Putting a price on art may not be an exact science, as the value of an artwork may be of a subjective nature. However, there is a method that art appraisers can use to give art a high or a low value in the art appraisal report.
Mark Grove and Mary Carpenter, two fine art appraisal experts, were asked for their professional opinion on assigning value to artworks.
Art Appraisers Should Be Accredited
Fine art appraiser Mark Grove advises: "Would-be appraisers need to be aware that anytime that there is a tax consequence for the intended use of an appraisal report the IRS requires that the appraiser be an accredited member of a major appraisal society ([Appraisers Association of America] AAA, [International Society of Appraisers] ISA, [American Society of Appraisers] ASA)."
Providing a longer answer is fine art appraiser Mary Carpenter. She advises:
"How to appraise an art object is a fairly open-ended question. But the main rule I follow is to examine the work with my own eyes, or in rare cases, rely on the opinion of an expert on that subject, such as a museum curator or a scholar. I personally am not a big fan of online appraisals. I only appraise those works which fall into my field of expertise. One learns very early on that it is much better to say "I don’t have the expertise, but I can refer you to someone who does," rather than to try to know every kind of art. No one can know everything."
Take Notes and Read Documentation
Carpenter further states; "As an art appraiser, I examine the work, take measurements, notes about the condition, signature, any other physical traits, and then photograph the object. Looking at the back of two-dimensional works is as important as looking at the front since there are often gallery stickers or identifying features that are extremely useful."
"Any documentation about provenance, its purchase or any other relevant facts provided by the owner about the object are also extremely useful."
Taxpayers must support the fair market value that they claim on the works of art that they own by having them appraised. This mandate includes artwork included in estates, gifts and federal tax returns when the listed value is above $50,000.
"How I craft an individual appraisal report depends on its purpose. There is more documentation needed for any reports which are possible to be reviewed by the IRS."
High or Low Values?
Many owners of works of art will purchase insurance coverage for their possessions. This is the value that an insurance provider will cover in the case of loss or damage. An expert appraisal gives the owner some peace of mind that a true value has been placed on the artwork.
"The values for Fair Market Value would tend to be lower than for an Insurance Replacement Value. But there are no hard and fast rules as to when to go high or low. It depends on the market of the individual artist and the purpose of the appraisal."
Consider Appraisal's Purpose
"The purpose is the primary consideration as to what approach to take. And even then, a certified appraiser can only reflect the market and not go artificially higher or lower to accommodate a certain end the client might request."