What Happens to Confiscated Art Fakes?

Daniel Grant has a very good article in the Huffington Post entitled What Happens to confiscated Art Fakes?  Grant states most counterfeit art is dealt with at the federal level due to interstate activity and sales, this includes the FBI and US Postal Service.

The article states most fake art after confiscation is dealt with on a case by case basis, and many times it is returned to the owner.  In other cases before a return the artwork may be marked or may have a requirement for a accompanying certificate stating it is a counterfeit piece.

A very good article for both appraisers and dealers to be aware of.

Grant reports

What to do with counterfeit art is determined on a case-by-case basis, often dependent upon whether or not the owner knew that it was a fake. Proving fraud, intentional deception, is often quite difficult, according to Lawrence Katz, counsel for the inspection division of the U.S. Postal Service, because "in the very subjective world of the arts, people can simply make an honest mistake." There is little hope of obtaining a court order to destroy counterfeit property or pressuring an owner to forfeit it to law enforcement agents when there is only a question of an attribution in dispute.

When the FBI recovers a stolen -- albeit fake -- artwork, "in most cases, all we can do is return it," Chaffinch said. At times, agents will advise the owner that the work is a counterfeit, which implicitly puts that person on notice that the piece should not be represented as authentic in the event that it is sold, but works of questionable ownership and authenticity "tend to pass through various hands" before law enforcement is alerted that a crime has taken place, she added.

"The best way to insure that a counterfeit artwork doesn't resurface in the art world is to destroy or deface it," said Catherine Begley, a former special agent in the New York office of the FBI. "Shred it, incinerate it, stamp it so that no one will be fooled again."

In fact, both the U.S. Postal Service and the FBI try to do exactly that, permanently marking the work (branding a sculpture or applying an ink stamp to a painting or work on paper) as a fake, requiring that the work be accompanied by a certificate describing it as counterfeit, applying (through the U.S. attorney in charge of trying the case) to a judge for permission to destroy the work or pressuring the suspect to forfeit or abandon the work to the government as part of a plea agreement.

Click HERE to read the full article.

The Luxury Market

I just received a copy of a recent issue of the Kiplinger Letter.  I spotted in interesting couple of sentences on the luxury market and I think it has some relevance to what is happening in the fine and decorative arts markets and sectors. There was also a shot notation on the estate tax situation which I have also posted.

Kiplinger states luxury retailers such as Tiffany are expecting 4% growth this year in poor economic conditions.  That is rather good, but it would be better, but the buyers are from the wealthy economic spectrum, and the luxury retailers are not getting a strong cross over effect from the middle class.  Perhaps this is a parallel to the art markets, where the upper market sectors are rather vibrant and strong, while the middle market continues to languish.

From the Kiplinger Letter

Luxury retailers face a difficult adjustment to the postrecession market.
They’ve lost a big chunk of consumers, maybe permanently. Upper incomers are starting to come back to Tiffany & Co., Neiman Marcus and other posh purveyors…the luxury market worldwide will likely rise 4% this year. But “aspirational” shoppers, the middle incomers who eagerly sought pricey merchandise and fueled growth in the American luxury market over the past decade, are nowhere to be found.

There was also a short note on the Estate Tax situation. Interesting concept that perhpas 2010 estates may have the choice between no tax and the stepped up basis or the 2009 rates.

The Kiplinger Letter states

There’s no such move possible on estate taxes, though. Even liberals
don’t want to see the top rate soar to 55%, with the $1-million exemption returning. Odds of resurrecting 2009 rules for 2010 estates get shakier as time passes. Those estates may get a choice: Use 2009’s $3.5-million exemption and 45% top rate or enjoy no estate tax this year but be stuck with carryover basis rules. Then, starting in 2011…a phase-in of lower rates and higher exemptions.

Forbes Toy Collection at Sotheby's NY

Bloomberg has an article on an upcoming December sale of toys from the collection of Malcolm Forbes at Sotheby's in NY.  There was a previous Forbes sale many appraiser might remember of toys and toy soldiers back in 1994 that brought a lot of publicity and very high prices.  I would think Sotheby's is planning for the same type of results from the collection of the late publisher of Forbes magazine.

The sale is expected to generate between $3 and $5 million.  Given the noterity of Forbes and the success of the 1994 sale, this auction should be another good sale for comparable property with excellent provenance.  According to the article, the toy collection is owned by Forbes Media, which has seen a decline in advertising dollars.

The Bloomberg article states

Forbes, which auctioned part of its famous toy collection in 1994, is selling the rest of its miniature soldiers, boats and motorcycles, as well as an early version of the Monopoly board game.

The company that publishes Forbes magazine has cut staff in recent years because of a decline in advertising, and it sold its Greenwich Village headquarters to New York University in January.

The toy sale is estimated to raise between $3 million and $5 million. The collection, acquired over four decades by the late Malcolm Forbes and his sons, has been a fixture at the Forbes Galleries in New York for the past quarter-century.

“My brothers and I concluded it was best that others now have a chance to own them, collect them and maybe even wind them up in a pond or pool and watch them go,” company vice president Robert Forbes said in a statement provided by Sotheby’s.

Four years after Malcolm Forbes’s death in 1990, the family auctioned part of the toy collection at Sotheby’s for $393,000. Forbes’s collection of Faberge Imperial Easter eggs was sold to Russian tycoon Viktor Vekselberg for an undisclosed price in 2004.

To read the full Bloomberg article, click HERE.

Results: Sotheby's Lehman Brothers

As I mentioned in the a post the other day, it appears the Sotheby's NY sale of modern and contemporary art at Sotheby's from the Neuberger Lehman collection was strong, and the final results do support that assumption.  The sale offered 142 lots with 118 selling for a respectable 83.1% buy through rate.  The total sale brought in $12.3 million, with 17 record prices for artists at auction and 6 records by medium at auction.

The main disappointment of the sale was a Damien Hirst We've got Style, (The Vessel Collection, blue/green) with a pres sale estimate of $1 million failed to sell. With that in mind, the sale does not appear to be only top heavy, but interest in items through out the sale.

Alexander Peers writing for the NY Observer stated 

Neuberger had an unusual strategy: It bought low-cost works by emerging artists and also bottom-fished for works by bigger name ones, sometimes buying what had failed to sell at auction. In some cases, Neuberger Berman had paid about $25,000 for artworks, by artists likd as John Currin and Mark Grotjahn, that sold for about 10 times that at the auction. According to people close to the matter, executives of Neuberger-Berman overlooked the sale from a private skybox.

Seventeen artist's records were set. A $1.02 million record was set for Julie Mehretu's "Untitled," 2001. Though far from a household name, her work was recently added to the Goldman, Sachs corporate collection. A few of the 142 Lehman works up for sale were bought by the Buenos Aires Museum, which paid $92,500 for a Robert Longo.

Christie's will sell works owned by the European offices of Lehman at an auction Sept. 29.

