7/23/2020

Thank You


Thanks to everyone who send me best wishes, kind thoughts and positive feedback about how important the AW Blog has been to them over the years. I am truly humbled by the response and outpouring of support, and more importantly concern over my recent surgery and recovery. Thank you so much for all of the kind words and outpouring of support.

Some of the support emails and blog readers asked if there was a way to view all of my posts over the years and how to search for the posts. For the first questions on viewing all of the posts, such as an index or table of contents, I can on the blog dashboard, but I dont think there is a way to make that public. I will look into it and see if there is a way to publish the titles of the posts. I dont think I can, but I need to look a little deeper into it.

The second questions was searching the posts specific content and information. And yes, that can easily be done, and I have had many appraisers, attorneys, art market advisors, bankers and even IRS professionals search the blog for articles and specific content.

To search the post you need to visit the blog homepage. Most viewers of the blog are through email distribution, but there is a webpage for the AW Blog and all of the posts are on it and they are searchable. 

To visit, click the following link


Once on the AW blog page, in the top left corner is search box.  Just type in your keyword, such as Kollsman or Appraisal Foundation and posts with those keywords will appear. If you are using a general term, like appraisal, be prepared for a lot of posts, so be more specific. It searches the title and the content of my posts (mostly news articles). There is a wealth of knowledge and over ten years of appraisal related posts on the site with great past art market news and appraisal content.

Have a great weekend, and again thank you for all of your kind words and thoughts.


7/22/2020

Update and Future Plans


I hope everyone is doing well and staying safe. I have not posted since early May, and even prior to that I was not posting as regularly as I like or have done in the past.

First, things slowed down with isolation, shut downs and social distancing, and with that I thought a good time for a bit of a break. I probably had more time to post, but found little of interest and with the change in routine focuses on other opportunities and interests. 

Then, on May 10th I had unexpected quadruple bypass surgery. I bit of a shock, but all is well and the recovery has gone better than expected. That certainly slowed me a down as well, while it also makes you reassess your priorities as well as lifestyles.

We look at the discovery and surgery as a blessing as the blockages were caught before any major medical events, such as a heart attack. The good news, according to the cardiologist is my heart is in very good condition and did not sustain any damage.

With that, I am now getting back to work with some interesting appraisal assignments, and I am please about that as too many days have run together over the past few months. My plans for the Appraiser Worskshops blog are still forming or re-forming. I hope to continue to post, but will probably reduce the number of posts and only post when something major happens or something with a high level interest to the personal property appraisal community, or something that interests me and I wish to share. Additionally I am working with the ISA Conference Planning Committee for the 2021 Assets Annual Conference which if all goes well will be held in Washington DC in March of 2021. We have some exciting things planned and a lot of great programs.

I have been posting for over 10 years now, and have over 4,000 posts, mostly dealing with appraising and the fine and decorative arts markets.

So stay safe and look for my posts in the future.

Best,

Todd




4/16/2020

Art Collectors Looking for Liquidity During Covid-19


I hope everyone has been well as we adjust to social distancing and isolation during the Covid-19 threat. My family and I have been well, staying mostly at home and doing some appraisal work and trying to stay busy as the days pass.  From other appraisers I have spoken with business is very slow, and I am seeing the same thing. Hopefully when the economy is opened and restrictions are slowly lifted life and our appraisal practices will start to get back to normal.

I have not been posting much, as it seemed to be a good time for another break, but I spotted this interesting article from Business Insider on how wealthy collectors are using their assets during the Covid-19 outbreak.

Everyone, please stay safe and well.

Business Insider reports

  • Some wealthy art collectors are raising cash from their art assets amid the looming recession.
  • Investing in art has long been popular among the wealthy because the category is considered a “value-preserving asset class” that has a lower call risk than assets that are priced daily, such as securities.
  • “As equities tumbled and then, as concern and the consequences of the pandemic started to become apparent, some clients [are] looking for fast capital to meet capital/margin calls on their investment portfolios,” Freya Stewart, CEO of Fine 

Some wealthy people are looking at using their art assets as collateral to obtain hard cash amid the coronavirus pandemic, Business Insider has found, based on interviews with multiple sources in the art world.

Elizabeth von Habsburg, managing director of Winston Art Group in New York, told Business Insider that people are looking to raise money from their art due to a mixture of “economic disruption and lowered interest rates” in the financial markets, giving clients “the opportunity to undertake, or add to, their loans collateralized by art.”

Athena Art Finance in New York told Business Insider that the company was in “active discussions” with various art collectors and investors looking for liquidity, while London-based Fine Art Group said it has also seen an uptick in inquiries for financing against high art and jewelry this past month.

Fine Art Group CEO Freya Stewart told Business Insider the uptick is because “cash is king” – especially in “times of volatility and uncertainty.”

Experts say the US is headed toward a recession brought on by the coronavirus pandemic. In the past three weeks, more than 16.5 million Americans have lost their jobs.

“As equities tumbled and then, as concern and the consequences of the pandemic started to become apparent, some clients were looking for fast capital to meet capital/margin calls on their investment portfolios,” Stewart said. “Others simply want to secure capital now to ensure they are financially well positioned over the coming months and beyond.”

To be sure, there is evidence of that this activity is having a counter effect: wealthy people, collectors, and galleries sensing an opportunity and buying more art than before. Bloomberg’s Katya Kazakina and Tom Metcalf reported that wealthy people have been buying art at massive rates to shift their stock into “real assets.”

