the home.
I do not mean to insult any of you that do rugs in the home. In fact I am hoping to get your appraisal work if you get sued.
A few simple guidelines:
  • The appraiser should not be the seller. That represents a conflict of interest.
  • Appraisers do not have to be certified to appraise rugs. If an appraiser does not list his credentials then it is likely that he does not have any.
  • The appraiser or his associate must actually examine the rug in person. An appraisal from photographs is of far less value.
The appraised value should be identified as 
  • "Fair Market Value" (what it might actually sell for in the condition it was in when it was placed in your care.), 
  • "Replacement Cost". Insurance companies will often pay for a new one at full retail. You are not an insurance company. 

Barry O'Connell
Senior Fellow Academy of Oriental Rugs
Cell 570-447-4395