Buying Art and Avoiding Legal Complexities

The NY Times ran a good article in their Wealth Matters column entitled  Avoid Legal Pitfalls when Buying Art.  Some of the concerns brought up are of course proper title and ownership, such as Nazi looted art and proper authority to sell the art, and also other outside claims to ownership.  Forgery is also mentioned.  The article also mentions getting value at auction, and not getting caught up in the moment  of bidding.  The article also notes that title insurance for art is available, but it is not something that has caught on with the majority of collectors. With a few high profile disputes, this could change.

Keep in mind as appraisers that ownership, claims and partial ownership can have an impact on value.  Know what you are appraising and do your due diligence.

The problem is in buying art that has unseen strings attached. The cases associated with Nazi-era art looting are well known. But claims associated with outright theft count for only a quarter of the lawsuits brought against owners of art, according to Judith Pearson, president of Aris, a title insurer specializing in art. The bulk of the claims come from more traditional liens and encumbrances.

“There are all kinds of examples — someone didn’t have the authority to sell the art, the I.R.S. has a lien on all assets for not paying taxes, the art was used as collateral for a loan and the loan wasn’t paid off,” she said.

This weekend’s auction of the Neuberger Berman and Lehman Brothers corporate art collections has several art advisers talking. While no one has suggested any impropriety in the sale, which was approved by a bankruptcy court judge, several advisers discussed other auctions that involved claims against the art. A spokeswoman for Sotheby’s, which is handling the Lehman auction, did not return repeated calls.

Click HERE to read the full NY Times article.

Lehman Sale at Sotheby's

As I write this post the Sotheby's NY sale of Lehman art is in just concluded. Kelly Crow writing for the Wall Street Journal wonders if there still is a Lehman's premium for their art as in past sales.  She notes that Sotheby's has not taken full advantage of the Lehman connection.

I hope to post results of the sale as soon as they are listed and we can see if the past premium prices for the collection remain, and perhaps judge overall interest in modern and contemporary art for the future fall sales.

Update: Sotheby's sales total was $12.3 million so that alone is close to the $14 million projection for Lehman sales being held at Sothebys, Freemans and Christies.  Earlier reports and estimates expected the Sotheby's sale to sell around $10 million, so without examining the results (buy-ins, top heavy etc), the sale looks to have been solid but from first glance at the numbers a strong sale yes, but a premium, probably not for this sale of Lehman art.

Crow reports

Is there still a Lehman premium? The final—and priciest—collection of artworks from the defunct Lehman Brothers will be auctioned off in a series of sales beginning Saturday at Sotheby's in New York and continuing at Christie's in London next Wednesday and Freeman's in Philadelphia Nov. 7. Overall, the sales could bring in a combined $14.2 million, which would be used to repay creditors.

Collectors and souvenir seekers went wild for the bank's corporate collection of lower-priced prints and paintings last fall during an initial sale at Freeman's, with a $1.3 million sales total that doubled the house's expectations.

But in a marketing turnabout, Sotheby's says it is downplaying the bank's connection to the 147 works it's auctioning Saturday. The pieces up for sale were actually amassed by Neuberger Berman, an investment firm that started a corporate art collection long before the firm was bought by Lehman in 2003. Sotheby's is betting it can attract more bidders by emphasizing the tastes of the smaller firm's co-founder Roy Neuberger, a 107-year-old collector who created the Neuberger Museum of Art in Purchase, N.Y.

To read the complete article in the WSJ, click HERE.

Dealer Cash Flow

The Artnewspaper has an article that is very relevant in today's marketplace, especially for fine and decorative art dealers.  It has to do with collecting payment on sold items and how slow payments impact cash flow and the ability to successfully operate.  There is nothing earth shattering or new about the need for a positive and timely cash flow, but given the state of the economy the delinquencies appear to be adding up and having a negative impact on dealers.  There can be a very fine line between trying to gain new buying customers and making sound business and financial decisions.

What I find very interesting is the article points out slow payments are not necessarily tolerated in others business where many include large upfront deposits and prompt payment.  The fine and decorative art worlds are a big business with billions of dollars worth of property being exchanges every year, and for some reason our profession is not always viewed as seriously as other professions and businesses.

The appraisal profession has many of the same difficulties, where much of the public is confused by quick estimates and opinions of value instead of understanding what a qualified appraisal represents. We as a profession also need to do a better job in informing the public and users of appraisals the important differences of an opinion of value as seen on entertainment shows and a qualified appraisal.

The Artnewspaper reports

Trade sources said that collectors generally pay quickly—either immediately or within the standard 30 days. But there is a growing contingent who take longer to pay, or worse yet, cancel sales. While this can be problematic for secondary market dealers, it can be fatal for primary market galleries. Dealers say delayed payments can cause artists to wonder if the gallery has been paid, but hasn’t turned over the funds to the artist.

Here’s an unhappy scenario: a young gallery, with nearly empty coffers, hasn’t collected payment on six of the seven sales the dealer closed at a June satellite art fair in Basel. The dealer—who paid all fair-related expenses months ago—needs to cover his rent and overheads. He can’t pay the artist, who needs money for his own bills plus materials for an autumn show. To make matters worse, the dealer must remain calm and detached, while trying to extract payment. “It’s this old-school gentleman thing,” the dealer told me. “You don’t want to appear desperate.”

This sort of behaviour is less tolerated in other industries. High-end fashion houses require a deposit to pre-order a coveted handbag or next season’s coat, says Jackie Noble, manager of Manhattan’s designer Mina boutique and the Albright Fashion Library. “There is a certain element of trust, but we always make sure there is some form of payment to vouch for a customer’s financial standing.”

To read the complete article, click HERE.

Update: Estate Tax

Perhaps Congress is finally getting close to legislation and a decision on Estate Tax.  The Hill is reporting Estate Tax legislation may be included in a bill dealing with the extension or partial extension of the Bush tax cuts.  The comments on the combined legislation came from a spokesman to Senate Majority lead Harry Reid, so it does appear legislation may be close.

Expectations are for an exemption of $3.5 million and a tax rate in the 35% - 45% range.  No word on if the bill would be retro-active.  This is similar news to what has been proposed in past months, and nothing has come to fruition, but what makes this interesting and perhaps credible is the statement from Reid's office that it is being considered.

Other news outlets report there will not be a vote on the Bush tax cuts until after the November elections, so we may have to wait until the very end of the year before we know if anything on estate tax legislation will happen or what exemption and rates may be.

I will keep AW Blog readers posted as I get additional news.

The Hill reports

Senate Finance Chairman Max Baucus (D-Mont.) has taken the lead in crafting an extension of the Bush tax cuts. But with gridlock in the Senate and 2010 whittling down to just a few months, Baucus could use the Bush tax bill as a vehicle to move other tax priorities.

"We don't have multiple bites at the apple," the spokesman said, adding, "[Baucus] could include other stuff [with the Bush tax cuts], including the estate tax,"

Absent congressional action before next year, the estate tax reverts to pre-2001 levels that slapped a tax as high as 55 percent on inheritances worth more than $1 million.

Baucus last week said he would like the estate tax to return to 2009 levels, which levied a 45 percent tax on estates worth more than $3.5 million, but he didn't rule out going lower on the rate.

He said a 35 percent estate-tax rate was in the ballpark, but not near home plate.

