Art appraisal is a part of an evaluation of the estimated price of an artwork, sculpture, vintage ceramics, luxury piece of jewelry, collection wine but also classic car or even an elite level sports horse that you have acquired for your collection a while ago. And now you would like to know whether it was a good investment or not, or you would like to have precise information on the value before you decide whether selling it or not.
The practice of an art appraisal combines the financial evaluation with subjective view on the cultural value and significance of that particular item you are curious about. The appraisal requires profound knowledge of the art world and a high level of expertise in evaluation methods.
A qualified appraiser will explain to you the steps to be followed and depending on whether it is a collection or a single artwork you are requiring evaluation for, it will take some time to gather the information together and present you complete information and estimated numbers for it.
Art appraisal is most used for investments, tax planning, insurance, donations, and other purposes. However, each of them require slightly different approach.
We will talk about artworks in this article but feel free to contact Gunna Freivalde for questions regarding appraisal of other collectible items mentioned above.
So, what exactly is art appraisal?
An art appraisal is a subjective opinion of a highly informed specialist in the field of the value of an artwork, and the value of it is defined as “a formal and widely accepted process of determining the value of artwork”.
Unlike establishing value to a house or a car, it is often a challenging task to place as exact as possible value on artwork, and it is rarely the price you paid for the item back at the moment when you bought it.
The price change is due to different reasons – the most notable one being the fame of the artist. It might have increased from the time you bought it, or the artist might have taken a break from the artistic career. In both cases, it directly applies to the actual price of the artwork.
However, asking for an appraisal is not only for the interests of an artwork collector, but it can also be a very interesting tool for artists too.
To evaluate your own artwork, it is important to keep in mind several details – how much time have you spent creating it, the materials used, size of the artwork, etc. But only a specialist can tell you the additional value that your artwork can have and therefore to be able to place it in the art market with the most precise price tag. It is not only beneficial in short term but also in a long run.
Many artists and gallery managers face the question of “How much my/their art is worth?”
Asking for appraisal is to ask to elaborate a legal document, which describes the value of the artwork, and a properly prepared report should clarify questions of value under all circumstances.
A qualified appraiser should be able to defend the value conclusion in writing and when needed also in a court of law. Therefore, it is a must that the appraiser has solid knowledge of art in general, but specifically the time frame that your artwork fits into.
It is essential to evaluate that the appraiser does not have any conflicts or interest regarding the particular work and can deliver the evaluation in an independent, impartial and objective manner.
Types of appraisal
If you are looking for a general notion of the value of the artwork, it is better to opt for a preliminary estimate of value. However, it is not to be considered as appraisal.
In general, art appraisals can be performed for purposes depending on what you want to do with the artwork. Generally, it can be divided into six categories:
1. Updating or obtaining insurance.
It is defined as the “current market replacement value”.
This value considers the amount covered by the insurance company in case the artwork happens to get damaged, destroyed (by fire or floods, for example), or stolen. Usually, it is a full actual market price and adding the additional expenses that might be necessary for the repair or replacement of the artwork (which in case of artworks is almost impossible).
This is a widely chosen appraisal for those art lovers who want to keep their art with them, and keep their investment in art safe and protected.
2. Resale value.
It is the second most demanded appraisal and is defined as the “fair market value for purposes of resale”.
It is a written market research document establishing the estimated price for the artwork. However, it does not mean that the appraisal is a firm guarantee that the artwork will be sold for the mentioned amount of money in any given period of time. It is not a firm promise of the sale of the work, either.
3. Donation
If you are based in the US, this might be the right appraisal type. It is defined as the “fair market value for purposes of donation” and is a great way to have a tax deduction.
This appraisal type does not analyze the retail prices. However, it is a search in auction and previous sales records. It is also important to keep in mind that the only tax deduction that can be taken by an artist donating one of their own works, is the cost of materials that were used in producing the artwork.
4. Settling a family member's estate.
5. Settling a divorce or dispute.
6. Liquidation.
These three types of appraisal are less common yet necessary to be performed by a highly skilled appraiser. For example, in divorce, it is important to know the value of the artworks acquired and owned during the marriage before any further negotiations are started.
Or, in case a business has been announced bankruptcy, it is good to know the value of the artworks the company owns. However, it is a more complex case where other laws come into force, such as who has the rights to keep or resale these artworks, etc.
In these cases, it is always a good idea to use both appraiser and art lawyer for the best outcome possible.
Documentation
To make sure, the appraisal will be as precise as possible, you must have all the necessary documents related to the artwork.
Depending on the artwork, it can be everything starting from receipts of purchase to previous appraisals if such have been done, provenance records, restoration records if such exist, list of galleries where it has been showed or stored, exhibitions where the artwork has been featured, publications where the artwork has been mentioned and sales history.
Having as many as possible documents accompanying the artwork is essential.
Appraisal is not the same as an authentication
Appraisal and authentication services are 2 different things.
The appraisal is usually performed assuming the artwork is authentic and can be done both virtually and in-person. However, it is still possible that an appraiser would also perform the authentication of the artwork, but it is possible only when an appraiser is also specialized in a certain artist's works.
Asking for an appraisal for the artworks you own, can provide you with a different perspective and appreciation of their value, but also offer crucial information about artwork´s conditions up-to-date and provide the most reliable sense of value in the art business.
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Gunna Freivalde
Areas of Practice: Arts Law International Transportation & Logistics Art appraisal
Gunna has obtained a diploma in art law from the UK-based Institute of Art and Law and is a certified art appraiser. Before she set up her legal practice in Brussels, Gunna worked as a lawyer and independant legal advisor in Switzerland, Russia and Spain. Gunna has been a speaker at various legal seminars and academical courses dedicated to art law and Intellectual Property matters.
She has been an evaluator and judge at ICC Moot Court Competition for the Grotius Centre for International Legal Studies and the International Bar Association, a member of American Transportation Lawyers Association, UK based A-law, Asociación de Escritores y Artistas Españoles. In a personal capacity Gunna is actively involved in a number of organizations and fundraising initiatives supporting important art and environmental protection projects, is a Trustee at Tigers4Ever Board of Trustees and volunteers at A-Law, UK Centre for Animal Law.
