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, and the IRS may
require an appraisal. Then there are those who are simply curious about
the value of a piece or pieces of art. The reason for the appraisal
should determine the type of appraisal and the choice of the appraiser.
For insurance purposes, a replacement value appraisal is usually
provided, for the other purposes, a fair market value appraisal is
usually required. An appraisal that doesn’t specify its type is
There can be confusion between the terms "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.
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 usually applied to charitable donations and estate values.
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.
Market Value: Market value (MV) is the value realized, net
of expenses, but a willing seller disposing of property in a competitive
and open market to a willing buyer, both being reasonably knowledgeable
of all relevant facts, and neither being under any constraint to buy
Liquidation Value: Liquidation value (LV) is the value realized
in a sale situation under forced on limiting conditions and some time
Selecting a appraiser depends on many
factors. Since the 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. Since
the appraisal fee depends on both the rate and the hours expended, and
expert may be able to complete an appraisal in a few hours whereas it
may take a general appraiser a week 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 $5000. 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. The IRS also requires the appraiser to certify
the authenticity of the work. Thus, if an appraisals expected to exceed
$5000, not only must the appraiser be certified but s/ he must also be
qualified to certify the authenticity of the piece.
The cost of an appraisal ranges from as low as $25 an hour to over $300
an hour. So selecting the right appraiser is not only a matter of the
accuracy of the appraisal, but also the cost of the appraisal. It makes
no sense to spend $600 appraising a $500 painting. In fact, in many
cases, gallery appraisers will offer price evaluations at a rate less
than a formal appraisal. Price evaluations may be sufficient for insurance
purposes, whereas estate settlements and charitable donations always
require a formal appraisal. Also, since the cost of an appraisal
depends on the time required, it is always wise to find an appraiser
that specializes in the particular art to be appraised. An expert in
antique Chinese brush painting may be able to perform an appraisal in
an hour, whereas a general appraiser may require days.
Before an appraisal is initiated the appraiser
should provide you with their hourly rate, plus some estimate of the
time required. If the appraiser cannot furnish you with such an estimate,
it suggests the appraiser does not have experience in this particular
area of art. Some appraisers require a deposit with signed approval
to pursue the appraisal, whereas for others the process may be more
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