"That's in the outfield," he said. "It's still in the park, but it's getting close to the exit. But it is in the ballpark."

To read the full Hill article, click HERE.

Update: Park West vs Fine Art Registry

Crain' Detroit Business had a recent report stating that Park West vs Fine Art Registry will proceed to a new trial without an appeal.  It appears that after the judge vacated the award and ordered a new trial the parties have decided to go back to court.  A new Federal trial is likely in 2011.  The legal fees must be extraordinary, but I assume both sides have hit the point of no return regardless of cost and will continue to defend their positions.

Crain's reports

Park West had sought $46 million in damages against the Phoenix registry, its CEO Teresa Franks and a contract writer for the registry, in a 2008 lawsuit stemming from a series of reports the Registry published online. Those articles focused mainly on buyers alleging fraud and violations of consumer protection laws in several states in art auctions that the Park West at Sea subsidiary company manages aboard cruise ships.

A multi-district prospective class action lawsuit against Park West, a couple of the cruise companies and other defendants awaits trial at a federal court in Seattle, and combines buyers' claims from Michigan, Florida and Washington state.

The Zatkoff jury in April awarded no damages to Park West and none in six of the seven counter-claims that Fine Art Registry and the other defendants had filed against the dealer. But it awarded $500,000 against Park West on a single count of violations of the federal Lanham Act governing several aspects of trademark law.

Zatkoff last month denied a request from Park West for a new judgment in its favor as a matter of law, but did grant a new trial in all of the claims except for a small subset of them involving Hochman.

“Unfortunately the case law is against us going forward on (an appeal) right now. You can't really appeal a decision for a new trial, because it isn't a final order,” said Donald Payton at Farmington Hills-based Kaufman Payton & Chapa PC, who is defending Fine Art Registry in Park West's suit and represents several buyers in a separate lawsuit filed at Oakland County Circuit Court.

“You generally have to wait to complete the second trial, and then go from there on your appeal. I really researched it, and wanted to do it, but you can't at this point.”

The Oakland County case remains pending before Circuit Judge Nanci Grant.

To read the full article in Crain's, click HERE.

Update: Lehman Art

On Saturday Sotheby's will auction portions of the Lehman Brothers art collection.  I wont go into many pre sale details as I have previously covered this in earlier posts.  What is interesting is that Alexandra Peers in writing for the NY Observer states this first contemporary art sale of the season may set the tone for future sales.  In past sales Lehman property has done very well.

I will post results from the sale on the Aw Blog when available.

Peers writes

The Sotheby's sale of the Lehman Brothers-Neuberger Berman contemporary art collection on Saturday, Sept. 25, will be keenly watched. As the first major contemporary art sale of the season, and one where works by some big names are priced competitively, it is a likely bellwether of the art market.

Peers continues

Sotheby's is expecting to raise as much as $10 million from the sale of 147 artworks. "The sale's a litmus test for corporate collecting. If most of the art sells, this would signify the return liquidity to the contemporary art market and the viability of institutional art collecting of works by emerging artists.

To read the full article, click HERE.

ISA Webinar on Internet Marketing Tools for the Appraiser

The next International Society of Appraisers webinar is scheduled for Tuesday, September 28 at 8:00 pm (eastern). The topic is "Internet Marketing Tools for the Appraiser." I am pleased to say that I was asked to develop and present this webinar on internet marketing tools for ISA.

I think this is such an important topic, and one where fellow appraisers may need assistance and guidance that Jane and I plan on developing it further into a full one day seminar for the Appraiser Workshops, so stay tuned and if you have ideas or comments, please let me know. Jane and I were just touching on social media and internet branding in our Good, Better, Best Appraiser Workshop, but as social media is now becoming more commercialized I believe there is a need for a stand alone workshop for the personal property appraiser.

The following is a brief synopsis of the webinar. For more information, details and to register for the webinar with ISA, click HERE. The webinar is scheduled for Tuesday evening, the 28th of September at 8:00 pm eastern and the cost is $37.50..

Internet branding is quickly becoming a dominant sector of online marketing strategy. This webinar will present an overview of how to succeed and raise your online profile through internet branding tools. The webinar will discuss many available internet marketing tools, such as social media, websites, blogs, video, podcasts, email, newsletters, advertising, email signatures, press releases and landing pages. Did you know that Facebook now has over 500 million users? Additionally, users now spend more time on Facebook than on Google. Businesses are now just learning how to leverage and commercialize social media sites and personal property appraisers need a presence in order to compete.

As technology quickly changes the manner in which consumers and businesses make decisions and purchases also changes. Appraisers must adjust in order remain relevant and to standout from the competition as technology rapidly changes. Internet branding has become an important and integral element of any marketing strategy. For an effective online presence appraisers need more than a simple virtual presence such as a stand-alone website. In order for Personal Property appraisers to succeed they need a complete online strategy to coordinate and link online profiles, social media and websites in order to maximize exposure and success. This webinar will assist the appraiser in knowing what is available and how best to use these important online resources and tools.

Chubb Collectors Newsletter

The new Chubb Collectors email newsletter was just released with article on cultured perals, merging art and architecture and Asian textiles.

Follow the links for the full article or click HERE for the Chubb Collectors home page.

Cultured Pearls For A Queen…And Also For You & Me!
Cultured pearls dominate the market because natural pearls command stellar prices, yet we find a spectacular South Sea culturedpearl necklace with an $800,000 price tag; it took over five years for the producer to acquire enough fine matching pearls to assemble it! Despair not if this exceeds your budget. Cultured pearls offer a wide range of choices. This article explores the best of the current cultured pearl market.
http://www.chubbcollectors.com/Vacnews/index.jsp?form=2&ArticleId=266


Merging Art and Architecture: a Collaborative Process
Art provides emotional and aesthetic satisfaction, enhancing our lives and the spaces in which we live and work. A collaborative relationship between architect/designer, client and art consultant promises the best outcome for an art program. This article explores the many ways to make that collaborative relationship work.
http://www.chubbcollectors.com/Vacnews/index.jsp?form=2&ArticleId=267


Asian Textiles: A Rich Heritage
International dealers at the San Francisco Tribal Art and Textile Show in February, 2010, seemed to confirm an expanding market in Indonesian textiles. This article explores the current market for these fine pieces and discusses what constitutes quality.

http://www.chubbcollectors.com/Vacnews/index.jsp?form=2&ArticleId=265

Christie's Names New Chief Executive

Carol Vogel noted in the NY Times that Christie's chief executive Edward Dolman has been promoted to Chairman and and the company has hired outsider Steven Murphy as the new CEO. According to the article Dolman will work out of NY and concentrate on business development while Murphy will be based in London and run the operations.

Vogel reports

The appointment ended a six-month international search during which the company’s management considered candidates inside the company and out.

“This is about mixing the gene pool,’’ Mr. Dolman said in a telephone interview when asked why Christie’s would chose someone with little knowledge of the art world. Mr. Murphy said he sees the challenge of learning a new business as a natural transition after having been in publishing and music (he was president of EMI Music/Angel Records from 1991 to 1998) for most of his career. “This is about moving the company forward,’’ Mr. Murphy said in a telephone interview, “and building an environment for creative people to excel.’’

