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CoVid Impact to Onsite Art Appraisals
ArtNet, Reprinted with permission, 8/2020
Art appraisals may not be essential business, but the art world needs them in their business world. Appraisals allow collectors to make consignments for auction. They offer crucial information about artworks’ conditions, and offer the industry’s most reliable sense of value. While appraisals traditionally require in-person assessments, professionals have gotten creative during lockdown, finding safe and reliable ways to inspect artworks.
Sotheby’s, in fact, noted “increased interest” in its appraisals business during the COVID-19 pandemic. “Many collectors are eager to understand the value of their collections, and as such we have been providing a lot of insurance and fair market valuations for their individual needs,” said Charlotte Van Dercook, head of Sotheby’s Contemporary Curated department in New York. Economic uncertainties and shifting fortunes, in other words, can inspire people to reappraise their assets and consider potential sales.
Haven Art Group CEO and founder Claire Marmion said she’s been surprised by how much of the business has seamlessly moved online. Her team can conduct site visits virtually, via Zoom, to explore a home and “map out all the exposures around a collection.”
Van Dercook’s team has also embraced digital appraising strategies, using Zoom calls, photos, and video to glean information about artworks. “While there may not be a substitute for in-person interaction, the appraisals process itself has transitioned quite smoothly for us,” she said.
Yet some types of appraisals specifically require on-site visits. In-person examinations are often a must if you want to secure a bank loan based on an artwork’s value, for example. According to Marmion, “in theory,” the Internal Revenue Service itself often requires on-site visits.
“In a claims scenario, it’s very difficult to respond and appraise without site verification,” she added. “You’re trying to figure out what artwork looked like before and after an event.” For insurance to pay out after a fire or other disaster, specialists must examine objects in person. In the case of estate appraisals, which can determine tax filing data, Marmion noted that assessments may be done virtually, with the assumption that qualified appraisers will follow up with an on-site visit at a later date.
Danielle T. Rahm, managing director at New York Fine Art Appraisers, confirmed that some in-person visits are still critical. For example, she spoke of a collector who had been in the hospital and recently passed away. His art had some previous condition issues that would affect both the value and the way the work would be moved out of the apartment: It had to be transported quickly, and Rahm and a counterpart needed to inspect it beforehand. They visited the site together, taking special precautions “common sense,” she said. They wore gloves, masks, and booties, and kept the windows open for ventilation. They asked that no one touch the artworks 48 hours before they came to examine them. Sotheby’s takes similar precautions and, according to Van Dercook, uses “rotating specialist schedules to limit the number of staff on-site.”
On-site, in-person viewings are the only way to confirm a few key details about art. Rahm noted that it’s particularly difficult to assess an artwork’s medium and condition on a screen. She must rely on clients to be honest when they fill out forms with details about artworks they want appraised. Such information includes title; date; medium; artist; signatures, numbers, and markings on the piece; framing information; dimensions; provenance; literary references; exhibition history; condition as far as the client is aware; any conservation assessment or conservation work completed; and any opinions of authenticity or other documentation.
“It’s very high stakes,” said Rahm. “I can never guarantee a client isn’t being dishonest and proclaiming to have something that either doesn’t exist if it’s for insurance purposes, or has a condition issue that isn’t visible from pictures.” As an appraiser, she protects herself by disclosing the variables she’s relying on and the uncertainties that persist without an on-site visit.
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Rahm and her team adhere to the standards established by Uniform Standards of Professional Appraisal Practice (USPAP), which do not, in fact, require inspection visits. They do, however, require what Rahm called “a reasonable basis for a credible result.” She and her team have admittedly had to make “extraordinary assumptions” over the past few months.
Disclosure is key to appraisal work right now—professionals must be aware of their limitations as they work remotely, and be able to communicate those to all parties affected by an artwork’s value.
Library closures are another, perhaps more unexpected, pitfall for appraisers in the age of COVID-19. Rahm’s team often relies on catalogues raisonnés and exhibition histories that haven’t yet been digitized. Like any art lover, Rahm is eager to see art in person again. “Seeing the color, seeing the vitality of it and the movement of the brushstrokes that you just can’t replicate in pictures,” she said.
Frequently Asked Questions about the Appraisal Process
Lisa Getzfrid; CEO/Founder, Red Feather Advisory & Appraisal
Steve Pakiz; CEO/Founder, Tailored Art Appraisal & Advisory
August 20, 2020
We frequently get asked questions about the appraisal process from friends, potential clients and even family members. Understanding what comprises an “appraisal” of art and antiques can be confusing and lead to frustration. Hopefully, this short article will provide a framework to help guide you at the start of the process.
1. Why do people need to get art appraisals?
There are four major reasons that people seek an art appraisal.
• The most common reason is to investigate whether they have sufficient and proper insurance coverage for their collection.
• Secondly, estate and divorce settlements will usually require an appraisal.
• Thirdly, owners are considering a possible sale of their art, and wish to know its value.
• Fourthly, they are considering a charitable donation of their art.
2. What are the different types of appraisals?
There are several different categories of appraisals but the two most common ones are:
Fair Market Value: Fair market value (FMV) is the price that the art would sell for on the open market between a willing buyer and a willing seller, with neither being required to act and both have reasonable knowledge of the relevant facts. If there is a restriction on donated art, the FMV will reflect this restriction. This is the appraisal value that is usually applied to charitable donations, equitable distribution (divorce) and estate values.
