ARTSY recently published an excellent article by Martin Gammon, "What Auction House Estimates Really Mean - and What They Can Tell Us."
The setting of auction estimates is often seen as a mysterious, but it really has a lot to do with understanding the psychological state of the seller and buyer, and may or may not well reflect the actual potential market value of the objects up for sale at auction.
This article is the best I have seen that explains the process of how auction estimates are set and what they really mean.
Showing posts with label Tips for collectors. Show all posts
Showing posts with label Tips for collectors. Show all posts
Nov 29, 2019
Jul 23, 2019
Why Selecting Credentialed Appraisers Matters & What Qualifications to Ask About When Selecting an Appraiser
A recent tax court ruling reveals why it is important to hire a formally-trained, dedicated appraiser rather than an auction house specialist or dealer. For the article, see https://procedurallytaxing.com/the-perils-of-a-discredited-appraisal-critical-insights-on-kollsman-v-commissioner/
The article also lists useful criteria for what to look for when selecting appraisers.
The Washington, DC-based Appraisal Foundation also weighed in supporting the court's ruling, stating:
“Consumers are the biggest beneficiaries of this ruling. Personal property assets will be better protected when a qualified and independent appraiser is retained to value one’s personal property assets,” said John Brenan, vice president of appraisal issues at The Appraisal Foundation. “This also means wealth managers and estate attorneys now have a greater fiduciary duty to their clients to fully understand appraiser qualification criteria and appraisal standards when vetting personal property appraisal experts.”
The ruling arises from the case of Estate of Kollsman vs. Commissioner. The Estate hired a premiere auction house to conduct an appraisal of the estate’s art collection. The U.S. Tax Court rejected the valuation of the auction house expert because of bias and a lack of objective evidence. The IRS retained the services of a personal property appraiser, who met the qualifications established by the AQB and completed an appraisal that was compliant with USPAP.
The IRS appraisal expert found two of the paintings were significantly undervalued. The court also found that the auction house expert had a conflict of interest as the appraiser in question also sought to represent the paintings at auction. The 9th Circuit Court took the case up on appeal and agreed with U.S. Tax Court opinion.
The article also lists useful criteria for what to look for when selecting appraisers.
The Washington, DC-based Appraisal Foundation also weighed in supporting the court's ruling, stating:
“Consumers are the biggest beneficiaries of this ruling. Personal property assets will be better protected when a qualified and independent appraiser is retained to value one’s personal property assets,” said John Brenan, vice president of appraisal issues at The Appraisal Foundation. “This also means wealth managers and estate attorneys now have a greater fiduciary duty to their clients to fully understand appraiser qualification criteria and appraisal standards when vetting personal property appraisal experts.”
The ruling arises from the case of Estate of Kollsman vs. Commissioner. The Estate hired a premiere auction house to conduct an appraisal of the estate’s art collection. The U.S. Tax Court rejected the valuation of the auction house expert because of bias and a lack of objective evidence. The IRS retained the services of a personal property appraiser, who met the qualifications established by the AQB and completed an appraisal that was compliant with USPAP.
The IRS appraisal expert found two of the paintings were significantly undervalued. The court also found that the auction house expert had a conflict of interest as the appraiser in question also sought to represent the paintings at auction. The 9th Circuit Court took the case up on appeal and agreed with U.S. Tax Court opinion.
Jun 24, 2019
Why Documenting Your Collection Matters
The website wealthmanagement.com has published an interesting article that discusses why collectors should document their collections: The Importance of Documenting Clients' Art Collections. This is important to do no matter how small your collection. I work with heirs regularly who don't have a clue about the value of art and antiquities they have inherited and they also often get wrong advice when settling their loved-ones' estates. Even if the contents of an estate does not need to be appraised for IRS tax filing, it is always a good idea to get objects assessed so a basis in value can be established as of the person's date of death. That is because if the heirs sell it afterwards, they will have to pay capital gains taxes on the profit. If a basis for value is established as of the death date, then the taxable amount will be lower.
Jul 24, 2017
Art Market Changes - Especially at Christie's London
A recent NY Times article Live Auctions End at Christie’s South Ken. Will Online Sales Fill the Void? , though not directly related to Asian art sales, is indicative of the changes to the art market in recent years. As one of the people interviewed for the article stated:
“More and more people want funky postwar design, pictures and decorative objects — and maybe one signature antique,” said William Rouse, managing director of Chiswick Auctions, a suburban London salesroom that is aiming to capitalize on Christie’s departure from South Kensington, one of the city’s most affluent neighborhoods. “They don’t want big lumps of brown furniture.”
