PHOTOGRAPHY APPRAISALS
The Ins and Outs of Photography Appraisals


Collecting photography may be a labor of love, but caring for it can be a responsibility best shared with experienced professionals. At the very least, it's important to stay informed about the value of your collection by obtaining a proper appraisal.


The first thing to understand is that there is a significant difference between an “estimate” and a full photography appraisal.


Auction houses use both formal and informal appraisals regularly, says Rick Wester, International Director of Photographs for Bloomsbury's in New York. An informal auction estimate can range from a quick verbal statement of value to a more detailed written assessment. He explains, “Auction estimates are not to be confused with formal appraisals. They don't set an established value. They represent an expectation of what an item 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 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 to 1983. 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.



Donation Appraisals

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 who 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 to confirm 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 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 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.



Archive Appraisals

While similar to an estate appraisal, this type of appraisal is usually 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 role 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, both participating in the transaction freely and with full awareness 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.





This article and information was written by Catherine Novak.
To read her full article: The Ins and Outs of a Photography Appraisal


Provided courtesy of I Photo Central
https://www.iphotocentral.com/
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