The Ins and Outs of Photography Appraisals
Collecting photography may be a labor of love, but taking care of it may be a burden best shared with experts.
At the very least, it�s important to keep up with the value of one�s collection by obtaining an appraisal.
The first thing to realize is that there is a big difference between an "estimate" and a full-fledged photography appraisal.
Auction houses use both formal and informal appraisals all the time, says Rick Wester, international director of photographs for Bloomsbury�s, New York.
An informal auction estimate can range from a quick verbally rendered statement of value to one that is more in depth and in writing.
He explains, "Auction estimates are not to be confused with formal appraisals. They don�t set a value.
They�re an expectation of what something may sell for in the future."
Why Appraisals are Necessary
There are many reasons to obtain appraisals, and as many types of appraisals as there are reasons.
Some of those reasons are as follows:
- Insurance/Loss Claims
- Donation for Tax Purposes
- Estate Planning for Tax and Other Purposes
- Photographer or Collector�s Estate
- Photographer or Collector�s Archives
- Fair Market Value
- Expert Witness/Legal Issues
- General Collection Management
- Tax Free Gifts
- Collateral for Loans, etc.
- IRS Appeals
Insurance Loss or Claims
Private collections are often insured on an agreed-value basis. Photography dealer and gallery insurance is usually based on a percentage of
the selling price for owned inventory, on an agreed consignment-value basis for consigned work, or on sales price plus accrued expenses for
sold work that is damaged. Museum collections are insured based on whether objects are on loan to the museum or owned by the museum.
Because it is the responsibility of the insured to prove any losses, a collector, dealer or museum should have a written inventory detailing the
work by artist, medium, title, size and date. To determine the value of a photographic collection, a collector can either submit an appraisal of photographs
or show recent (within the last year) invoices or valuation, or a collection listing by a dealer.
"People should be sure that their insurance appraisals are up to date at least every two years, " says Dale Stulz.
Dale Stulz began and directed Christie's New York Photography Department from 1978 to1983. After relocating to the West Coast,
in 1985, he founded Stulz Appraisals and Consultations, in Hawthorne, CA, near Los Angeles.
"Sometimes I have updated appraisals every six to nine months for some of the rarer material at this time with the market as high as it is," he adds.
Unlike household policies, which offer replacement value, most valuable-items policies require up-to-date appraisals.
By obtaining insurance appraisals at least every two years, a private collector is more likely to keep up with the value of
the collection. Like Stulz, some appraisers will even notify clients when one or more photographs have increased substantially in value.
The Internal Revenue Service requires an appraisal when a donation of one or more like items, for example, several photographs,
is worth more than $5,000. A donation appraisal requires extensive write-ups, including biographies, bibliographies, auction
and retail sales records and detailed descriptions of the works themselves. Individuals to substantiate their charitable donations
must complete IRS form 8283.
"All charitable contributions appraisals have to have a fee," says Rick Wester. "On the 8283 form, the IRS
asks the appraiser that the fee was based on a time-based fee, not a percentage of value."
Estate Planning for Tax or Other Purposes
Sarah Morthland, of the Sarah Morthland Gallery, in the Chelsea section of New York, joined forces with Robert Gurbo, the curator
of the Andre and Elizabeth Kertesz Foundation to form Archive Management Services. She says that they established the business
when she was asked by a photographer to manage his estate after he died. Morthland notes, "One aspect of our business is to
assist an estate with organizing their archives for a multitude of purposes."
When an artist or a collector dies, the estate must be given a cost basis agreeable to the IRS.
Both individual heirs and entire estates may use this type of appraisal. Often a "blockage discount" situation may apply.
Having a large number of like items�whether of the same artist, school or time period�coming onto the market, could potentially
depress the overall value of the items. This information is taken into account when determining an estate for tax purposes.
While similar to an estate appraisal, usually this type of appraisal is done while the artist is still living.
One reason might be that the archive is actively marketing its photographs. Fair market value, marketability and
reproduction potential all play a factor in this type of appraisal.
Fair Market Value
Sometimes an appraisal may be sought to establish a Fair Market Value. This is the price at which a photograph would change
hands between a willing buyer and a willing seller participating in the sale of their own free will and with both of them
aware of the market for the image.
In complex cases, an appraiser may have to do a discounted cash flow analysis to project anticipated future earnings,
says Monika Half. "You�re adjusting today�s money for tomorrow." Monika Half, located in Bronxville, NY, has
appraised photography as an independent consultant for more than five years after working for Christie�s New York for 12 years.
This type of analysis and appraisal requires building a cash flow model on a computer. If a huge estate is involved, says Half,
an appraiser may have to segment it into condition of images, the strength of the images, their value and the anticipated interest rate.
Article and information written by Catherine Novak.
To read her full article click this link The Ins and Outs of a Photography Appraisal.
This article provided courtesy of I Photo Central.
To read more about collecting photography as well as their services please visit their website.
I Photo Central
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