Art Appraisals 101

This blog first appeared in the Collector's Notebook in Western Art & Architecture, April / May 2022

Ever wondered whether you should have your collection of original art appraised?

No worries, we’re here to help. For starters, the answer is: yes, most definitely. Not only that, but you should have your art collection appraised every three to five years, sooner for really high-end works.

Let’s start with why.

Insurance Coverage

One of the top reasons collectors need an appraisal is for insurance. This kind of appraisal determines the “replacement cost,” i.e., the cost to replace art stolen or lost in a fire, for example. Check with your agent, but insurance companies don’t usually cover art without an appraisal.

A common misnomer: My art is covered under my general homeowner’s policy.

It is and it isn’t. Because people were gaming the system, insurance companies put a seriously low cap on coverage of art and jewelry under homeowner’s policies. You need a floater called a “personal article policy.” And the only way to get this is with either a replacement cost valuation/appraisal (see the rules for your state and insurance company) or you can have your art dealer supply you with a document indicating the current market value–replacement cost–for works they sold you.

For living artists, these values are established by the artist often with input from dealers who handle their work. For deceased artists, this value is established on the secondary market and at auction.

Note: Insurance appraisals always get collectors excited; the retail price for work they purchased years ago, for most artists, will have gone up over time, sometimes significantly. Collectors need to remember that they probably can’t sell this art for the prices they see on a replacement cost appraisal. (I discussed these reasons in a blog about buying and selling at auction.)

The 3 Ds: Divorce, Debt, Death

Division of property. We’re talking divorce, debt, and death. As if these situations weren’t bad enough, now you have to pay someone to appraise your collection (or your family member’s collection) only to divvy it up. These appraisals are done to establish the “fair market value,” which is the amount each work of art would sell for between a willing buyer and seller. This is not the replacement cost; there is a difference, sometimes are very big difference.

Estate appraisal. These appraisals are required for probate dealings. There is a threshold an estate needs to meet before an appraisal is required by the IRS. Check with your accountant to determine whether the fair market value of the real and personal property included in the estate exceeds the annually established unified credit exemption.

Donation. Donating art to museums or institutions such as your alma mater serves the dual purpose of being both altruistic and a great tax write-off. Most institutions will request an appraisal before accepting donations. You’ll also need an appraisal for your accountant when tax time rolls around. These fair market appraisals come closer to replacement value but use auction records more heavily when determining value.

What to Look for in an Appraiser

In many states, appraisers of art do not have to be licensed to do replacement valuations for insurance. They do, however, need to have substantial market knowledge, which is why you can often find gallerists and curators doing these kinds of appraisals. Check the laws of your state before selecting an appraiser for insurance valuations and ask your insurance agent for his or her requirements. Most other appraisals will have to be done by a licensed appraiser.

No matter what kind of appraisal you require, it’s wise to look for an appraiser with specific knowledge of the art you collect. While appraisers can certainly sleuth out the valuation of most anything, some appraisers specialize in disciplines, such as Western art or Bauhaus furniture, jewelry or antique farm equipment. There are lots of factors to consider when determining valuation, so having someone with deep market knowledge will ensure the best results.

Do ask for recommendations and check online with the national and international associations of appraisers. You can also ask museum curators and gallerists you know, and even your insurance agent for referrals.

What to Expect

Appraisers will give you a letter of intent that explains how they work and how they charge–usually by the hour. Rates are fairly standard but vary from state to state. Plan for the appraisal to run $125 to $350 an hour.

Do not ask your appraiser to turn around and sell art for you. This is a major conflict of interest. If you want someone to sell your collection, you want an art adviser not an appraiser.

Get a Head Start

There are some great online tools to help keep track of your art, such as Airtable and My Art Collection. (Check out the link to Rose’s premade Airtable stocked with everything you need to get started.) Keeping your records in an orderly and central location will help your appraiser create an accurate repost and save time. Here’s a handy list of the key elements to track.