Retail Replacement Value: Replacement value (RV) is the amount it would cost to replace an item with one of similar and like quality purchased in the most appropriate marketplace within a limited amount of time. This is the highest of the appraised values and is applied primarily to insurance coverage.
3. How do I select an art appraiser?
Selecting an appraiser depends on many factors. Since the art work should be visually inspected by the appraiser, it is best to find an appraiser near you. Since you are seeking the most accurate appraisal possible, it is important to find the most qualified appraiser for your kind of art. An appraiser specializing in art with a specialty in the particular type of art is your best choice. The appraisal fee usually depends on both the rate and the hours expended; an expert may be able to complete an appraisal in much less time whereas it may take a general appraiser much more time to complete the appraisal.
Choosing an appraiser for charitable donation purposes deserves special attention since the Internal Revenue guidelines outline appraiser requirements, especially if the value of the donation is over $5,000. The IRS requires what they call a "qualified" appraisal, and the appraiser must be qualified. Although many requirements and restrictions are outlined, the most significant is that the appraiser must be certified by a recognized appraisal organization.
To locate an appraiser, calling one of the appraiser organizations such as the Appraisers Association of America, is the best way to secure a listing of credentialed appraisers in your State.
4. What is the difference between Appraisal and Authentication?
There can be confusion between the term "appraisal" and "authentication." An appraisal assumes that the piece being appraised is authentic while an authentication is a formal and professional opinion that the work is genuine and created by the claimed artist.
A piece of art is authenticated to determine the identity of the artist who created the piece. Authentication requires the services of an art expert or experts in the field of the particular art. Authentications are much more time-consuming and expensive. The authentication process begins with a physical examination and testing of the particular piece of art. The piece is subjected to several tests including: infrared tests, wood lamp tests, a study of the pigments, etc. The purpose of these physical tests is to ensure the work was completed during the time of the assumed artist. These physical tests are followed by the work of graphologists who examine the signature and any other writing on the work that might be attributed to the artist.
5. Why should I insure my art?
Many homeowners make the assumption that their art collection is covered under their homeowner’s policy. Some of these collectors may be shocked to learn that certain homeowner policies specifically exclude fine art items. In many cases, there is a limit on the coverage of individual pieces of art. Such limits can be under $1000. With this reality in mind, every individual who owns even a small collection of fine art should review their policy.
Individuals with art collections should have a fine arts insurance policy not only because of adequate financial coverage but also because homeowner policies generally, will not cover broken or lost items, provide worldwide coverage, and have limitations on transportation and off-site storage.
There are basically two types of fine arts insurance coverages: scheduled and blanket. With scheduled policies, each item is individually listed on the policy for a stated insured amount. Insurers usually require an appraisal or a recent invoice if an item's value. Blanket policies are policies that allow a collector to obtain coverage of items without specifically itemizing the objects. Most blanket policies will include a maximum limit per item. While insured art is covered in the event of theft, fire or water damage or damage caused during transit, a policy will not pay for gradual deterioration, such as fading or cracking caused by natural or artificial light.
Like all insurance policies, the cost depends on the value of the potential loss. Thus, a current appraisal is necessary, and usually required by most insurers. For insurance purposes, the type of appraisal needed for that purpose is a retail replacement value appraisal. This appraisal values the art for the highest amount. Although this also will increase the insurance premium, it will insure full coverage. Whether your appraiser offers the service or you do it yourself, it is always beneficial to have a picture of your fine art items. This is particularly useful if the item is stolen.
The cost of fine art insurance is fairly in line with homeowner’s insurance. However, premium cost can vary significantly, and one usually finds the best insurance values with companies that specialize in fine art insurance.
6. What does the Appraisal Process include?
Appraisal work, under normal circumstances, involves transportation/travel, photography, inspection, measurement, condition assessment, digital inventory, research offsite, field research, valuation conclusion, report construction, file delivery, and maintaining the file for a legally required period of time. Reports should be written in the most current Uniform Standards of Professional Appraisal Practice (USPAP) compliant format.
7. Unregulated Art Market – Is it the Wild West?
Unfortunately, the art world is the largest unregulated market in the world and it ranks as the third largest area for corruption and illegal activity. However, real appraisals with genuine research performed by a professional is not free. Most appraisers charge by the hour or by the project. Be sure to request an estimate of the project before signing any contract, and be detailed in the scope of work that you are requesting to be completed.
Antique Road Show, American Pickers and radio personalities are not appraisals. It is entertainment and they provide a range of value, known as an estimate, but more closely related to an auction estimate. However, auction estimates are values that the auction house you’re speaking with believes they may be able bring at their auction, not another auction or all auctions. This is not a value for just Ebay, an antique store, a private dealer or seller. Consider the audience, location, condition and the other elements that may be affecting value on that particular day or at least up until that point. Just Answer, Yahoo Answers, “FreeArtAppraiser .com” and the many other places to get “no-cost valuations” are not formal appraisal services. These are not credible or Uniform Standards of Professional Appraisal Practice (USPAP) compliant appraisals for insurance, non-cash charitable donation, estate taxes or even equitable distribution and are not acceptable forms of appraisals when it involves Internal Revenue Service filings.
These estimate service providers are produced for personal gain, acquisition, brokering or in some cases for search engine optimization purposes to draw web traffic to a site that needs to produce advertisement or related service revenues. They are high volume, low due diligence platforms.
In summary, if you are in need of art appraisal services, it is always best to contact an organization like the Appraiser’s Association of America to secure a listing of appraisers in your State.