What’s My Art Worth? 4 Easy Ways to Price an Artwork
As mentioned in my previous post, “Art Buyers Beware! 5 Ways to Minimize Your Risk“, evaluating the price a work of art is an important part of the due diligence process. Besides, who doesn’t want to know if they are overpaying for an artwork or not? Here are the four surefire ways to find out what an art object is really worth.
You can take the burden off yourself and hire an appraiser but make sure they must specialize in the appropriate area or the appraisal can be disqualified by the IRS or potential donees. If you don’t know of any appraisers yourself, get a referral from a trusted source like the Appraisers Association of America which allows you to search by zip code, area of specialty and more. Tip: Seek out certified appraiser members over general members of the organization since certified members go through a more rigorous qualification process. They will appear in the first line of search results.
Remember to ask to see a copy of the appraisers USPAP certification. All appraisers have the duty to act in an ethical manner and never out of self-interest. Also, make sure they follow IRS’ requirements for donation, estate and gift appraisals and ask about their fee structure in advance to avoid surprises. If the appraiser is truly USPAP compliant, they will not base his/her fee on a percentage of the valuation of the object(s) appraised. An hourly or project rate is appropriate.
2. AUCTION ESTIMATES
What is an Auction Sale Estimate? An auction sale estimate consists of a range of variables that is assigned to an art object which include: 1) the object’s characteristics, 2) auction comparables and 3) the current market demand. By looking at upcoming estimates you can get a general idea of what the current market is for that artist. And, if there are enough comparables you can usually get a good enough idea of the value though there are always exceptions. Bear in mind, the purpose of auction estimate is to stimulate active bidding and they are mostly used as marketing tools with real financial implications. This method is not the most definitive way to determine value but is good to get a general sense of the market value.
3. PRICE DATABASES
Most art professionals subscribe to a price database in order to gather pricing data on objects that have either sold or been passed on (aka “bought-in”) at auction. Price databases aggregate past and upcoming auction results made available to the public and gives you a more full and accurate picture of the value of an artwork, provided there are enough auction results to measure it by. The artnet price database for example, allows you to:
1. Analyze precise data compiled and edited by our multilingual specialists
2. Discover comparable lots to determine the value of your collection and inform purchases
3. Track the international art market with past, present, and upcoming auction lots
4. Access over 8 million records dating back to 1985, from more than 1,600 auction houses
By looking at past sales results you can determine what the relative value is of an artwork but it is also good to check those values against current prices of similar works by contacting the appropriate galleries or dealers and ask them for asking prices are. A lot of appraisers use both sources in tandem when doing appraisals to verify their values.
A good price database can be an indispensable tool for evaluating fine art, decorative objects, antiques and even dinosaur fossils!
4. ARTIST MARKET REPORTS
Lastly, art market reports on artists or works of art can provide in-depth analysis on an artist’s market as well as track prices, trends, demand at auction and top prices achieved at auction. artnet’s Analytic Reports, for example, use data from 100,000s of artworks sold at auction to create indices, which analyze the performance of the art market. Index Graphs give a snapshot of the artist’s overall market performance.
It’s important to note however, that when determining the value of an artwork it is not always quantifiable. There are many qualitative factors that can influence value such as:
•Exhibitions (Museum or Gallery)
•Artistic Output (Is the artist prolific or not)
•Public and Private Collections
•Market Makers and market influencers of the art market
•Artist’s Circle and Her/His Reputation
The price of an artwork is always the price that a buyer is willing to pay for it. Therefore since there is no set formula, take ALL factors surrounding that object into consideration before coming to a final conclusion. By combining savvy art expertise and relevant qualitative factors with empirical pricing and market data you should be able to get very close to the fair market value of your art object.
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