The Importance of Contemporary Art Appraisals

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When Might You Need a Contemporary Art Appraisal?

Art Acquisitions

Art collectors, museums, galleries, and private individuals interested in purchasing contemporary Paintings, Sculpture, Photography, or Fine Art Prints might seek an appraisal to ensure they make an informed investment. An appraisal performed by a certified art appraiser helps the purchaser gauge the artwork's fair market value and authenticity before finalizing the acquisition. Often, this is an important financial decision collectors make pre-purchase to help with pricing which often saves collectors from paying too much. 

Art Sales

When contemporary art owners decide to sell their pieces, they may request an appraisal to establish a realistic asking price. Auction houses, galleries, and art dealers often require a certified art appraisal to estimate and reserve artwork sales prices. The appraisal often serves as an important document which details important aspects of the items condition, medium and provenance, as well as exhibition history if known. 

Insurance Coverage

Artwork, especially valuable contemporary pieces, can be a significant asset that requires proper insurance coverage. Insurance companies typically ask for a current appraisal to determine the appropriate coverage and ensure adequate compensation in the case of loss or damage. 

In legal disputes, such as art ownership conflicts or divorce settlements, an appraisal can provide an unbiased assessment of the artwork's value and authenticity. 

Estate Planning and Taxation 

In estate planning, a contemporary art appraisal helps determine the fair market value of the artworks to distribute assets among heirs or donate them to charitable organizations. Additionally, when art is donated to a museum or non-profit institution, an appraisal is essential for tax purposes and to comply with IRS regulations.

Loan Collateral

Art collectors or investors who use their contemporary art as collateral for loans may require an appraisal to determine its value as security.

Art Conservation and Restoration

Appraisals can also be helpful before conserving or restoring a valuable contemporary artwork. The appraisal helps establish the artwork's condition and value, guiding conservation decisions. Art historians and researchers may seek appraisals to document contemporary artwork's value and historical significance as part of their scholarly work.

Art Investment and Portfolio Management

Investors or art funds focusing on contemporary art may utilize appraisals to assess the performance of their art portfolios and make strategic decisions. 

How Does a Contemporary Art Appraisal Work

The process begins with finding a professional art appraiser specializing in contemporary art. Choosing a qualified and experienced appraiser with an understanding and background of the specific genre and market trends associated with the artwork in question is crucial. 

The appraiser will then gather essential information about the contemporary artwork, which may include detailed photography of the artwork, provenance or ownership history of the artwork, information about the artist, and any relevant documentation or certificates. 

The appraiser will conduct an in-person examination of the artwork, inspecting it for physical condition, quality, and any signs of damage or restoration. They will also look for specific characteristics that may influence its value, such as the medium, size, complexity, and rarity. 

Extensive research is a vital part of the appraisal process. The appraiser will study recent sales and / or retail asking prices of comparable contemporary artworks by the same artist or within the same genre. They will also consider market trends, demand for the artist's work, and how the artwork fits into the current art market landscape.

Formulating the Appraisal Report

The appraiser will prepare a comprehensive appraisal report based on the gathered information and analysis. The report will include a detailed description of the artwork, its condition, provenance, and the methodology used to determine its value. It will also state the appraiser's conclusions regarding the artwork's fair market value, replacement value, or other relevant values, depending on the purpose of the appraisal.

Finding An Art Appraiser

Value matters, and it is important to work with a Qualified Art Appraiser with significant experience and education appraising the type of property you are having appraised. The International Society of Appraisers is the largest organization of personal property appraisers and requires the highest level of education, testing, and training within the appraisal profession. They are recognized by the Appraisal Foundation of America and the IRS requirements for a Qualified Appraiser. Shelley Hall is a Certified Member of the International Society of Appraisers, the highest level of accreditation. Her experience includes working professionally in the art business since 1994 and appraising since 2007.

To get started with a contemporary art appraisal, contact us today! 

How To Determine If You Need An Art Appraisal

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Value matters and an art appraisal completed by a qualified art appraiser can save you substantial money by not selling too low, insuring too low, or paying too much in estate tax or equitable distribution. A pre-purchase appraisal can also help to understand the accurate market for the work and what is an appropriate amount of money to spend.

Appraisals are crucial in the art market, providing essential information about artworks' value, authenticity, and condition. Whether you are a seasoned collector, an art enthusiast, or someone looking to sell or insure a piece of art, understanding when to seek an art appraisal is essential. In this article, we will explore the key indicators that suggest you may need an art appraisal.

1. Artwork Ownership and Acquisition:

If you have recently acquired or inherited a piece of art, it can be beneficial to determine its value through an appraisal. Understanding the artwork's potential worth allows you to make informed decisions regarding its conservation, insurance, sale, or donation. Appraisals can also assist in establishing provenance, which can significantly impact the value of the artwork.

2. Insurance Purposes:

Artwork can be a valuable asset, and it is essential to ensure that it is adequately insured. Many insurance companies require a professional art appraisal to determine the appropriate coverage and premiums. An appraisal helps establish the artwork's current market value and ensures that you have the necessary documentation in case of loss, theft, or damage.

You should check with your insurance provider to see what is and is not covered by your homeowners or rental insurance policy. Some insurance companies include a blanket amount for artwork, and some require an independent appraisal (not done by the gallery or artist that sold you the art) for all items over $1200, $2500, or $5000. Each insurance carrier has a different policy and requirements, so it is always a good idea to check with them first. Many insurance companies also require an updated appraisal if the one you have was done too many years ago. The International Society of Appraisers recommends an updated appraisal every 2-3 years, but every five years is sufficient.