To read the full article, click HERE.

Christie's Asian Week NY Results

Christie's released the consolidated results from last weeks Asian Art sales. As I mentioned in a post a few days ago, the results looked to be around $70 million, and in fact were $70.75 million.

Christies's which had the bigger sales dominated the week with a 72% market share in New York.  The percentage of lots sold was varied among the sales ranging from a low of 56.4% with a poor percentage sold by dollars of only 49% for the Indian and South East Asian sale to high of 88% of lots sold for remaining Sackler items.  It appears the Chinese sales are still setting the market with other Asian sectors not quite as strong.

Chrisite's stated

Theow H. Tow, Deputy Chairman of Christie’s Americas and Honorary Chairman of Christie's Asia, said: “I am thrilled Christie’s finished the week with 72% market-share for Asian Art in New York. The market for Asian art, both classical and contemporary, remains extremely strong and I am delighted that we achieved an incredible total of $70.75 million, the second most valuable series of Asian Art sales at Christie's New York. The Chinese Works of Art sales alone totaled $55.5 million, the highest ever achieved for this category in New York and a milestone for Chinese art sales in the West. Throughout the week, clients eagerly competed for rare and important works with reasonable estimates. Items of superior quality and sterling provenance performed exceptionally well in all the Asian sales, especially those from Anthony Hardy, Dr. and Mrs. William L. Corbin, Property from the Arthur M. Sackler Collections, Julien Sherrier, and Jerry Lee Musselwhite. Clients from Asia continued to participate strongly, but American and European buyers were equally active, indicating a truly international and robust market.”

Sotheby's Sets Record for a Print at Auction

Last week Sotheby's London held its Modern and Contemporary Prints sale with some strong results. The sale totaled $13.9 million (including buyers premiums), with 174 lots offered. The sale saw 142 lots sold for an 81.6% sell through rate.  Only one of the top ten selling items failed to sell above the high estimate.  The top two lots were Picasso's selling for $1.99 and $1.71 million, with an Edvard Munch, Vampire II, Lithograph and woodcut in colors, 1895/1902 selling for $1.2 million.


The record for a print at auction, as well as a record for a Picasson print at auction was set. La Minotauromachie, Etching, 1935 sold for $1.99 million, against an estimate of $625,000.00 to $938,000.00 (see image).

Sotheby's stated about the sale

Discussing the sale, James Mackie, Sotheby’s Prints specialist, said: “A new record has been set for any single print sold at auction with the sale of Pablo Picasso’s La Minotauromachie for £1,273,250. Pablo Picasso was the most important and innovative printmaker of the Modern period and he has been credited with the creation of some of the most significant works in the medium’s five-hundred-year history. La Minotauromachie is considered to be the artist’s masterpiece of printmaking. It reflects key themes of the artist and demonstrates a mastery of technique that is unsurpassed. Nearly all recorded impressions of this subject are now in public or permanent collections round the world. The sale total of £8,885,525 is the highest ever for a Sotheby’s Prints sale held in London. At the core of the sale was a group of works from a Private European Collection, which collectively realised £6,540,175 against an estimate of £3,711,000 – 5,283,000. The price realised for Picasso’s La femme qui pleure is the highest
achieved at auction for a print of this subject by the artist. Bidding during the auction was competitive and globally based.”

Christie's Sets In-House Online Purchase Record

During this past weeks Asian sales (still waiting for consolidated figures, but the sales look to have been strong and totaled near $70 million at Christie's), Christie's noted that it achieved a new in-house record for an online purchase.  The online purchased totaled $3.3 million breaking the previous online total for Chrisite's of $1.27 set in April, 2008.  The online purchase (see image)  was for a bronze wine vessel and cover, Fangyi late Shang Dynasty, Anyang, 12th-11th Century.

As Christie's notes, collectors are becoming more and more comfortable with bidding online. I would agree, and expect in house records to continue to fall in the future.  Some of the Christie's figures are interesting regarding online bidding, and do show how online bidding is trending.  In 2009 Christie's sold $68.4 million to online bidders, with 30% of all bids coming through online with 14% of winning bids coming through online channels.

Christies states

In total, 22% of the lots sold in Thursday’s sale, which totaled over $20 million, were sold to or directly underbid by clients using the Christie's LIVE™ application. Since 2007, every category of fine art, antiques and collectibles sold in Christie's salerooms worldwide have been enabled for online bidding. The most popular collecting categories for online bidding at Christie’s include Watches, Fine and Rare Wines, and Interiors. Prior to today’s sale, three lots have sold online for over the US$1 million mark, including jewelry and Chinese works of art.

Michael O’Neal, Senior Vice President and Director of Digital Media at Christie’s, commented: “Today’s new house record is a sign that Christie’s clients are as comfortable bidding online as they are with bidding in person in our salerooms, on the phone, or by absentee ballot. We recognize that our clients are increasingly mobile and rely on the Internet and mobile devices to conduct business with us. We are pleased that Christie’s LIVE™ has become such a core component of our auction business since its launch in 2007, and we look forward to rolling out more mobile applications and online enhancements to our clients later this fall.”

Christie’s remains the only international auction house to offer real-time, online bidding in all of its sale categories worldwide. In 2009, $68.4 million (£43.5 million) was bid online including premium and Christie’s LIVE™ generated 49,343 accepted bids for the year. 30% of all bids and 14% of all winning bids came in through online channels and the number of winning bidders participating online increased by 40% over 2008. 

Sotheby's Opens Retail Wine Store

As noted on the AW Blog from article and press releases, luxury goods have been a very in demand commodity.  People with money have expensive taste and wan the best. With that in mind, we have also seen the major auctions houses take advantage of an important segmentt of their clientele, the wealthy by expanding into other areas services and retail.  Sotheby's has now opened a retail wine store in New York city, offering wines valued from $13.95 to $40,000.00.


Sotheb's sold a total of $35 million in the first half of 2010 a auction.  This represents a 76% increase compared to the same period last year, so it is not a stretch to believe that the Sotheby's retail brand will be a success.

In  Press release, Sotheby's states

Sotheby’s today launches a retail and online wine business, becoming the only ajor global auctioneer also offering fine wines at retail and online. The team at Sotheby’s Wine is known for an unsurpassed level of knowledge and expertise and has put together some of the most well known and historic wine auctions around the world. That level of care and expertise that has previously only been available for those wishing to bid at auction can now be used by anyone throwing a party, selecting a gift, putting together a collection or just planning dinner. This full service store, which has been designed by Deanna Kuhlmann-Leavitt of St. Louis-based Kuhlmann Leavitt Inc, offers a range of wine at competitive prices from $13.95 to $40,000 per bottle. Sotheby’s Wine is now fully open at 1334 York Avenue on Manhattan’s Upper East Side or at www.sothebyswine.com.