The article also notes the growth in the sales at auction of luxury goods (such as handbags, watches, jewels), describing these as "luxurification” of the 21st-century market," and although sales in these categories were down, sales of old masters, 19th-century pictures and Russian art fared much worse in the past year.
However, Asian art, Impressionist and modern art, and postwar and contemporary art did the best at Christie's in the first half of this year. Overall, online-only auctions have increased in recent years, but Christie's is not necessarily the leader in these; as the article states, "in the first half of 2017, at a time of overall growth in auction sales, Christie’s held 35 online-only auctions compared with 118 digital sales the previous year."
“More and more people want funky postwar design, pictures and decorative objects — and maybe one signature antique,” said William Rouse, managing director of Chiswick Auctions, a suburban London salesroom that is aiming to capitalize on Christie’s departure from South Kensington, one of the city’s most affluent neighborhoods. “They don’t want big lumps of brown furniture.”
The article also notes the growth in the sales at auction of luxury goods (such as handbags, watches, jewels), describing these as "luxurification” of the 21st-century market," and although sales in these categories were down, sales of old masters, 19th-century pictures and Russian art fared much worse in the past year.
However, Asian art, Impressionist and modern art, and postwar and contemporary art did the best at Christie's in the first half of this year. Overall, online-only auctions have increased in recent years, but Christie's is not necessarily the leader in these; as the article states, "in the first half of 2017, at a time of overall growth in auction sales, Christie’s held 35 online-only auctions compared with 118 digital sales the previous year."
Apr 10, 2016
Q & A with Lark Mason on What to Do with Ivory You Want to Sell or Donate
1. If a client living in NY State has antique ivory (over 100 years old, appraised as 15th century by Sotheby's 35 years ago and then worth $50K) and inherited many years ago from an aunt, can they legally sell it within or outside NY State?
-If it is a solid ivory object, no. To sell outside NY, they have to get a permit, which will not be forthcoming. It is not as clear regarding dual residency. The NY law is potentially in conflict with Federal law, but until a lawsuit is made, it is a problem. If the object contains 20% or less of ivory and is over 100 years old, it can be sold with a permit in NY.
2. If a client in South Carolina has a late 19th-early 20th century Japanese (Meiji period-datable by style), ivory carving, can that be legally sold at auction in the US?
- Yes, provided proof can be shown that:
A. it has been in the US prior to 1982, via an old appraisal, old dated photo, customs import document, or bill of sale. An owner's statement is not enough.
B. it is in a state that allows the sale of antiques containing ivory.
C. it is accompanied by a statement from an expert - who is not benefiting financially - that supports the age and the material identity showing it is African elephant ivory and not Asian elephant ivory.
3. A client has a large group of mostly 20th century ivory carvings - can these be sold somewhere?
-This depends. If the owners can prove they owned it prior to 1982, can have a statement from an expert, and the object is being is sold in a state allowing the sale, then yes.
Keep in mind, final rules will be published soon and we expect these will eliminate the African elephant ivory exception and make all under 100 year old items saleable only in the state where located except those which are composed of 20% or less of ivory. These will still have to have a statement from an expert and proof of purchase/ownership prior to 1982.
The change will also create a situation where an owner in NY or NJ or other states with prohibitions will be unable to obtain permission to sell in the state and unable to take the item out of that state (violates interstate commerce prohibition) and thus will be unsaleable anywhere.
4. Do you have any suggestions for what can people do with the mounds of ivory objects that are accumulating, unable to be sold, stored away in closets and cabinets?
-Right now, the main issue is that of the 1982 acquisition date. If the owner can satisfy that requirement, then it can be sold into interstate commerce, if the state where the owners live allows sale of ivory. If they cannot, they can still sell these, but ONLY in the state where located (provided the law of the state allows) and ONLY to a resident of that state.
For those owners whose objects can be proven to have been acquired before 1982, even if under 100 years old, these can be sold provided the 1982 date and the independent statement is made proving the object is African and not Asian. As to how to tell the difference, the Administration created this rule knowing that a DNA test would make 99.9% impossible to test either due to small size or cost. However, it is possible to use records of commercial activity to prove where African vs. Asian ivory was manufactured into objects.