3. Artwork Sale or Acquisition:

If you are considering selling or buying a piece of art, an appraisal can provide valuable insights. For sellers, an appraisal helps determine an appropriate asking price and allows you to negotiate with potential buyers confidently. On the other hand, buyers can benefit from an assessment to ensure they pay a fair price for the artwork's value.

You do not need a formal written appraisal to sell most fine art. Still, if you have something of value, you will benefit from an impartial assessment of fair market value so that you do not sell something too low to donate something of high value you did not intend to. It is also helpful to obtain an independent assessment since, many times; the family may think a particular painting is a very high value based on: purchase price, asking prices on online platforms, stories and marketing of the artist, etc. An impartial valuation can eliminate a lot of conflict with family members so they know what they have and can sell in the most appropriate marketplace.

4. Artwork Donation:

Donating artwork to museums, galleries, or charitable organizations often requires an appraisal for tax purposes. The appraisal establishes the artwork's fair market value, which is crucial for claiming deductions on charitable donations.

The IRS Requires a formal written appraisal by a Qualified Art Appraiser for any fine art donated with a value over $5000. This critical step will help safeguard the donor to determine an accurate, fair market value. Items donated for $20,000 or more require large high-resolution photographs and a detailed specific format for the item and report.

A qualified art appraiser can help streamline the donation process which is often required by museums before accepting the gift.

5. Artwork Authentication and Verification:

Authenticity becomes crucial when dealing with artworks of historical significance or renowned artists. An art appraisal by a qualified appraiser can help determine if the artwork is genuine, assuring potential buyers, collectors, and institutions.

Appraisers are not authenticators, but a fine art appraiser is an expert in their particular period and will know ways to determine a recent reproduction and do their due diligence to match signatures, styles, etc. Appraisers can help determine if the art needs to be officially authenticated and help you navigate that market to work with the accepted expert on the particular artist. It is estimated that 50% of the art in the market is fake.

6. Estate Planning and Probate:

Including art in estate planning is common, especially if you possess valuable artwork. An art appraisal facilitates the fair distribution of assets, prevents disputes among beneficiaries, and ensures that taxes and other legal requirements are met. During probate, an appraisal comprehensively evaluates the artwork's worth, simplifying the process. If a family member has a taxable estate for estate taxes, an art appraisal is required to document the value of the appreciable art.

7. Curiosity and Documentation:

Sometimes, obtaining an art appraisal is driven by personal curiosity. Understanding a beloved artwork's value and historical significance can enhance appreciation and knowledge. Moreover, appraisals serve as valuable documentation that provides a detailed description and assessment of the artwork, including its condition and provenance.

Art appraisals serve various purposes and are essential in determining artworks' value, authenticity, and condition. Whether you are a collector, seller, buyer, or looking to safeguard and understand the worth of artwork, seeking a professional art appraisal is highly recommended. Appraisals provide valuable insights, aid decision-making, and ensure you have the necessary documentation for insurance, sale, donation, or estate planning purposes. Consulting with a qualified and experienced art appraiser will help you navigate the complexities of the art market and make informed choices regarding your artwork.

Valuing and Substantiating Charitable Art Contributions

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What is a Charitable Contribution Appraisal?

A charitable contribution appraisal refers to the process of determining the value of a non-cash donation made to a charitable organization. When individuals or businesses donate assets such as property, artwork, or any other item of value to a charitable organization, they may be eligible to claim a tax deduction for the fair market value of the donated item. In order to claim a tax deduction, the donor in most cases is required to obtain an appraisal from a qualified appraiser. 

As art appraisers, our role is to provide an independent and unbiased opinion of the item’s fair market value at the time of the donation. 

When is a Charitable Contribution Appraisal Required?

A charitable contribution appraisal is generally required in the following circumstances:

  • Non-Cash Donations 

  • Value Exceeds $5,000

  • Exception for Publicly Traded Securities 

  • Substantially Appreciated Property

It’s important to note that the specific rules and requirements for charitable contribution appraisals may vary, and it is always advisable to consult with a professional or refer to the latest guidelines provided by the IRS for the most accurate and up-to-date information.

Key Points to Understand About a Charitable Contribution Appraisal

Hiring a Qualified Appraiser 

The appraisal must be conducted by a qualified appraiser who has the necessary certifications to perform appraisals for the type of donation. Shelley Hall is a certified member of the International Society of Appraisers with Fine Arts Specialty. She has also worked in the art business since 1994 as a consultant and artist herself, former gallery owner and professional appraiser.  

Written Appraisal 

The appraisal must be in writing and include detailed information about the piece, the method used to determine its value and the appraiser’s qualifications.  

Fair Market Value

The appraiser determines the fair market value of the donated artwork, which is the price that a willing buyer would pay and a willing seller would accept in an open market transaction.

Timing

Generally, the appraisal should be completed close to the time of the donation. For any donation valued at $5,000 or more, a formal appraisal is required. 

IRS Guidelines

The IRS provides very specific guidelines and requirements for charitable contribution appraisals. It is important to comply with these guidelines to ensure the deduction is accepted by the IRS. 

Record Keeping

Both the donor and the charitable organization should retain copies of the written appraisal and any supporting documents for their records. These records should be kept for a minimum of three years after filing the tax return claiming the deduction.

If you have made a charitable art contribution, or are planning on making a donation, reach out to Shelley Hall to get started with an appraisal. Locations in Portland, OR and San Diego, CA.