Artwork title. Don’t make this up. Often, the artist will have written the title on the back of a painting or along the base of a sculpture. If no title exists, call it “untitled” or “title unknown” and give it a small description.
Size of the image and outer size of the frame, height by width. For sculpture, add depth. Note: art dimensions are always listed in this order: height by width by depth.
Medium–oil, pastel, watercolor, bronze, etc. And list the specifics of the substrate, if you know it, such as “oil on linen,” or “c-print mounted on card.” If you’re not sure, call an artist; they will know immediately what you’ve got.
Year the artwork was created. If you don’t know exactly, list the approximate date, and toss the word “circa” after to denote that you’re pretty sure it was done close to this year.
What you paid. If you have the invoice and are uploading things in a spreadsheet, consider taking a scan or photo of your sales records, and add them to the digital file.
Where you purchased the artwork. This establishes a lovely trail called “provenance.” Over time, provenance established the importance of the work and, thereby, it’s value. If a work of art you own has been shown in a museum or major exhibition, make sure you keep record of that and leave the museum tag, if one was placed on the back of the work, exactly where it is. (By the way, if a museum wants to borrow something, for goodness sakes, say yes! This supports the artist and your collection.)
Frame on painting or base of sculpture. Add details like closed corner or chop frame (where you see the joined corners), gold leaf, compo ornamentation, etc. And note whether the frame is original to the work of art. If you are unsure, no worries. Just include a photo of the frame.
Note whether a painting is under glass or plexi, museum grade, UV, etc.
Detail any dings or mars to the frame or artwork surface, as well as discoloration or creases to works on paper.
Photographic documentation. You don’t need to take print worthy pictures for your records. In fact, iPhone pics are pretty darned good. The main aspects to document are the front and back of paintings. For sculptures, get photos from three to four angles. For all art, take a closeup of the signature and get at least one overall photo in the frame or of the sculpture and it’s base. If the frame is really special, get a couple closeups of corners or compo designs.

When taking pictures of paintings under glass, try this trick: using ambient light, lay the work flat on the ground, shut off overhead lights that are reflecting off the glass, then shoot down. You may have to move your body a bit until you find the best spot with the least reflection–or try standing on a chair–but the smart phone camera auto adjusts for low light.

Again, don’t forget to take a photo of the back of 2-D work. Sometimes the back of a painting is more intriguing than the front! Any writing, signatures, and labels from galleries or exhibitions help support the work’s provenance.

Airtable

I keep track of my collection and those of clients online, in Airtable. If you’re not familiar with Airtable, you really need to check it out. It’s a free, open-source application that has tables for just about anything you can think of. It’s basically Excel on speed. Here’s a link to my layout for collectors: Rose’s Art Collection Base.

Art Insurance: Are you sure you’re covered?

As residents of Los Angeles begin the complicated process of rebuilding after fires wiped out more than 15,000 homes and businesses, the last thing anyone facing that future wants to hear is that they weren’t adequately insured. A recent study by the University of Colorado Boulder, however, found that three-quarters of people who lost their homes in the 2021 Marshall Fire that ravaged suburban Boulder County were not fully covered. In fact, one-third of homeowners were severely underinsured, holding coverage for less than 75 percent of their home’s value.

In light of current events in L.A., North Carolina, and Hawaii, we thought the topic of insurance was timely, if only to nudge readers into double checking and confirming that their valuables are covered.

How Do Disasters Affect Premiums?

It’s safe to say that insurance premiums will increase no matter where you live. Insurance is a numbers game—lots of people buy into a plan to spread the risk as widely as possible. And then the probability of loss is factored in. With so many big events like hurricanes and wildfires, many companies have come to the point where they simply can’t charge enough in premiums to cover the inevitable devastation. In Florida, for example, almost no one will cover structures built within five miles of the coast. In L.A., more than a year ago, many insurance companies pulled coverage in areas at the highest risk for wildfires and mudslides because it’s not a question of if but when and that risk was just too high.

When this happened, state governments stepped in and created their own insurance funds. The problem with these funds, one agent explained, is fairly fundamental: states’ asset to liability ratios are not held to the same standards and regulations as the insurance industry is. If a state doesn’t have enough assets to pay out on claims, they will have to tap into other funding sources, essentially robbing Peter to pay Paul.