However, once the final rule eliminates the distinction between African and Asian ivory, nothing under 100 years old that contains more than 20% ivory will be able to be sold across state lines. Nothing. And those items that are in states with prohibitions, such as NY, will have NO value but will be valued by the IRS just as with the "Eagle" case.
The "Eagle" case refers to a sculpture titled "Canyon," which incorporates a stuffed bald eagle, by artist Robert Rauschenberg that children of the owner inherited when she died in 2007. Because the work includes a bird under federal protection, the heirs would be committing a felony if they sold it. So their appraisers valued the work at zero dollars. But the IRS took a different view. They appraised it at $65 million and demanded the owners pay $29.2 million in taxes. So the heirs had a choice: they could either (a) keep it and come up with $29 million, (b) sell it and go to jail for unlawful sale of endangered species material, (c) refuse to pay the tax and go to jail for that, or (d) accept the IRS valuation and pay the $29 million, then donate the sculpture to charity and take a relatively small charitable deduction every year. Ultimately, the IRS agreed that if “Canyon” were donated to a museum, which it eventually was (to the Museum of Modern Art, New York), no estate tax on it would be levied. Information on the case is here, NY Times article 7/22/2012:
Or here, Wall Street Journal article, 12/2/2012:
Another article, in the online journal, wealthmanagement posits this question: "A recent settlement between the taxpayer and the IRS leaves unresolved the obvious legal issue: Can the government prohibit by statute the existence of a marketplace and, nonetheless, assert the imposition of its estate tax based on its “fair market value” standard of a willing buyer and willing seller?"
5. If a person is unable to sell ivory because he lives in NY or another state that prohibits sales, can they donate it to a museum and take a tax deduction for the donation?
-They can donate the ivory to an institution but states prohibiting the sale of such material will not allow for them to take a deduction for the donation given to an institution in their state. The same is generally true for donating to an institution out of state; however, it all depends on the state where the museum is located. From a Federal standpoint, it is possible to get a charitable donation but state regulations are different. This is very complicated and it is best to consult an attorney familiar with the Endangered Species Regulations.
-posted with thanks to Lark Mason for his clear and insightful responses to my questions.
-If it is a solid ivory object, no. To sell outside NY, they have to get a permit, which will not be forthcoming. It is not as clear regarding dual residency. The NY law is potentially in conflict with Federal law, but until a lawsuit is made, it is a problem. If the object contains 20% or less of ivory and is over 100 years old, it can be sold with a permit in NY.
2. If a client in South Carolina has a late 19th-early 20th century Japanese (Meiji period-datable by style), ivory carving, can that be legally sold at auction in the US?
- Yes, provided proof can be shown that:
A. it has been in the US prior to 1982, via an old appraisal, old dated photo, customs import document, or bill of sale. An owner's statement is not enough.
B. it is in a state that allows the sale of antiques containing ivory.
C. it is accompanied by a statement from an expert - who is not benefiting financially - that supports the age and the material identity showing it is African elephant ivory and not Asian elephant ivory.
3. A client has a large group of mostly 20th century ivory carvings - can these be sold somewhere?
-This depends. If the owners can prove they owned it prior to 1982, can have a statement from an expert, and the object is being is sold in a state allowing the sale, then yes.
Keep in mind, final rules will be published soon and we expect these will eliminate the African elephant ivory exception and make all under 100 year old items saleable only in the state where located except those which are composed of 20% or less of ivory. These will still have to have a statement from an expert and proof of purchase/ownership prior to 1982.
The change will also create a situation where an owner in NY or NJ or other states with prohibitions will be unable to obtain permission to sell in the state and unable to take the item out of that state (violates interstate commerce prohibition) and thus will be unsaleable anywhere.
4. Do you have any suggestions for what can people do with the mounds of ivory objects that are accumulating, unable to be sold, stored away in closets and cabinets?
-Right now, the main issue is that of the 1982 acquisition date. If the owner can satisfy that requirement, then it can be sold into interstate commerce, if the state where the owners live allows sale of ivory. If they cannot, they can still sell these, but ONLY in the state where located (provided the law of the state allows) and ONLY to a resident of that state.
For those owners whose objects can be proven to have been acquired before 1982, even if under 100 years old, these can be sold provided the 1982 date and the independent statement is made proving the object is African and not Asian. As to how to tell the difference, the Administration created this rule knowing that a DNA test would make 99.9% impossible to test either due to small size or cost. However, it is possible to use records of commercial activity to prove where African vs. Asian ivory was manufactured into objects.