Jamie Ritchie, President and CEO, Sotheby’s Wine, Americas and Asia said: “We have been planning this business for a long time as we often speak to people who would like to buy wine from Sotheby’s but who want more flexibility and immediacy than bidding in our auctions. With the launch of our retail wine business we can now offer a complete service to anyone with an interest in wine. Because of our decades of experience working with wine makers and collectors from around the world, we are uniquely placed to help wine lovers get the most out of one of life’s great pleasures. Our team source and taste constantly, so all our wines are of high quality, typical of their region and offer good value for money. Our selection includes the best producers, but also our favorite wines that may be less well known and which are sometimes exclusive to us in the United States. It’s an exciting time to launch this business, with the combination of our new retail store and website—technology is playing an ever bigger role in how people purchase wine and we are keen to see how user-friendly our new website is in helping them find their favorite wines and make new discoveries.

Click HERE to visit the Sotheby's Wine website.

Share Certificate found for Dutch East India Company

A Dutch graduate student doing research at the West Frisian archives in Hoorn, just north of Amsterdam, found a certificate for a founder share of ownership in the Dutch East India Company. It is thought to worth over $700,000.00. It is dated 1606. It just goes to show you never know what you might find in old basements, attics and as well as archives.

Bloomberg reports on the discovery

doing research for his master’s thesis at the University of Utrecht, in February found the receipt for a founder share in the Dutch East India Company, dated Sept. 9, 1606. Auctioneers say the share, the fourth of its kind to emerge, may be worth as much as 600,000 euros ($764,000).

“This is the Rembrandt of shares,” said Reinhild Tschoepe of the namesake auction house in Germany by telephone. A share in the Dutch East India Company is “an absolute masterpiece in scripophily,” the collecting of old securities certificates, according to Mario Boone, director of auction house Booneshares in Belgium. Boone estimates the paper found in Hoorn to be worth as much as 600,000 euros.

German Investors

Schalk’s discovery is almost three weeks older than a similar security owned by a group of private German investors. Issued by the Amsterdam chamber of the East India Company on Sept. 27, 1606, it once belonged to the regional archives of the Dutch capital, deputy archivist Ellen Fleurbaay said in a telephone interview.

“It disappeared from the city’s archives in the nineties,” Fleurbaay said. “We want it back.”

The private German investors once said that they were prepared to talk about a sale starting at 5 million euros, said Tschoepe, who brokered the initial purchase of the share for the investors. “For us, that’s an amount we won’t even talk about,” said Fleurbaay.

The two other shares in the East India Company from the year 1606 are in the library of the University of Leiden and owned by NYSE Euronext in Amsterdam, respectively. All of them derived from the first share sale that ever took place, said Cees Vermaas, chairman of NYSE Euronext Amsterdam, in an e- mail today.

To read the full article, click HERE.

Forbes Mag Profiles Appraiser Dunbar

Forbes magazine has a profile under its Entrepreneurs section in the Sept 27, 2010 issue on Leila Dunbar, the sports and collectibles appraisers and past VP at Sotheby's.

Leila has always been very active and has spoken and last spoke to ISA members at the conference in Charleston in 2009.  The profile is an excellent promotions piece for Leila and her appraisal practice.

Forbes reports

Her response: Go solo. At $250 to $350 an hour Dunbar has been called on to appraise Floyd Mayweather's gloves, the late country singer Tammy Wynette's costumes and awards, $12 million worth of memorabilia on display at Yankee Stadium's museum, and Bobby Jones' old one-iron for the United States Golf Association. In 2009 Leila Dunbar LLC pulled in roughly $200,000 in revenue, and Dunbar claims to be "well ahead" of that pace for 2010.

Dunbar runs lean. She works out of her one-bedroom apartment on Manhattan's Upper East Side and has no staff, no website and no advertising budget. Her biggest expense: travel. Planes, trains and hotels eat up about $30,000 a year. This year Dunbar has hauled herself to California, Colorado, Florida, Washington, D.C., Iowa and Arizona, among other stops, mixing client visits with lectures, benefit auctioneering and periodic appearances on the television hit Antiques Roadshow. "I've spent less than half my nights at home this year," she says. "All I need is a laptop, a camera and a phone."

To read the full article on Leila Dunbar in Forbes, click HERE.

Valuing Art for the IRS

Fellow appraiser Diane Mizell, ISA AM sent me a very good article from the Journal of Accountancy.  This is a good article to print out and save for both future reference and in marketing your appraisal practice to potential clients.

The article touches on an IRS statement of value on items of $50,000.00 or more where they review a qualified appraisal by a qualified appraiser for $2,500.00.  Yes it costs $2,500.00 for the IRS to review an appraisal, accept or adjust and then issue an IRS accepted statement of value.  Mention this IRS charge the next time a a client complains about a fee.

The article touches on common valuation issues in appraising art, such as volatile markets, authenticity, provenance and even blockage.  It mentions USPAP and qualified appraisers, fees and that an analysis of the artwork in order to avoid potential challenges.  It also reviews the 2008 Art Advisory Review panel findings (posted on the AW Blog, click HERE to read and for a link to review). 2008 is the last year the report has been published. Hopefully they will soon release the 2009 figures.

The Journal of Accountancy states

The amounts at stake are often high. In 2006, U.S. individual taxpayers claimed itemized deductions for charitable contributions of 147,896 items of art and collectibles worth more than $1.22 billion, more than the value of donated mutual funds (“Individual Noncash Contributions, 2006,” Statistics of Income Bulletin, Summer 2009). The average value of an artwork contribution, at $8,263, was much greater than for other tangible personal property, including vehicles.

While the value of artwork and collectibles in taxable estates or those given as gifts subject to gift or generation-skipping transfer tax each year is unknown, it likely is many times greater than the amount claimed in income tax deductions for noncash contributions. Still other tax-related valuations crop up in the context of theft or casualty loss deductions. In all these circumstances, a qualified appraisal that can be successfully defended in a return examination is essential. CPAs may also be involved in valuing artwork in nontax situations, such as equitable division of property in a divorce or other settlement. While CPAs don’t necessarily need to be up on the finer points of the market for late 19th or early 20th century Impressionist paintings, they do need to be able to assess whether an art appraisal is needed and if it will likely pass muster with the IRS.

In whatever context, tax-related appraisals determine fair market value, which is not necessarily the value that might be posted in a shop or gallery, since there is no certainty that an item would sell at the retail asking price. A record of sales of similar items (comparables) must be available from a gallery, auction house or by private sale memoranda to substantiate this valuation. Fair market value has occasionally relied on the income approach, where the object is either in the process of or can reasonably be expected to be leased or rented to a user by an institution or individual in the business of leasing or renting art. Fair market value is a gross valuation that includes all fees and sales commissions.

To read the full article from the Journal of Accountancy, click HERE.

NY Asian Art Week

The AFP has an article on the Asian art sales scheduled at Chiristie's and Sotheby's NY this week.  The AFP reports shows a total of over 1,900 lots being offered with Christie's sales expected to total between $46 and $65 million and Sotheby's, slightly less at about $22 million to $31 million.

I will be monitoring the sales activity over the next few days, and will post the results to the AW Blog when available.

The AFP reports

Hugo Weihe, head of Christie's Indian and southeast Asian art, said the modern and contemporary auction on Wednesday was expected to raise more than 10 million dollars, with works by big-name artists including Francis Newton Souza and TV Santhosh.