On top of that, citizens often lay blame on governments for not being able to protect them from disasters. In L.A., for example, lawsuits have been filed against municipalities claiming they should have enough water on hand to fight the fires. Legal battles such as these further drain the government’s coffers and can impede the payment process.

Know Before You Need It

Art does—and doesn’t—fall under your general homeowner’s policy. At one time, art and jewelry were covered, but because people started gaming the system, companies capped the payout; some companies pay as little as $2,500 per work of art.

To make sure you are covered, you need a supplemental “personal article policy.” These floater policies are fluid, meaning you can add and subtract objects without having to create a whole new policy. The catch is that you need to prove every items’ value.

Market Value

As trustworthy as you are, you can’t just call your agent and give him an amount you need to cover your collection; you have to have an up-to-date appraisal. (See Western Art & Architecture Collector’s Notebook April/May 2022 for more information on appraisals.) These appraisals document the replacement cost of the works in your collection, i.e., the cost of buying a work of art that is of “like kind and quality.” An appraiser will photograph the objects you want insured, condition report and document things like artist’s signature, dimensions, medium, framing or base, and what, if anything, is on the back or underside of each piece of art. Then the appraiser analyzes the market to determine the cost to replace each work of art if you had to buy it again.

Appraisals can be time consuming and get expensive but once you have it done your appraiser can update values on art that has increased rapidly. If you don’t have much art, you can also call the gallery where you purchased pieces and ask them to send you a current valuation document on their letterhead. They can substantiate the current market value as long as they are still selling those artists’ work.

In a 2024 interview for Antiques and the Arts Weekly, senior vice president and fine arts and valuable collections product manager for Chubb, Laura Doyle suggested that collectors with high value items have appraisal updates done every three to five years, but for works in art markets that tend to appreciate quickly, Doyle suggests a one to two year revaluation.

Mitigation

These personal article policies on art tend to be surprisingly reasonable. Jewelry is another story—these items are easily damaged or lost because we wear them, and they are easier to steal then fine art. But fine art, once hung, is relatively safe because it is kept out of harms way.

With large collections of significant value, insurance companies have underwriters who can visit your home and create a report with suggested ways to limit your risk of loss. It’s good to use the same company you use for homeowner’s policy because these policies should jibe, but also because if there is, say a fire or flood, the reimbursement processed can be streamlined. But it’s best to call around or speak with a broker who can compare several companies to find the best coverage for you.

Mitigating loss is not only a good way to lower your rate but it’s a good piece of mind. There are lots of great security systems that integrate burglar alarms with fire, water, temperature and humidity controls.

Interestingly, many companies no longer offer discounts for installing a sprinkler system in your home. The problem with these systems is that, along with putting out the fire—a fire that may have been easily handled with a fire extinguisher—they douse your entire home with water and that water damage can destroy floors, furniture and art, as well as soak your walls.

Other Concerns

It’s best to consider transporting art. If you take a painting out on loan, for example, you need to have the gallery clearly state that that their insurance covers the art while in your car and at your home while you make up your mind. If not, your insurance will not cover any damage, so you could be on the hook should anything happen. Once you do buy something, however, it is important that you let you agent know so he or she can add that to your personal articles policy. Savvy collectors will call their agent before they take possession of expensive works of art to make sure they are covered.

Essentially, collectors, the best defense is—you guessed it—a good offense. Call your agent, go over your coverage, and take the next steps to getting everything insured. Whatever you do, don’t wait until you need it.

How to Help Artists In Need

Many artists in L.A., South Carolina, Hawaii and other areas stricken by wildfires, floods, hurricanes, and other disasters have lost everything—art, archives, supplies, computers with their clients and gallery information. If you would like to help, please go online and research funds and resources in need of money and donations. Because there are a few people out there who have no problem taking advantage of those in need, we strongly recommend double checking the organization to make sure they are legit.

Some organizations to check into include:

The National Heritage Responders hotline at 202-661-8068 to talk with trained conservators and collections care professionals administered by the Foundation for Advancement in Conservation.

