Art collecting is a balance between aesthetics and investment. Although personal style is just that – personal – valuation of artwork is a more analytical way of thinking. There are several reasons one would need an art appraiser to complete an appraisal for artwork, including selling a piece of art, valuing one’s financial status, inheriting a piece of art and contemplating the sale thereof, and obtaining insurance coverage for the artwork in question. Since the art business is unregulated, one could sell a piece of art for any price, or even state that they are an artist, and nothing can be said to refute this (other than comments on the lack of artistic ability!) Transactions between private parties can be fraught with ambiguities, and either party can walk away having been taken advantage of. There is a system for appraising art, and knowing more about it will not only make the process smoother, but will give you skills to do some of your own basic appraising.
A large part of learning how to appraise art is simply gained by experience after years of buying, selling, and studying art. Acquiring knowledge about the hundreds of styles and thousands of artists takes time and effort. Many art appraisers have degrees in fine art, but there is much more involved in the practice. Although not licensed in the traditional sense of the word, most professional appraisers belong to one of three major appraisal accrediting groups where certification and official training is involved. An appraiser is not just giving his or her estimate, they are liable and legally responsible for the expert opinion they have given. When choosing an appraiser, be sure to choose an accredited individual.
STEPS IN AN APPRAISAL
Although there is an aspect of personal opinion on the part of the appraiser, there are standard steps taken in the process of valuing art.
- Artist. Who created the artwork, and is he or she well known for any style or period of art? If there is a story behind the artist and the piece, that will increase the value.
- Signature. An artist’s signature, another trait affecting the value, supports its authenticity. Some artists signed most or all of their pieces, while others signed just a few.
- Creation Date. When considered within the time frame of the artist’s career, the piece could have increased (or reduced) value. Was it created at the height of the artist’s popularity, when the works were in demand? Was it created in a fashionable style?
- History of Ownership, or Provenance. From the French world provenir (“to come from”), this is documentation verifying the history of ownership of a work of art. This can be achieved by invoices, bills of sale, or previous appraisals (however a previous appraisal is not a guarantee that the work is authentic unless the appraiser is an expert in that art). The most valuable proof of provenance is the artist’s statement of authenticity, but this is not often found. Further, WHO owned the artwork can increase its value. Was it owned by a dignitary, a political leader, or a well-known company? The existence of a gallery label on the back indicating the piece had previously been exhibited also increases the value.
- Condition. This one is self-explanatory. The art appraiser will take into consideration the age and type of artwork, damage obviously affects artwork. Your appraiser may be able to suggest restoration work which can be done.
TYPES OF APPRAISALS
Now that you know what is involved in the appraisal process, it is important to understand the types of appraisals and valuations. Much depends on the purpose of the appraisal.
FAIR MARKET VALUE. This type of valuation is required by the IRS, and what is typically used in the banking and legal industries for valuing assets. It is what a buyer is willing to pay for an item when they are fully informed about the item and have the money, if neither buyer nor seller are pressured to complete the transaction.
REPLACEMENT VALUE. Defined as the cost of replacing an item with another of similar quality/appearance/usefulness/origin in a similar market, this is used for insurance appraisals. Usually this is a high retail value, and what it might cost you to replace something expensive when you are pressured to purchase it. There is often a significant difference between the two valuations.
Since many pieces of art are one-of-a-kind pieces, the value must come from something similar in style and size. An experienced, accredited art appraiser must understand details of the artwork, artist, and market to arrive at a replacement value, along with having access to a database of comparable sales for reference.
THE WRITTEN APPRAISAL—SPELLING IT ALL OUT
There are several parts of the appraisal:
- Appraisal agreement, spelling out the scope of the work
- Purpose of appraisal (insurance, re-sell) and type of appraisal
- Conditions which might affect appraisal (damage, etc.)
The art appraiser should charge an hourly fee, or flat rate including expenses for additional expert input (art historian, research costs, etc.). If an appraiser wishes to bill based on a percentage of the appraised value, it is likely that the item will be given the highest possible valuation. For this reason, it is not recommended to hire an appraiser who uses this format for invoicing, as this conflict of interest can skew the stated value of your collection and raise your insurance estimates.
Now that you have a better understanding of what is involved in an art appraisal, you are better equipped to make purchases with full knowledge. To protect yourself, consider an appraiser when making purchases, have your art appraised on a regular basis, and consider an appraisal when approached to sell a piece of work.
The Sybaris Collection offers its ARTclub. With this exclusive program, members have access to our advisory services and network of art professionals, including personalized shopping service, guidance throughout the entire purchase experience, and assistance with display and interior design.