Technical article

Four Prices for One Object: Retail, Auction, Insurance and Estate Value

All four numbers are about the same watch, and none of them is a mistake.

By Neil Solomon · 4 min read

Imagine a widow in Texas who inherits her husband's watch. The insurance schedule says one number. A dealer offers a second. The estate return asks for a third. A friend who follows auctions mentions a fourth. All four numbers are about the same watch, and none of them is a mistake.

The reason is simple. Each number answers a different question. Here are the four, and what the rules say about each.

The four prices

Estate value in the United States

Federal estate tax values each item at fair market value on the date of death. The test is a price between a willing buyer and a willing seller, neither forced to act and both informed. It is not a forced-sale price. The executor may choose a date six months later, but only if that lowers both the gross estate and the tax (tier A, Treasury Regulation 20.2031-1).

For goods the public usually buys at retail, the test is the retail price of a comparable item. The regulation's own example is a car. It is valued at what a member of the public could pay for a car of the same make, model, age and condition, not at the dealer's trade-in price. So a collector car in an estate follows the retail rule.

The estate value does one more job. For the heir, the income-tax basis is usually the fair market value at death, and the value appraised for estate tax is treated as that value (tier A, IRS Publication 559 and Treasury Regulation 1.1014-3). The same number may later set the gain on a sale.

Estate value in the United Kingdom

HM Revenue and Customs uses open market value. The test is the price the item might reasonably be expected to fetch if sold on the open market at the time of death. A professional valuation that says it is on open market value can usually be accepted. HM Revenue and Customs says sales after death, especially at auction, are the strongest evidence. The figure used is the hammer price, before the seller's commission and without the buyer's premium. Costs of valuing and selling after death do not reduce the value (tier A, Inheritance Tax Manual IHTM21041, updated April 2026).

Insurance value

Insurance usually means replacement cost. Sotheby's draws the line in its own guide. It separates fair market value, which is what it believes an item would bring at auction, from insurance value, which is replacement cost (tier B). The same manual warns that an insurance valuation may include too high a value, and one labelled "for probate" may be queried. A Canadian law-clerk article makes the same point. Appraisals often reflect replacement value, which is usually above what the item would fetch from the estate (tier B).

One probate valuer's piece gives an example from the United Kingdom. A dining table insured at GBP 4,000 might fetch GBP 300 at auction (tier C, one firm's example).

Dealer price

Dealers buy to resell, so they pay less than retail. Hilco Global, a lender and valuer, says a dealer may pay 80 to 85 cents on the dollar for a trade-in, and a forced cash sale of a US$50,000 watch might clear US$38,000 to US$42,000 (tier C). Two dealer-written guides differ. One says dealers pay 70% to 80% of online prices. The other says the gap between a dealer buyout and a good private sale is 30% to 40% of value. A reasonable reading is that the dealer price sits in a wide range, and the range depends on the dealer and the day.

The objection

You might say that a number is a number, and the family can use whichever they like. In practice the paper decides. An insurance figure filed as the estate value may be questioned, and in the United Kingdom a sale price after death is treated as the strongest evidence. An heir who sells at the dealer price may find the estate return used retail.

None of this means one number is right and the rest are wrong. It means each one belongs to a different use. You could ask any valuer, before you hire them, which of the four they are giving you.

Which of the four numbers surprised you most when you first saw it for something you own? Share it here. Someone may be holding a paper that answers a different question than they think.

Figures are estimates for planning, based on public data. Date read: October 2026.