Tuesday could see an intriguing sale when India's ancient output goes on the block, ranging from Himalayan gilt bronze sculptures to rare silver from the 1st century BC.

Indians -- similar to the rich Chinese actively buying their nation's treasures back from Western collectors -- are expected to be a big force.

"We see increased interest in India now for the antiquities, which of course has happened in Chinese art," Weihe said.

"Once any economy gets strong, literally you buy into your heritage," Weihe told AFP. "China is doing that in a very strong way. We were very surprised, 'why hasn't India done that more?' Well now we're seeing very strong signs."

Parallel to the sales, Christie's is hosting an exhibition of Chinese contemporary art co-organized by a branch of the Chinese culture ministry.

The "Trans-Realism" collection of 29 works by 17 artists offers a modern view of Chinese art far from the typical delicate, pre-communist ceramics or even socialist realism -- although with nods to both, plus a twist of European influence.

"The range of (Chinese) art works represented in the international market is still very limited. We'd like to bring more Chinese art to the international audience," said Pan Qing, a curator from the National Museum of China.

Christie's auctions run from September 14 through 16. The Sotheby's sale is on September 16 and includes a collection of snuff bottles estimated to sell for between four and six million dollars, and works of art from China and South Asia.

To read the complete AFP article, click HERE.

Strength of Art Market Continues

Georgina Adam the editor at large for the Artnewspaper writing for the Financial Times states the art market is back in gear.  Adams points to four items of interest to support her claim that the art markets are rebounding.  We have seen much positive growth over the past year, and the interest continues.  Much of this growth has come at the highest end of market sectors and it has yet to trickle down to the middle markets.

Adams notes the large number of sales and exhibition scheduled around the world, strong interest in an international art conference in Luxembourg, the growing debate on living artists rights, and of course where there is money, there is growth in underworld interest with fakes.  All of these items show an interest in the art markets by governments, the public, dealers, museum professionals and criminals.

Adams reports

A second Giacometti faking case has opened in Stuttgart, Germany, following on from a related case heard earlier this year, which resulted in guilty verdicts for three men accused of forging Giacometti bronzes (a judicial review is pending). In this new case, four men and a woman are accused of counterfeiting some 1,150 bronzes and plasters by the artist, which the police found in a “secret” warehouse in Mainz. According to the prosecution, the defendants attempted to sell 300 bronzes and 100 plasters, valued at €50m, through a New York gallery in 2008 and 2009. The prosecution says fakes worth around €9m were sold by the accused to buyers in Germany and elsewhere, and that they also tried to sell 17 works, worth €1.3m, to an undercover police investigator.

Press reports have named one of the accused as Lothar Wilfried Senke, who allegedly claimed that he knew Diego Giacometti, Alberto’s brother, and had access to a series of works that had been hidden for years.

The expert witness in the first trial was Mary Lisa Palmer, director of the Giacometti Association (there is also a rival Giacometti Foundation, but that’s another story). She says: “The way to rid the market of fakes is through education, but in the meantime the best thing to do is contact our association, which is also attentive to ‘provenance’.”

To read the full FT article, click HERE.

Museum Smart Phone Apps

Daniel Grant has a short article in Baron's about the development of smartphone applications for museums. As technology quickly expands from computers to smartphones, the advances and ease of programming is getting a firm footing into our cultural infrastructure.  As noted in the article, the smartphone applications allows for more two way connections and the ability to promote exhibitions directly to interested parties.

This type of connection, be it for museums, or for retail stores is now forming the backbone for the commercialization of social media.

Grant reports

It's just one of a parade of new apps from America's museums—some artful, some not. The best of the bunch go well beyond the traditional information in brochures. If a painting at the Museum of Modern Art happens to catch your eye, just click on the MoMA App, punch in the artwork's registry number and hear a discussion of the piece and the artist. The app of the Brooklyn Museum in New York invites you to create your own online exhibition, drawing on the museum's collections. Who knew: You are one awesome curator!

For the museums, there's "a lot of potential for two-way information," says Elizabeth Merritt, director of the Center for the Future of Museums at the Washington, D.C.-based American Association of Museums. That is, while the user learns about a particular museum, the museum also gets to learn about the user. For instance, someone who tuned in for a discussion of a Matisse painting is likely to want to be notified of any upcoming exhibitions of the artist's work or lectures on Matisse or even receive discounts on items in the museum store.

Appraisal Foundation News

Although not personal property related, the Appraisal Foundation has announced the withdraw of the Appraisal Institute as a sponsor.  The withdraw comes after the Appraisal Foundation sanctioned AI.  The sanctions included a suspension from Sept 15, 2010 to April 15, 2010 and revocation of the AI ability to reproduce USPAP and discounts on the purchase price of USPAP.

According to the information, the Appraisal Institute was disclosing legislation or regulatory proposals that might effect the Appraisal Foundation.  According to the AF this is not the first time the AI has violated disclosure rules, hence the sanction.

The AF states that without its knowledge or approval, the Appraisal Institute approached three other organizations with the proposed revisions to the federal law (FIRREA) which grants authority to The Appraisal Foundation:

Question: Why did the Appraisal Institute choose to withdraw as a Sponsoring Organization of The Appraisal Foundation?

Answer: Obviously, only the Appraisal Institute can provide their full reasoning for this decision. However, the simple response to this question is the Appraisal Institute was unwilling to accept sanctions imposed by The Appraisal Foundation as a result of their conduct as a Sponsoring Organization.

Question: What did the Appraisal Institute do or not do that The Appraisal Foundation objected to?

Answer: In simplest terms, The Appraisal Foundation expects its Sponsoring Organizations to communicate with it first regarding any matters that have a direct or indirect impact on our organization. The Appraisal Institute failed to comply with this expectation.

To read an Appraisal Foundation Q&A about the sanctions and withdraw, click HERE.

Sotheby's Art Show

Carol Vogel is reporting in the NY Times that Sotheby's will launch a show/exhibition to be held in its 10th floor space of its New York showroom.  The show features artwork based upon Dantes Divine Comedy.  It is scheduled to run from September 30th through October, 19th.  Much of the artwork will be for sale, but there will not be any price tags.  Interested collectors will have to ask Sotheby's staff for additional information.  There is a catalog available for $65.00.  The artwork which is for sale is said to be priced between $35,000.00 to over $10 million.

As Vogel points out, and as I have noted in past posts on the AW Blog, there is a continued blurring of the lines between the large international auction houses and art galleries.

Vogel states

The organizer is Lisa Dennison, the former director of the Solomon R. Guggenheim Museum in New York, who joined Sotheby’s in 2007 and is now its chairwoman for North and South America. She called on experts throughout the company for help. “We see this as an extension of our private sale business,” she said in a telephone interview. Referring to the company’s Upper East Side headquarters, she added, “Our 10th-floor space is often unoccupied, and we wanted to do something there that will use all our specialists and that crosses geographies.”

Ms. Dennison was quick to point out that Sotheby’s had organized exhibitions before. It has shown and sold sculptures on the grounds of Chatsworth in Derbyshire, England, and other stately homes in the English countryside. And last year it held an exhibition of the collection belonging to Steven A. Cohen, the hedge-fund billionaire, also in its 10th-floor galleries, although Sotheby’s experts said then that nothing was for sale.

