How is a work of art valued?

By admin, June 8, 2015

How do valuers arrive as prices for artworks? We demystify the process with an expert.

While we ​can argue about constitutes “good” or “bad” art, how the value of an artwork is ascertained is serious business.

Commercial galleries and auction houses establish a price point for an artist, but they are just part of a complex calculation that establishes a fair value of an artist’s work.

The need to appraise or assess the value of an artwork can be driven by several reasons; each of those in turn affecting the value placed on the work.

The most obvious is that you may be thinking of selling an artwork you own on the secondary market and need to get a current market estimate. Other reasons, such as valuing an artwork for insurance or for tax purposes when gifting it to an institution, have more complex legal ramifications. For that reason, an Accredited Valuer is recommended.

It is an extremely specialised field with a rigid accreditation process. Annette Larkin, who was formerly Associate Director and Head of Contemporary Art at Christies Australia, a committee member for the Australian Government Cultural Gift Scheme (2007-2010), and is a respected independent Valuer, who since 2006 has run her own dealership and consultancy business, said: ‘It seems to be a dying technique; people just don’t have the expertise today,’ said Larkin.

‘Eleven years at Christies it became second nature to me. People who work in auction houses have an advantage of knowing what to look for – they are doing it everyday,’ said Larkin.

‘Anyone can put a sign up saying they are a Valuer; there is no great qualification,’ said Larkin. ‘Just because someone sells you a work of art, doesn’t meant that they know how to value a work of art – be wary.’

Many art consultants and advisors today offer valuations as part of their charter of services. Larkin advised that, at least, the client should ensure the consultant is registered with the Australian Government as a Cultural Gifts Valuer.

It, along with Art Consulting Association of Australia (ACAA) body of Registered Valuers, which claims to be the leading group of independent specialist Fine Art Valuers in Australia, are sound endorsements.  Both require that the Valuer meet the strictest criteria as well as professional endorsement.

Furthermore, all ACAA Registered Valuers must be Approved Valuers under the Australian Government’s Cultural Gift Program, within their area of specialisation.

Outside the Fine Art Market, the AVAA (Auctioneers & Valuers Association of Australia) is the leading national body of auctioneers and valuers of more general goods, and they offer training courses for the auction sector.

Auction houses offer valuation services at a price, alongside neutral or independent Accredited Valuers. They will also publish the results of their auctions.

The why is an interesting question when it comes to valuations.

The first question is always what is the purpose of this valuation? If an artwork is being valued for resale on the secondary market it would be different to the value placed on the artwork if it was a probate case when a couple divorce for example, where the value is determined very much on what the market deems it worth today.

‘There is the market price, which is purely what it is worth today if you have a willing seller and a willing buyer,’ said Larkin, ‘Then there is a Cultural Gift valuation, which is much more based on a commercial retail gallery value, (while) within insurance you can have all different levels. When valuing for institutions it is usually on the higher value (end of the scale) as the reason is primarily about the lending of the artwork to insure it in case something happens to it.’

Another area is superannuation, which Larkin said is a growing area. ‘With superannuation it is really what it is worth today – what a willing buyer would pay.’

Larkin warned against delving into the realm of valuing work for speculation or investment.

‘I always gets lots of requests to value work,’ said Larkin, adding that the majority were for Cultural Gifts valuations.

‘If you want to get rid of something at auction or donate it to an institution, you will get more (value) under the Cultural Gift Program as the prices are usually based on best retail market (rather than the whim of the hammer). Most people would rather do that than sell for peanuts and leave a gift to the Nation, with a tax deduction.  They are also not see to be capitalizing on an artist or spoiling an artists market by selling low on secondary market,’ said Larkin.

It is complex territory. Larkin added, ‘You have to be careful if you are a Valuer as you want to do the best for your client, but you must remain mindful that they are employing you to be truthful, to advise what the market is doing.’ It serves no one to bloat or bolster a valuation.

‘A value is based on market interest in an artist’s work; that is what it is all about really,’ summed Larkin.

So how is that bottom dollar defined? A checklist of considerations when valuing an artwork would be:

Authenticity: Obviously, the first box to be ticked is that the artwork is authentic.

