Understanding the Value of Art

What is your art worth?

 

Although it’s a genuine response, “It depends,” is not usually the answer people like to hear when they casually ask what their art is worth. This question prompts a whirlwind of thoughts in a professional appraiser’s mind and there is rarely a simple, off the cuff answer. (That is, unless someone asks about artwork created by a beloved child, then the answer is unequivocally, “Priceless!”)

Appraising art–or any property–means going through a data-driven, step by step process of research and analysis then reporting a conclusion of value for a specific purpose.

In other words, there is much more to the appraisal process than what you see on antique and pawn store TV shows.

These frequently asked questions will shed some light:

I found an interesting piece of art at a garage sale, how do I know if I need an appraisal?

You can start with an Online Consultation. It will help you determine if a formal appraisal is warranted.

Do a gallery or an artist’s asking prices indicate the value of an artwork?

Not necessarily. Asking prices are interesting pieces of information, but they do not necessarily indicate value.

Professional appraisers look to “realized prices” or the actual amounts involved in confirmed transactions for data. This information can be difficult to capture since not all sales of artwork are public. However, it is an appraiser’s job to do the research into various market levels and transactions that make up the market for a certain artist or for similar works of art.

How can one item have more than one value?

There are actually many different definitions of value and with each one, different market levels and related transactions must be taken into consideration. Each type of value can have a different dollar amount associated with it.

Say you own a Rembrandt and you want to donate it to a museum and receive a tax deduction for the donation. The IRS requires an appraisal report that concludes Fair Market Value. However, if you’re keeping the Rembrandt in your home and you want insurance coverage for it, you need an appraisal that reports Replacement Value. Fair Market Value and Replacement Value can be different amounts for the same artwork.

Another scenario is that one day you have a change of heart and decide to sell your Rembrandt. You want to know how much money you are likely to put in your pocket when the sale is all said and done. You’ll want an appraiser to find out what its Marketable Cash Value is and it could be a different amount yet–all for the same work of art.

Do the words “cost,” “price” and “value” mean the same thing?

Not to an appraiser. “Cost” refers to the amount it costs to produce something. For an artist, the amount he/she pays for supplies, equipment, studio space, time, expertise, etc. are all elements of cost to produce an artwork. “Price” is a specific amount associated with a single transaction. “Value” or “what something is worth” is a wider concept that is subject to change over time and can vary in different markets. While there can be a relationship between these three terms, the concept of value is much more fluid and broad.

Art prices are determined by the meeting of real or induced scarcity with pure, irrational desire.

-Robert Hughes, Australian Art Critic

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