However, once the final rule eliminates the distinction between African and Asian ivory, nothing under 100 years old that contains more than 20% ivory will be able to be sold across state lines. Nothing. And those items that are in states with prohibitions, such as NY, will have NO value but will be valued by the IRS just as with the "Eagle" case.
The "Eagle" case refers to a sculpture titled "Canyon," which incorporates a stuffed bald eagle, by artist Robert Rauschenberg that children of the owner inherited when she died in 2007. Because the work includes a bird under federal protection, the heirs would be committing a felony if they sold it. So their appraisers valued the work at zero dollars. But the IRS took a different view. They appraised it at $65 million and demanded the owners pay $29.2 million in taxes. So the heirs had a choice: they could either (a) keep it and come up with $29 million, (b) sell it and go to jail for unlawful sale of endangered species material, (c) refuse to pay the tax and go to jail for that, or (d) accept the IRS valuation and pay the $29 million, then donate the sculpture to charity and take a relatively small charitable deduction every year. Ultimately, the IRS agreed that if “Canyon” were donated to a museum, which it eventually was (to the Museum of Modern Art, New York), no estate tax on it would be levied. Information on the case is here, NY Times article 7/22/2012:
Or here, Wall Street Journal article, 12/2/2012:
Another article, in the online journal, wealthmanagement posits this question: "A recent settlement between the taxpayer and the IRS leaves unresolved the obvious legal issue: Can the government prohibit by statute the existence of a marketplace and, nonetheless, assert the imposition of its estate tax based on its “fair market value” standard of a willing buyer and willing seller?"
5. If a person is unable to sell ivory because he lives in NY or another state that prohibits sales, can they donate it to a museum and take a tax deduction for the donation?
-They can donate the ivory to an institution but states prohibiting the sale of such material will not allow for them to take a deduction for the donation given to an institution in their state. The same is generally true for donating to an institution out of state; however, it all depends on the state where the museum is located. From a Federal standpoint, it is possible to get a charitable donation but state regulations are different. This is very complicated and it is best to consult an attorney familiar with the Endangered Species Regulations.
Apr 9, 2016
Why Provenance Matters
I am often asked to appraise art people have bought in the past 10-20 years. These items include objects acquired impulsively during casual trips to Asia, from estate sales, or even from thrift stores, all for low prices, or occasionally purchased from non-specialist dealers or those catering to decorators. Many people think they are getting good buys. Most will be disappointed with my conclusions. It is always imperative when building a serious collection to study the type of art you are interested in yourself, consider provenance (history of past ownership) when purchasing objects, and buy from reputable dealers or auction houses.
A recent high-priced sale of a British collection of Chinese antiquities assembled in the 1950s and '60s shows why this matters.
Moon Flask, 15th century
A recent high-priced sale of a British collection of Chinese antiquities assembled in the 1950s and '60s shows why this matters.
Dec 11, 2015
APPRAISAL FOUNDATION GUIDE TO APPRAISING
The Appraisal Foundation (based in Washington, DC), that oversees the appraisal profession, has produced a fine introductory brochure for the public on what proper appraisals should include and how to find a competent appraiser. You can download it here
Nov 24, 2015
THE PERILS OF SHIPPING ART
ARTNET NEWS had an interesting and informative primer about pitfalls to watch for when shipping art today. ART SHIPPING NIGHTMARES AND HOW BEST TO AVOID THEM
1. Don't pack the art yourself
2. Get advice on a shipper - ask the registrar department at a local museum, gallery, or collectors
3. Get a professional to write a condition report (and include photos) before the object ships and after it arrives
4. Clarify if the shipper you choose will subcontract in transit and vet the trans-shipper too
5. Make sure loans get returned in the same crates in which you shipped them to the borrower
6. Shipping ephemeral materials have special challenges
7. Check shipping details like making sure the crate fits in the receiving location's elevator
8. (not included in the article, but always a good idea) - prior to shipping art you own, make sure your insurance coverage is up-to-date. Insuring for purchase price when the sale took place several years ago is not a good idea, because insurers may only pay damages on stated amounts and prices may have risen since then. In addition, purchase prices are not the same as insurance value, which includes additional fees such as potential taxes, commission fees, shipping, and insurance for the purchase of a replacement object if yours gets lost or damaged in transit.