Condition: Is critical to the value of an artwork. Apart from the obvious scuffs, scratches or dings an artwork my carry to the naked eye, a valuer will need to ascertain whether an artwork has been restored in its life, and whether the integrity of the artwork has been upheld. They may also consider how the artwork has held up over time – how has it aged, its fragility, has it faded or has the surface structure altered. All may have baring on the value of the artwork.

Rarity: The next consideration might be the output of the artist – is this just another “pumped out”; what volume of their work is in the market place; and is this work a-typical or a stellar example of their oeuvre.

Historical and social significance: Some artists hold historical benchmarks in the development of art movements and for that very reason as “trail blazers” their work will also be valued highly. Similarly, certain artworks are important historical documents even when their maker might be anonymous, and they are also accorded a certain weight when valuing.

Provenance: This is the path of ownership from when an artwork is made by the artist, then passing through various collections, to this point of valuation. If the work has been held by an important collector or a museum, for example, this will bolster the credibility of the work and its value. Similarly, if a work has been bounced around the secondary market, trading every couple of years, its value will feel somewhat tepid and it will struggle to be fueled by rarity.

As part of the provenance of an artwork a Valuer will also consider whether the artwork has been exhibited and the importance of those show, where they were, the credibility of the gallery and the curator, was it illustrated in any publications or journals, was it written about by critics or historians. All of these factors add weight to an artwork’s when it comes to appraising it.

Subject Matter: One of the questions a Valuer will ask is does it epitomise the artist’s style or is it from an important phase in their career – is it typical? Some subjects just sell better and are more desirable, such as a Sydney Harbour view by Brett Whiteley. Nudes are more desirable than hunting scenes; landscape than still lifes; painting over video. The more immediately recognisable a work is by the artist the greater its value also, recognising the hallmarks of an artist’s style and gesture that have established their name.

Edition / scale: I suppose this is one case when the adage bigger is better can be argued both ways – a smaller edition will always be valued more (not to mention an original artwork is always preferenced), while the size of an artwork physically will influence is price. In some Asian countries the price of an artwork is calculated by the square inch in the commercial gallery sector, and while an Accredited Valuer does not operate on the same principals, the scale of the work is a consideration, and can also be thought of it terms of how ambitious that was within the artists oeuvre.

Market demand / fashion: While we all like to preface quality over such considerations, market demand will affect the value of an artwork. Perhaps the artist has been recently selected for a major retrospective or an international biennale, for example, spiking interest in their work and their prices. And just as artist become “hot” and desirable, they can also slip from fashion, reflecting broader changing tastes.

Although the value of an artwork is subject to this gamut of variables, perhaps the greatest factor or guideline is how the work has performed in the past, that is, the Valuer needs to consider comparability.

This can be straightforward, especially when an artist has been actively traded and there are strong documented sales records. These sales results are available directly from auction houses as well as from various online databases today that maintain market prices, and usually charge a fee to access.

‘I don’t mean to sound ancient, but we didn’t have the Internet when I started valuing and people didn’t have wild expectation. Now everybody looks up things on interne, but don’t take into account all those things – they just see that a Charles Blackman sold for $400,000 at auction and say, “well my print must be work $50,000 then.”’

And when a client asserts they know best, there is only one answer said Larkin: ‘Go and see if you can sell it for much more’.

Some of these sites include, and are usually membership based:

• Art Sales Index (Blouin)
• Invaluable (formerly Artfact)
• ArtNet
• Artprice
• Australian Art Sales Digest​​​​

Again these do not offer a definitive value – they only offer part of the story. Any art advisor, gallerist or valuer would recommend a broader assessment for a true value. And, any insurance provider or museum considering a gift under a tax benefits scheme – Cultural Gifts Program – would insist on an independent accredited art valuer.

An appraisal should be a consolidation of all points of market from primary market gallery price to current secondary market selling prices, and a history of both. It is not just a decision of fair judgment and professional credibility, but one based also on research and cold hard facts.

The field of experts is small, and the demand is growing with a rise in philanthropy, individual giving, and a healthy auction market.

First published on ArtsHub 21 April 2015.