To read the full article, click HERE.

Deutsche Bank Restructures Art Services

The Art Newspaper has an article on Deutsche Bank, the large German bank restructuring its art services departments. According to the article art consultancy will contract, while increasing art lending. I would think they both go hand in hand, and that with more consultancy there comes more lending.  It appears the plan is to promote more art lending through private wealth advisers instead of through art experts.

The art consultancy department will be reduced from 3 people to 1, while art financing will grow internationally through existing lending divisions and private wealth account specialists. 

The Art Newspaper reports

Deutsche Bank has re-examined its business in the light of the economic downturn, concluding that private wealth management does not deliver the returns it should, resulting in the recent restructuring. While the bank does not officially give a precise sum of money needed to become a private wealth management customer, the threshold is believed to be €5m.

Art consultancy from Deutsche Bank is usually offered as an additional service at no extra charge for very wealthy customers; lending against works is expected to accrue greater returns. “We are in no way cutting down our art advisory [facility] within…private wealth management, but adjusting the services offered,” said Winker, adding: “Those who still want to ask us for advice will be taken care of by our art consultant, Christina Schroeter-Herrel.”

To read the full Art Newspaper article, click HERE.

Market Report - South Asian Art

Art Research Technologies has released its September report on the South Asian Market. ART provides data analysis and quantitative solutions for the art market.  ART reports that with S.H. Raza's record breaking work of $3.5 million at Christie's in June his work should be in high demand.  If that is the case, supply is high with 23 lots of Raza's works being offered.

ART reports on 5 important statistics concerning South Asian art.

1. In 2005, more than 80% of the 21st-century South Asian art works offered sold in range of or above their estimates.

2. The highest prices in the South Asian sector tend to go to 20th-century paintings in the 2,000 to 10,000 square inch range.

3. Works by the Indian painter F.N. Souza have accounted for about 12% of the total gross of South Asian art sales since 2005.

4. Demand for work by the Indian artist M.F. Husain is high this year; Husain's sell-through rate is 93% in 2010--a fact that bodes well for Sotheby's Untitled Husain cover lot.

5. The majority of South Asian artists have notable records of exceeding their estimates. Tyeb Mehta's average price since 2005, for instance, is 28% greater than his average mid-estimate.

For more information on ART, click HERE.

Sotheby's Pres Gets New Contract

Philip Boroff writing for Bloomberg reports Sotheby's Chief Executive William Ruprecht has a signed a new contract with plenty of incentive clauses.  His base pay will remain the same at $700,000.00 per year, but if all incentives and marks are hit, the new contract and annual compensation could total $8 million a year.  The four year agreement could total $32 million.

Sotheby’s Chairman Michael I. Sovern stated that if the full amount of the contract is earned, Sotheby's shareholders would be very happy.

It is nice to see that the compensation is based upon the success of the auction house.

Boroff writes

Auction houses started reviewing costs as the art market shrank after the collapse of Lehman Brothers Holdings Inc. Ruprecht took a one-third pay cut in his package last year, to $2.4 million, as Sotheby’s cut staff and lost $6.5 million, its worst result since 2003. On Aug.5, it reported that second- quarter earnings were seven times that of a year earlier as the art market recovered.

Effective Sept. 1, the contract leaves Ruprecht’s basic salary unchanged at $700,000. He’s to be paid an “annual target bonus” of $1.4 million cash, with a maximum $2.8 million depending on “performance and other metrics” set by the company’s compensation committee. In addition, Sotheby’s will grant him “performance share units” worth $3.5 million to $4.5 million that vest over time, also contingent on performance.

Sovern said neither the cash bonus nor performance shares is guaranteed.

Shares Double

The shares have almost doubled in the past year. Closing yesterday at $29.14, they remain about half their Oct. 10, 2007, peak of $57.64.

Sovern said Ruprecht has “a wonderful strategic sense,” navigating well in good times and bad. He points out that Ruprecht purged employees twice -- last year and after he took over in 2000, following a price-fixing scandal.

“To cut a significant fraction of the workforce without damaging operations and morale, that’s very hard,” Sovern said. “He’s done it twice, with enormous success.”

To read the full Bloomberg article, click HERE.

Antiques are Green

The Antiques Trade Gazette has an article on a report that antiques are truly environmental beneficial. The report claims antiques have a carbon footprint 16 times lower than newly manufactured pieces. There has been a movement to promote antiques as being green and this current study was completed by Carbon Clear, and was sponsored by numerous Antique Trade groups, including the ATG, Antiques are Green, and the British Antiques Dealers Association.

The ATG reports

While details of the cutting and processing involved in the manufacture of the modern chest of drawers in China were readily available, certain assumptions had to be made about the origins of the antique piece based on expert opinion.

The carbon emissions associated with the actual manufacture of the antique piece were very low. Cabinetmaker’s workshops in the 1830s were not generally powered and all work was done by hand and in daylight, timber cutting was also done by hand but the report factored in 70 per cent of the greenhouse gas emissions coefficient already calculated at Bath University for current wood cutting and processing.

A similarly conservative approach was taken to the life of the antiques chest, where it was assumed to have been sold and restored twice, where many pieces would have required little or no restoration. Even with this conservative approach it was found that the absolute emissions associated with the old chest including restoration, storage and transport were significantly lower.

The lifespan of the antique piece was assumed to be 195 years, though it could be much longer. Once this was taken into account, its average emissions per year were shown to be 16 times less than those for the modern chest. The lifespan of the new chest was estimated at 15 years based on expert opinion.

To read the complete ATG article, click HERE, and to read the Carbon Clear report, click HERE.

Top End of the Market

Scott Reyburn has a piece in Bloomberg about upcoming art auctions in London, and believes the market is exceedingly strong for important collections and celebrity provenance.  He refers to art from the collection of former model Jerry Hall, the former wife of Mikc Jagger of the Rolling Stones and from David Manners, the Duke of Rutland.

Most of the article is about the major pieces of art, including works by Lucian Freud, Andy Warhol, Damien Hirst and Frank Auerbach from Hall's collection and a painting by the 17th-century French artist Nicolas Poussin from Manner's collection which is expected to sell for $30 million.

I want to highlight only one sentence from the article, which shows the growing demand for quality art with strong provenance. The very top end of the art market appears to remain strong as evidenced by quality art coming to market.

Famous collectors and aristocratic owners are acting as demand for high-quality art picks up.

To read the complete article, click HERE.

Update: Estate Tax Bill

I have been trying to follow and keep fellow appraisers abreast on any pending moves for estate tax legislation. The Hill recently reported that Sen. Chuck Grassley (R-Iowa) predicted there will be legislation on the Senate floor and a new estate tax bill will be passed before the end of the year. Grassley stated he believes the exemption will be $3.5 million. Grassley did not comment on what the tax rate will be above any exemption or if the new legislation will be retro active to the beginning of the year.

Time is running out, and we have seen these statements before that legislation was close, only to see it not get to the Senate floor.

