Valuation FAQs

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Click to ExpandWhat is valuation?

Legally, it is the act of ascertaining the value of a thing (i.e. artwork); typically involves some estimation of the worth or price of a thing by a ‘disinterested’ third party.

Click to ExpandWhy is it important?

Valuing a work of art, for example through an appraisal, in necessary for a variety of reasons such as tax purposes, insurance claims, or determine the work’s fair market value. Essentially the valuation determines how much you can expect to charge or receive from your work.

Click to ExpandCan work be valued if it is not tangible?

Intangible works have no intrinsic or marketable value; however, such a value might exist. For example, due to the reputation of an artist, the artwork might be valued higher, though reputation is not tangible. This value would be most easily qualified by the difference between a purchase price and value of artwork or asset acquired.

Click to ExpandIs the work valued for Fair Market Value or Insurance purposes? What are the differences?

Typically art is appraised/valued for insurance purposes. Insurance Purposes: Typically a work is valued when entering an insurance agreement an artist must “declare” the value of the work, if lost/damaged insurance compensation will be based on declared value, cost of replacement, or cost of repair; whatever is less. Such declarations of value must typically be derived from an appraiser to have legal foundation. Fair Market Value: Fair market value is the price, in cash, or its equivalent, that the property would have brought at the time of taking, considering its highest and most profitable use, if then offered for sale in the open market, in competition with other similar properties at or near the location of the property taken, with a reasonable time allowed to find a purchaser. In other words, it is the price that property would bring at a sale where both parties are willing, ready, and able to do business.

Click to ExpandHow do I obtain valuation for a work?

For legal purposes, you should enlist the services of a qualified appraiser and /or fine art professional. It is easier for appraisers to value art work by established artists who are well established because they tend to have a large number of documented sales. Generally, for well established artists, appraisers can value a work of art based on the recent selling prices for similar works of art. For less established artists, with fewer documents of sales, valuation can be more complicated. Value however can be determined regardless of how established the artist is based on facts about the artist combined with facts about the art market in general.

Click to ExpandHow do I receive compensation if a work is damaged or stolen?

Under an agreement with a dealer for exhibition or consignment of your work(s), which is required in Arizona, the art dealer is strictly liable for the loss of or damage to the work of fine art while it is in the art dealer's possession. The value of the work of fine art is, for the purpose of determining compensation if it is damaged or stolen, the value established in the written agreement between you and the art dealer prior to the loss or damage. If no written agreement regarding the value of the work of fine art exists, the fair market value of the work of fine art.