Determining your art collection's value
You may be sitting on your couch during quarantine looking up at your wall wondering if your art has any material value. Or, your financial planner has suggested that your art may be part of your retirement plan. Either way, how do you begin to know what your art could sell for, if there's any marketable value, and how do you go about researching a real value?
First of all, it's becoming more accepted for art to be considered part of a retirement plan. Stocks and bonds have done very well over the last decade compared to its history and some economists believe that this won't last. To reduce risk, it may be worthwhile looking at alternatives, such as investing in art.
Art can bring joy and make a great conversation starter. They can also be financially rewarding. One extreme example is Amedeo Modigliani's "Nu Couché" (1917-18) that sold for $170.4m in 2017. Masterworks, an investment firm focusing on Blue Chip art, suggests a 14% annualized return over 5 years.^1 Of course, Blue Chip art is generally outside the price range of most investors; this company pools multiple investors' resources in order to make a single purchase of a Picasso painting or similar expensive work, making the purchase feasible.
Regarding your own collection, begin by gathering information. Start with basic details, when and for how much was it purchased, material, and note the artist's work history. Also if possible find like-kind works that have sold and, more importantly, if your piece has been sold before along with the associated documentation. If the artist is still alive, possibly the most important method of determining marketability is finding out how many Instagram followers this artist has.
You can also figure out the basic construction cost of the piece itself. This would include materials, fees, costs, taxes paid by the artist, quality work, and most importantly how many hours of work was put into making the piece. This can be used as a bare minimum price.
Another reason to determine the value of your collection is to make sure that you have adequate insurance to cover it in case of theft or damage. At a bare minimum, you should have photos of everything in your house, however, the insurer may also request a professional appraiser pay you a visit to make their own evaluation.
During Covid, many galleries have closed as the art market moved online. This has made research and transactions more easily executable. One way to start the evaluation process is to submit your information to a vendor online, such as Artsy: https://www.artsy.net/consign or Sotheby's: https://www.sothebysinstitute.com/news-and-events/news/how-to-sell-your-art-on-consignment.
Connecting with a dealer, appraiser, or gallery representative may be your ultimate strategy. All the online research in the world won't replace a professional working in the field, someone with an art history degree and years of experience understanding the art market. As much as you're able to find out about the art piece itself, at the end of the day, it is only worth as much as it will be purchased for.
At Eureka Wealth Management, I help my clients identify opportunities in their entire portfolio, including their art collection. I also do retirement planning, investments, tax and estate strategies. Call for a free initial consultation at (760) 537-0791 or online at eurekawealthmanagement.com.
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