BY MARK ANDERSON

Every day thousands of art market participants find themselves in search of a ‘good art appraisal’ that will suit their specific needs. Even more art owners are already in possession of such valuation documents, which they use for important legal purposes. At the same time, we all know that art appraising process can be a little intimidating. Many people rely completely on the guidance of the first art experts they meet without doing their homework on the expert and, more impartially, the process involved. In this article, I would like to share everything you need to know as a client about the process of art appraisal. We will discuss the purpose of these documents, how to audit them yourself, what standards should good appraisers follow, and much more. But, first things first – what is art appraisal?

Art appraisal is the process of determining the value of an artwork. This can be done for a variety of reasons, such as insurance purposes, tax evaluations, or for sale or purchase transactions. The primary purpose of art appraisal is to determine the fair market value of a piece of art, which is the price that a willing buyer would pay to a willing seller for the piece, assuming that both parties have reasonable knowledge of the relevant facts. It is a complex process that requires knowledge of art history, market trends, and the ability to evaluate a piece of art in terms of its condition, rarity, and historical significance. An accurate art appraisal is essential for ensuring that the value assigned to the artwork is fair, and that the art is properly protected and valued. Now, let’s take it step by step.

Purpose

The first thing one needs to know about art appraisals is that the appraised value of an artwork may vary greatly depending on the purpose of the valuation. For example, an appraisal for insurance purposes may have a different value than an appraisal for sale or purchase. Here are some of the primary purposes for an art appraisal:

Insurance: Art appraisal is essential for determining the value of artwork for insurance purposes. It helps ensure that artwork is adequately insured, and in the event of damage or loss, the insurance company can compensate the owner accordingly.

Sale or Purchase: Art appraisal can help buyers and sellers determine the value of artwork, ensuring that the price is fair and that both parties are satisfied with the transaction.

Estate Planning: Art appraisal is useful for estate planning, including determining the value of artwork to be passed down to heirs and determining the appropriate tax implications.

Donations: Art appraisal is necessary for tax deductions when donating artwork to a museum or other charitable organization. The appraised value helps determine the tax deduction amount.

Loan Collateral: Artwork can be used as collateral for loans, and an appraisal helps lenders determine the value of the artwork and the loan amount to be granted.

Investment: Art appraisal can help investors determine the value of artwork as an investment and decide whether to buy or sell artwork based on its appraised value.

Authentication: Art appraisal can help determine the authenticity of artwork, especially for pieces that are difficult to verify. The appraiser can examine the artwork and its history to provide a professional opinion on its authenticity.

Appraisal

An appraiser will typically begin the appraisal process by examining the artwork in person and taking detailed notes as well as photographs of its condition. They will research the artist and their work of art, looking for information about their background, exhibition history, and previous sales. They will also review any available documentation, such as certificates of authenticity and provenance information. There are several methods that can be used to determine the fair market value of a piece of art. The most commonly used methods are:

Comparable Sales Method: This method involves comparing the piece of art in question to similar pieces that have recently sold. The prices of these comparable pieces are used to determine the fair market value of the piece in question.

Cost Approach: This method involves determining the cost of reproducing the piece of art, and then adjusting that cost for factors such as age, condition, and rarity.

Income Approach: This method is used primarily for pieces of art that generate income, such as rental properties or commercial buildings. The income generated by the piece of art is used to determine its value.

After completing a through examination and researching artist’s reputation, provenance, and historical significance, the appraiser will use one or a combination of the above methods to determine the fair market value of the piece. They will also provide a written report detailing their findings, including an explanation of the methods used and the reasoning behind the value they have assigned to the artwork in question. It is important to note that art appraisal is an opinion and the value of a work of art can change over time, so it’s a good idea to have your art reappraised periodically to ensure that the appraisal is still accurate.

Shopping

Appraisal shopping refers to the practice of obtaining multiple appraisals for a piece of art or other property, in order to compare the values assigned by different appraisers. This practice can be used for a variety of reasons, such as to find the highest value for insurance or tax purposes, or to find the lowest value for estate or divorce settlements.

It’s important to note that, while appraisal shopping may seem like a good idea in order to get the best value for your property, it can lead to several issues. For example, if an appraiser knows that their value will be compared to others, they may inflate their value to get the job, rather than providing an accurate value. Furthermore, some appraisers may not be as diligent or thorough in their research, as they may think their opinion will not be the final one.