For questions about saving family heirlooms and personal collections, email the National Heritage Responders at NHRpublichelpline@culturalheritage.org.

Check out FEMA’s site, https://www.fema.gov/disaster/recover/save-family-treasures.

Grief and Hope, https://www.gofundme.com/f/help-rebuild-the-lives-of-las-artists-and-art-workers, a Go Fund Me effort in Southern California

North Carolina Arts Disaster Relief Fund operated by the North Carolina Arts Foundation is actively supporting artists, so contact them:

https://www.ncartsfoundation.org/donate-nc-disaster-relief

Do you need an art valuation for insurance? Give me a call to discuss, 303-733-4755.

Your Collection’s Afterlife

Collecting art is fun! Reselling…not as much. But inheriting someone else’s collection and having to figure out what to do with it can be incredibly frustrating. Think about it. If you didn’t collect it, you probably don’t have the same attachment. And now you are saddled with a bunch of stuff you don’t know how to sell or where to start, much less how to value it.

Because art collections add a few interesting wrinkles to estate planning, I’m taking a look at ways to minimize the issues and help you make sure that, even if your next-of-kin didn’t share your passion, they will know the value of the art you acquired and how to send it on to someone who does want it and will care for it.

Next Month: I'll break this down for artists.

Documentation

A common concern for collectors is that their kids will put everything in a yard sale and sell it along with stacks of faded towels and chipped plates for pennies on the dollar. As any good bargain hunter—and lots of savvy collectors—will tell you, estate sales and thrift stores are great places to find art, antiques, and important books at rock-bottom prices.

When you’re gone, you can’t do anything about yard sales, but you can nip that concern before you go. Determining what happens to your collection starts with a well-documented list that includes where you acquired things, sales receipts, current market values, and a list of dealers who are selling those works.

This can be tedious, but it’s well worth your time–or money to hire someone–to create this document. I discussed this in my monthly column The Collector’s Notebook in Western Art & Architecture “Art Appraisals 101,” in the April/May 2022 issue. Basically, the important things to notate are dimensions, medium (oil, bronze, glass, etc.), frame or sculpture base, price you paid, photos of the work including signature, front and back, and current prices of similar works selling at galleries or auctions.

For some collectors, this list is all you need to share with family members to kick off a discussion of who gets what. For other collectors, this list and the total valuation of your art is just the beginning.

Don’t know where to start? Check out my free online collections management database in Airtable.

Separating the Wheat from the Chaff

If members of your family have ever said (or you suspect this is how they feel): “When you’re gone, we’re going to sell all of this because we don’t like it.”, you are going to want to keep reading.

When it comes to downsizing and refining your collection, you don’t want to leave this task up to your family, which, for above stated reasons, you really shouldn’t. Your options are to donate, gift, or sell art on the secondary market.

There are some wonderful benefits to actively selling art from your collection even while you’re still collecting. Culling and refining your holdings is the key to creating an important and focused collection. Tastes change, especially if you are an avid collector. The more you look at art and get to know artists, the more adept you become at evaluating and refining your collection. You want to weed out lesser works and either trading up or move on.

Consider making time to meet with fellow collectors, dealers, and curators to discuss art and objects and learn more about the genre of work you most enjoy. These folks are great sources of knowledge and will help you improve your eye. They will also come in handy when you go to sell or donate things. You may find that you and your group buy from, sell to, or swap things with each other.

Cleaning House

Once you’ve identified the pieces that no longer fit your collection, it’s time to plan their departure. The best person to sell your art is you. Stay with us on this one. We’re not suggesting you open a gallery. What we are saying is that you, dear collector, know where you got these things and how much you paid. You probably also know something about the artist’s career and whether their art has gone up or down in value in the art market. I discussed resales in “How to Buy and Sell Art at Auction.” Give that article a read so you are prepared for what to expect on the secondary market or at auction. Auctions, in particular, can be tricky; you’ll want to go into that world armed with some basic knowledge about how they work and what to expect in the fine print on those contracts. Speaking of contracts, I’m also going to strongly suggest you read “Laying Down the Law,” my blog on contract and selling art through dealers. You really need to know what you’re getting into!