1. Don't pack the art yourself
2. Get advice on a shipper - ask the registrar department at a local museum, gallery, or collectors
3. Get a professional to write a condition report (and include photos) before the object ships and after it arrives
4. Clarify if the shipper you choose will subcontract in transit and vet the trans-shipper too
5. Make sure loans get returned in the same crates in which you shipped them to the borrower
6. Shipping ephemeral materials have special challenges
7. Check shipping details like making sure the crate fits in the receiving location's elevator
8. (not included in the article, but always a good idea) - prior to shipping art you own, make sure your insurance coverage is up-to-date. Insuring for purchase price when the sale took place several years ago is not a good idea, because insurers may only pay damages on stated amounts and prices may have risen since then. In addition, purchase prices are not the same as insurance value, which includes additional fees such as potential taxes, commission fees, shipping, and insurance for the purchase of a replacement object if yours gets lost or damaged in transit.
Mar 3, 2014
AFFORDABLE ART AT ASIA WEEK NY - MARCH 2014
The Art Daily just published a good overview of dealers' & auction house experts' recommendations for what to buy at Asia Week this year that is affordable. When reading it though, remember that these are the recommendations of the people who are trying to sell you the art. Still, their recommendations are, for the most part, wise. BUT they leave out two important facts: there are a LOT of fakes out there of many the types of art they are selling, so its always BUYER BEWARE (that's why provenance matters), and many types of affordable art (such as Japanese scrolls) are easily damaged by exposure to light and so should not be continually displayed and kept out of sunlit rooms.
Oct 4, 2013
Considerations for Insuring Your Art Collection
A thoughtful, but somewhat simplistic, article in the NY Times, October 4, 2013: With Prices High, Insuring Art a Risky Business
At least it suggests getting an outside opinion of value from someone other than your insurance agent, but does not actually advise consumers to seek valuation advice from appraisers (like me), who possess specialized training in determining appropriate levels of coverage for their needs.
At least it suggests getting an outside opinion of value from someone other than your insurance agent, but does not actually advise consumers to seek valuation advice from appraisers (like me), who possess specialized training in determining appropriate levels of coverage for their needs.
Sep 19, 2013
TIPS FOR NOVICE COLLECTORS
I am always getting emails from people who buy art cheaply and then want to know what it is worth. If you want to be serious about collecting fine Asian art, here are some useful tips:
1. Buy what you like not what you think will appreciate in value.
2. Buy from reputable dealers--avoid eBay, where dealers and collectors sell off their second-rate art or fakes. Also avoid estate and rummage sales, unless you really know what you are looking at.
3. No matter what dealer you buy from, do not take their word on identification and dating; ask for documentation, do research yourself, and consult unbiased experts (museum curators, scholars, knowledgeable appraisers)
4. Buy the best type of art you can get for the money you have to spend. If, for example, you only have $5,000 to spend, buy the best art you can get for that amount of money. Do not get a work of art by a particular artist or a type of art just to have something of that type of art in your collection if all you can afford is a mediocre piece.
5. Trade up--if you find a piece better than one you already have in your collection, get that and sell (or donate to a museum) the one of lesser importance.
6. Unless you know that it can be repaired easily, do not buy art in poor condition, unless you really know what you are buying is rare and can be properly restored by trained conservators. This is especially true for Japanese prints, scrolls, and screens.
1. Buy what you like not what you think will appreciate in value.
2. Buy from reputable dealers--avoid eBay, where dealers and collectors sell off their second-rate art or fakes. Also avoid estate and rummage sales, unless you really know what you are looking at.
3. No matter what dealer you buy from, do not take their word on identification and dating; ask for documentation, do research yourself, and consult unbiased experts (museum curators, scholars, knowledgeable appraisers)
4. Buy the best type of art you can get for the money you have to spend. If, for example, you only have $5,000 to spend, buy the best art you can get for that amount of money. Do not get a work of art by a particular artist or a type of art just to have something of that type of art in your collection if all you can afford is a mediocre piece.
5. Trade up--if you find a piece better than one you already have in your collection, get that and sell (or donate to a museum) the one of lesser importance.
6. Unless you know that it can be repaired easily, do not buy art in poor condition, unless you really know what you are buying is rare and can be properly restored by trained conservators. This is especially true for Japanese prints, scrolls, and screens.
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