Market value is required when one needs to qualify a fair valuation of what an artwork should be sold for; i.e. a reasonable fair value, based on similar artwork coming to the market in recent years by the same artist that possesses comparative criteria namely of size, subject, medium, year, condition. When assessing artwork for establishing a comparison, a valuer will look at comprehensive examples only. In some instances it will not be obvious to the owner why the market valuation is different.
The market often has favourites which if an artwork surfaces for sale will or may result in a higher or lower valuation than what was considered likely. e.g. a ‘sought after’ artist has an era or subject of artwork that is in demand, because of that demand the value can be pushed higher than past sales records may indicate. Alternatively a valuation of an artwork could be suppressed because it is atypical, regarded to be too common or out of favour. So a valuer will need to be in tune with market sentiments to qualify a valuation range that meets the current market.
The valuation of an artwork is to be considered as just that, an indication of a market price, and vendors expectations may need to be flexible as buyers of art will qualify their own value on an artwork offered to the market. This could be higher or lower than the vendor’s expectation. As with any commodity to be offered for sale a buyer and seller may need to compromise when concluding a sale. Vendors should be mindful that the art they sell is a qualified sale and the funds secured can be directed to other priorities in their lives.
When is a Market valuation required?
- When an owner wants to sell
- As a requirement for a Self Managed Superannuation Fund tax return.
- When reviewing ones collection of art for assessment and review purposes.
- For considering when is the best time to sell? Often monitoring an artist’s prices is just one of the indicators when assessing the right time to sell!?
- When differing opinions confuses the owner as to the fair market price. Often friends, colleagues in their willingness to offer an opinion can sidetrack the true value of an artwork.
- A ‘firesale’ market price may sometimes be necessary because urgency is the driving force to dispose of one’s possessions. In this instance the market value will need to be reduced further to almost force a sale. By this I mean the potential buyers have to believe that the art on offer is at almost ridiculously low prices …. too good to miss!
- Probate, in the event of an inheritance, the art assets will need to be evaluated for distribution as per the instruction of the owner’s will.
The executors will be responsible for obtaining a fair and current valuation of the artwork, such that an equitable distribution of those assets is assured. In some instances where individual artworks cannot be dispersed equally, the artwork will need to be sold. Namely when all parties can’t agree on the artwork they wish to select from the estate or when one or a selection of the artwork is valued much higher than the balance of the collection. Realising the funds from selling the artwork and dividing is the only solution.