There are three main avenues for deaccessioning art: resales, gifts, and donations. Let’s start with resales.

Resales

Reselling art is always an adventure. The easiest route is to go through a gallery already familiar with that artist’s work. You’ll pay a commission on these sales, but often you can negotiate the amount. You might even be able to trade for something they have for sale.

Here’s an important caveat: when reselling art by a living artist on the secondary market, you are competing with that artist for sales. One or two pieces won’t make a difference, but if you collected ten or more works, it could crush an artist if you dump all of those pieces on the market at once.

Auctions are another venue for reselling work. They can be, however, deleterious to artists, especially living artists. Sales that go at or below the minimum or don’t sell (bought-in), can damage an artist’s pricing structure by signaling a drop in the valuation of their work. For collectors, auctions are a well-known place to buy below retail, but when you do that, you are, in a sense, lowering the value of the thing you just bought. For this reason, active dealers and some artists with means, will jump in and bid those works up—or try to buy them before they appear in an auction where they may not sell at or above the high estimate.

When considering sending things to auction, take the time to find the best place to represent those works. For example, a painting of a California seascape probably won’t do as well in a Chicago-based auction. Though auctions now can be followed and bid on over the internet, you might still want to place work where the auction house has a good track record for selling that kind of work.

I take a deep dive into reselling art, in the “Collector’s Notebook” article. Here’s a link: “Become a Savvy Salesperson.”

Gifts

Here’s where your itemized list of art will come in handy. Often family members have no idea what things are worth—they just like or dislike something based on an emotional attachment. While you want to make sure the people who love something wind up with it, you may also want to know that there is a fair distribution of art and objects among all. The best way to do this is to have your collection appraised.

If you have substantial art holdings, you most likely know to have that work appraised for insurance. These appraisals should be done every three to five years, as the market fluctuates and, if we’re being honest, you can’t seem to stop buying art and so need to have those new purchases added to your insurance documents.

Not only can the appraised values help you fairly divvy up your collection, but this information can help you understand any tax implications of these gifts. You’ll want to check with your accountant as to whether something exceeds the tax threshold. If you are wondering how anyone will know if you give away something that exceeds the gift tax limits, you’re right, they won’t unless the recipient goes to sell that art. The issue there, as with inherited art, is capital gains tax, which is another question for your accountant.

When it comes to figuring out who gets what, there are lots of ways to do this, such as having folks walk around with a stack of Post-it notes tagging the things they want. If you’d like to make a game out of it, try this novel idea: hold a mock auction. One couple we know with a sizable art collection, invited the kids over, poured some wine, and gave everyone play money. Then they opened the bidding. Winning bidders either left with art that night or were duly noted in the will.

Donations

Did you know many museums won’t accept unsolicited art donations? There are a few reasons for this. The institution may not hold collections, or they have too much in storage or they have enough works by the artist whose work you’d like to donate. This is where involvement with your favorite museum curators is important. Often serious collectors solicit curators to find out what they are looking for so the collector can acquire that work with the intention of bequeathing it to their favorite museum. The bonus is that the collector can write off a charitable donation, if needed.

There are strict laws around charitable donations, so I advise having a conversation with your accountant. The important thing to note is that, in order to write off an art donation above a certain amount on your taxes (check your state regulations), you will need a licensed appraiser to determine the fair market value and write-up a detailed report. This can be costly, and it has the be done within a specific timeframe. There are also restrictions on how long a museum has to hold donated art before they can turn around and sell it. Furthermore, there are restrictions on what a donor can demand of the museum in exchange for donated art. The kind of museum or non-profit organization can also be an issue if there isn’t a direct correlation between the art and the non-profit’s mission. Again, talk to your accountant before you get into a sticky situation.

Donating art has many appealing aspects when done while you’re alive or posthumously. For one, lots more people can enjoy that work and, unless otherwise requested, your name will be listed on the wall materials as the donor, which is a lovely way to immortalize your hard work and excellent taste.

Collector’s Notebook