Additionally, obtaining multiple appraisals can lead to inconsistencies and inaccuracies in the values assigned to a piece of art. Each appraiser will have their own methodology, knowledge, and experience and the value assigned can vary widely depending on the appraiser and the purpose of the appraisal. This can create confusion and mistrust, and can make it difficult to determine the true value of a piece of art. It’s also important to consider that professional organizations have strict guidelines and codes of ethics that prohibit their members from participating in appraisal shopping, as it can create a perception of dishonesty. Many organizations consider it an unethical practice, as it can create a conflict of interest for the appraiser, who may be inclined to inflate the value of the artwork to secure the job.

Audit

Auditing art appraisals is an important step in ensuring that the value assigned to a piece of art is accurate and fair. Here are some tips:

Understand the purpose of the appraisal: Before you begin your audit, it’s important to understand the purpose of the appraisal. Is it for insurance purposes? Is it for a sale or purchase? Knowing the purpose of the appraisal will help you to determine what information should be included in the appraisal and what standards should be used to evaluate the art.

Review the appraiser’s qualifications: A qualified appraiser should have a thorough knowledge of art history, as well as experience in appraising art. Look for credentials such as accreditation from professional organizations, or a degree in art history or a related field.

Examine the art: Take the time to examine the art yourself. Look for any signs of damage or restoration, and compare the piece to other examples of the artist’s work. Take detailed notes and photographs, as these will be useful when you are evaluating the appraisal.

Compare the appraisal to market trends: Look at the current market trends for the artist and the type of art. Compare the value assigned by the appraiser to the prices of similar pieces that have recently sold. If the appraised value is significantly higher or lower than the market value, this may indicate a problem with the appraisal.

Check the documentation: Review all the documentation provided with the appraisal, including any certificates of authenticity, provenance information, and exhibition history. Make sure that all the information provided is accurate and that any gaps in the documentation are explained.

Look for inconsistencies: Look for any inconsistencies in the appraisal. For example, if the appraiser states that the piece is in excellent condition but the documentation shows that it has been repaired, this may indicate a problem with the appraisal.

Seek a second opinion: If you have any doubts about the accuracy of the appraisal, seek a second opinion from another qualified appraiser.

By following these steps, you can ensure that the art appraisal you are reviewing is accurate and fair. Additionally, there are many highly qualified and reputable art auditors in the world, and the top ones will depend on the specific area of expertise and the region where the art is located. However, some of the well-known international art auditors include:

Art Recovery International: Founded by Christopher Marinello, a leading expert in art recovery, this company specializes in recovering stolen and looted art and cultural heritage.

Artvest Partners: This company specializes in art advisory, investment and appraisal services. They have a team of experts who have decades of experience in the art market

Art Loss Register: This company maintains the largest private database of lost and stolen art in the world, and provides a range of services including art recovery, due diligence and provenance research.

The Fine Art Group: This company provides art advisory, investment and appraisal services. They have a team of experts who have decades of experience in the art market

Art Agency Partners: This company is an art advisory firm that provides a wide range of services including art appraisals, due diligence, and collection management. They have a team of experts who have decades of experience in the art market.

Art Appraisal Associates: This company specializes in appraisals of fine art, antiques and decorative art. They have a team of experts who have decades of experience in the art market

Sotheby’s Institute of Art: This is an academic institution that provides a wide range of art-related courses and research opportunities, including art appraisals and art market analysis.

It is important to note that this list is not exhaustive and there are many other reputable art auditors around the world. When selecting an art auditor, do your research and select the one that is qualified and experienced in the specific type of art you are interested in.

Standards

There are several art valuation standards that appraisers should follow when determining the value of an artwork. The most widely recognized standards are those set by the International Society of Appraisers (ISA) and the American Society of Appraisers (ASA). The ISA and ASA have developed a set of guidelines, standards, and code of ethics that must be followed by their members when performing appraisals. They are designed to ensure that appraisals are performed in a consistent and professional manner, and that the values assigned to pieces of art are accurate and fair. Some of the key standards that appraisers must follow include:

Independence: Appraisers must maintain independence and objectivity when performing an appraisal. They must not have any conflicts of interest that could affect their ability to provide an unbiased appraisal.

Due Diligence: Appraisers must conduct a thorough examination of the piece of art and research the artist and artwork in order to ensure that the value assigned is accurate and fair.

Professionalism: Appraisers must conduct themselves in a professional manner and must be knowledgeable about art history and the art market.

Standard of Care: Appraisers must perform their work with the care and skill that a reasonably competent and diligent appraiser would use under similar circumstances.

Reporting: Appraisers must provide a written report detailing their findings and the methods used to determine the value of the piece of art.

There are also other national and international standards that may be applicable, depending on the location and purpose of the appraisal. It is important to ensure that the appraiser you are working with is familiar with and adheres to these standards, as it will help ensure that the value assigned to the piece of art is accurate and fair.

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