Appraisal Bureau was recently retained by a major international law firm to value Fine Art jointly owned by a couple seeking division of assets in divorce proceedings.
The collection of more than 500 artworks, holding significant material value, was originally appraised by a major auction house. The judge presiding over the case requested the mid range of the auction estimate to be used for the official valuation. Generally, artworks consigned to auction are given a low and a high estimate, which is a strategic range relevant to the auction, and not necessarily an indication of Fair Market Value. For example, a low estimate significantly below Fair Market Value for desirable property attracts buyers to place bids in hopes of a good deal. Top quality artworks often sell for well above their high estimate, and after bidding is finalized the auction house adds a buyer’s premium which starts at approximately 25%. To that end, the hammer estimate without premium has little correlation to true Fair Market Value. Furthermore, the auction estimate reflects secondary market consideration only, and would not necessarily support primary market data.
Without knowledge of the previous auction house appraisal, Appraisal Bureau was hired first to value a selection of the art collection. With a neutral survey of both primary and secondary markets, Appraisal Bureau’s report came in significantly higher than the auction house report. A second report of additional artworks showed the same results. In a market of little to no regulation, access to complete data and neutrality are crucial.