The Hill reports

Congress is likely to finish work this year on setting a permanent estate tax, Sen. Chuck Grassley (R-Iowa) suggested Thursday.

Grassley, the ranking member of the Senate Finance Committee, suggested that Congress is likely to settle on an estate tax rate this year, and exempt up to $3.5 million of estates from taxation.

"If we go back to a million-dollar estate tax exemption, which is going to happen Jan. 1, we're going to be selling a lot of farm land to pay estate taxes," Grassley told AgWired. "And even at $3.5 million dollars, which I think is where we're going to end up, it's still going to be detrimental to some family farmers. But I think that's where we will end up, and I think we'll do it before the end of the year."

To read the full article, click HERE.

Excerpt from the Journal of Advanced Appraisal Studies - 2010

This is the final installment of excerpts from the 2010 Journal of Advanced Appraisal Studies. This article by Robert J Corey and Robert W. Cook is entitled Lack of Objectivity Leaves Appraisers at Risk: Index Adjusted Good-Better-Best Appraisal Model Offers Partial Solution.

I have long been interested in pricing models for fine and decorative arts, and wrote for the 2008 Journal of Advanced Appraisal Studies Quality Condition Adjusted Mean Methodology: A Comparative Valuation Tool for the Appraiser, and in 2009 I co-authored with one of the authors of this article, Bob Corey, Combining Metrics, Standards and Connoisseurship: A Weighted-Factor Scoring Model.  This interesting article by Corey and Cook discusses using indexing, such as the Consumer Price Index to adjust scoring and final valuation adjustment.

Example of Objective Price Adjustment

Suppose that on July 31, 2009, you contracted to appraise a Georgian inlaid oak Welsh Dresser, mid-18th century, the cornice with dentil inlay and scalloped frieze, side compartments and door with shell inlay, base with deep frieze drawers, star inlaid pendant, and cabriole legs, ending in pad feet. A search of auction results within the last few months is unlikely to yield evidence of the sale of a wide selection of close comparables from which to choose. However, you note that on October 6, 2007, Neal Auction Company of New Orleans sold at auction a qualitatively similar and characteristically equivalent property for $7,931 including buyer’s premium. Before launching into a value ranking analysis of this potential comparable to determine its quality and value relationship to the subject property we need to adjust the price realized to reflect how inflation and market fluctuations have influenced the value of this sale over time. Making use of a CPI calculator, we find that inflation has driven the original price realized up 3.45% to $8,204.89 in current dollars.

Results:
Adjusted dollar amount $8,204.89
Base CPI Index 208.49
Adj. CPI Index 215.69

Turning to the calculator for major market indexes, we can create a chart to illustrate what the market has done to our original $7,931 since its realization in October of 2007.

A quick glance at the resulting chart indicates that the major market indexes have all fallen in the neighborhood of 30% to 35%. Utilizing the objective information provided we can than estimate that the out-of-date comparable price realized of $7,931 has increased 3.45% because of inflation and decreased 32.5% in a falling market. We conclude that in the current market (July 31, 2009) the comparable in question would likely command a price of $5,627.00 including buyer’s premium.

Adjusted Price Realized = ($7,931 + 3.45%) - (32.5%)
($7,931 + $273.62) – (2,577.58) = $5,627.04

The same adjustment procedure is applied to each of the selected comparables and the results represent objective inputs to the model. If current comparables are located, there is no need to apply the adjustment because those comparables will represent the state of the current market.

All proceeds from the sale of the Journal support the educational initiatives and scholarships of the Foundation for Appraisal Education. The cost of the journal is only $55.00, a bargain for the amount of content supplied, and for a short time shipping is free. For more information visit www.appraisaljournal.org to order your copy.

Sotheby's S&P Rating Gets a Boost

Although this new release is a bid dated from August 17, it is a slow period and I have not been able to locate any decent market news.  Standards and Poor's Ratings Service bumped the rating of Sotheby's up two levels, now almost at investment grade level.  The increase is based on the strong second quarter results.  The upgrade still may be shaky, as the economic recovery, if you can call it that continues to struggle.

DOW JONES NEWSWIRES

Standard & Poor's Ratings Services gave a two-notch boost to Sotheby's (BID), putting the auction house on brink of investment-grade territory, citing its "recent strong performance."

The upgrade came two weeks after Sotheby's reported its soaring second-quarter profit on rebounding sales in an improved auction-market environment.

Analyst Charles Pinson-Rose, while noting "volatile worldwide demand for art can lead to large swings in operating performance, credit ratios, and cash flows," said the new BB+ rating reflected S&P's view that "the risks are somewhat offset" as the company's performance "exceeded our expectations in the past year."

S&P had predicted a rebound after a very weak auction market in the last two years. Its ratings outlook on Sotheby's is stable.

S&P moved Sotheby's from BB- to BB+. The outlook is stable; it was raised to positive in March. The ratings agency said an upgrade to investment-grade territory might be "constrained" if "a significant decline in global capital market" occurs, which it said would increase the volatility in the company's results.

Moody's Investors Service last week upgraded Sotheby's, with its rating one step below S&P's new grade, on the "significant improvement" in credit metrics due to a rebounding auction market.

Shares were up 2.1% to $29.54 in recent trading. The stock has risen 31% this year.

Productive Magazine

I have posted on past issues of the online/PDF  Productive Magazine on the AW Blog.  This it a Getting Things Done (GTD) magazine with content and ideas on becoming more productive.  What is good about it is that most of the concepts and articles are geared toward small businesses and solo professionals who have to manage many aspects of business, from getting clients to dealing with finances and administrative issues.  We all could use a little advice in being more productive.  In that sense it is applicable to the managing the personal property appraisal practice.

As you can see from the article listed below, there are many insights into getting things done.

This issue of Productive Magazine contains the following interviews and articles:

• Ditch the Bad Habits and Cultivate the Good Ones - an Interview

• Scheduling Time in the Alone Zone

• Frictionless Wrok: How to Clear Your life of Non-Essential Tasks

• Quick and Dirty Guide to: Meetings - How to Make them Work

• Getting Things Done...Faster

• Kanban Changes the Perspective

• Focusing on Getting Things Done with Project management 2.0

• 7 Ways the New Apple iPad will Increase your Productivity

• 10 Laws of Productivity

To read the new PDF issue of Productive Magazine, click HERE.

Student Needs Survey Assistance

Sotheby's Institute grad student Alexa Shitaneshi is working on her thesis and would like the assistance of fine art appraisers. Alexa's thesis is focused on provenance and value. She would like art appraisers (especially those with contemporary and 20th century specialties) to complete a short survey. The survey is online and should not take much time to complete. If you are not an art appraiser, please do not complete as the survey results are geared toward appraisers with a fine art specialty.

To take the survey, click on or cut and paste the address to the survey on Survey Monkey.
http://www.surveymonkey.com/s/HF8M7M8

If you know of a fine art appraiser who is not a subscriber to the AW Blog, please feel free to forward the link.

If you may recall, the Appraiser Workshop readers assisted with a thesis on blockage last year, which was later published in the Journal of Advanced Appraisal Studies.

Please help Alexa out, and take a few minutes to complete the survey.

Thanks for your help,

Todd