Art financing has long been popular with investors, because art is seen as a “value-preserving asset class,” as noted by Deloitte’s 2019 Art & Finance report. Artwork in general isn’t necessarily impacted by the risks commonly associated with the financial market, which makes it a lower call risk as an investment, Kazakina and Metcalf reported.

For example, it took the S&P 500 five years to recover from the 2008 recession, while it took the Artnet Index for the Top 100 Artists only three years. During the 2015 and 2016 market sell-offs, though both the S&P and Artnet Index took a hit, Deloitte found that, when broken down by price bracket, high end works of art worth at least $1 million were able to lead a comeback in some art categories.

Since art is regarded as being a luxury item, it often rebounds and grows faster than traditional assets do. This is especially true for blue chip artists such as Picasso, Dali, Pollock and Warhol, whose works have been proven to hold value over time, even during economic crises.

“Over the past 10 years, art has become recognized as an acceptable asset class for banks to lend against,” Scott Lynn, founder of the art investment company Masterworks, told Business Insider. “We estimate that there is more than $10 billion in leverage secured by major art collections. Most art loans begin at $10 million and exceed $1 billion in collateral value.”

As a recession looms, the art world waits to see what’s next
Interest rates for art lending have fallen dramatically over the past few years, attracting more companies and art collectors that are looking to secure loans. In fact, von Habsburg said that last year alone, Winston Art Group appraised more than $3 billion worth of art to be used as collateralized loans.

“The benefits now as in the past are many – it is a way to make that asset class work as a financial tool; it is an alternate source of liquidity in a normally rather illiquid asset,” she said. “For those collectors or dealers who have large stocks of stored art that is not being hung or transacted, that art generates funds rather than sits as a static asset; and the art can be held and hung on collectors’ walls even while being used as collateral.”

Art shows, fairs, and private and public auctions have been canceled amid the coronavirus pandemic. Museums around the world, such as the Louvre and the Met, have also closed, as have the galas usually thrown to help raise money for them.

Art shows, fairs, and private and public auctions have been canceled amid the coronavirus pandemic. Museums around the world, such as the Louvre and the Met, have also closed, as have the galas usually thrown to help raise money for them. Getty Images
But there could be a negative side to using art as collateral, she said, which could become more apparent over the next few months. Especially because this season’s art shows and auctions have been postponed, while private sales have started to slow down.

“The current situation, it is not just a financial crisis. It is also a crisis of the health of so many people worldwide,” she continued. “I would imagine that the art market will be slower to recover than after the 2008 financial crisis, as galleries go out of business, leaving many artists without gallery representation, auction houses retrench, furloughing wide swaths of specialists across lower revenue areas of the market, and sales remain ‘virtual’ for longer periods of time.”

Meanwhile, as a recession continues to threaten the global economy, von Habsburg predicted that some art portfolios, such as contemporary or modern art, might need additional collateral to “maintain their ratios of loan to value.” But, she said, this could prove difficult for those who do not have excess work to place into the portfolio.

“Works may have to be sold to cover the debt, and the market has a sharp nose for works being sold under duress, which can lead to lower than normal financial results,” according to von Habsburg.

Cynthia Sachs, chief investment officer of Athena Art Finance, somewhat agreed with von Habsburg.

“Art collectors are waiting until the public part of the market opens to sell their art, while art investors are using this time to find interesting stressed opportunities,” Sachs told Business Insider. “This global pandemic is clearly a new paradigm for all asset classes. We don’t have any precedent or foresight in our recent history to understand the true long-term effects of such a crisis on the art market.”
Source: Business Insider 



3/26/2020

PERSONAL PROPERTY INSPECTIONS



Personal Inspections during a National Health Emergency from the Appraisal Foundation
Question: Do  personal  property  appraisers  need  to  perform  personal  inspections  during  a  national health or other emergency?

Response:Appraisers and users of appraisal services should remember that USPAP does not require an  inspection  unless  necessary  to  produce  credible  assignment  results. (Please  refer  to USPAP Standards Rules 7-2 and 8-2 and Advisory Opinion 2 for further guidance.) When a personal inspection would customarily be part of the scope of work, a health or other emergency condition may require an appraiser to make an extraordinary assumption about the identification, relative quality, etc. of the subject property. This is permitted by USPAP as long as the appraiser has a reasonable basis for the extraordinary assumption, as long as its use still results in a credible analysis, and as long as the appraiser complies with the reporting requirements in Standards Rule 8-2(a)(xiii) or (b)(xv).Thus, if appraisers rely on photographs, purchase receipts, inventories, maintenance logs, etc. to identify the subject property, they must reasonably believe the sources are reliable.

Appraisers must also reasonably believe the sources areadequate for identifying the other characteristics  of  the  property  that  are  relevant  to  the  type  and  definition  of  value  and intended use of the appraisal, as specified in Standards Rule 7-2(e)(i-vi).

Personal property appraisers are cautioned to use great care in the use of an extraordinary assumption  in  lieu  of  a  personal  inspection.  It  may  not  be  possible  to  identify  relevant characteristics   of   some   assets   or   to   perform   certain   assignments   without   actually performing a personal inspection of the subject property. Some examples include, but are not limited to, when the scope of work makes it necessary for the appraiser to: determine whether the subject is a painting or a giclée print on canvas; obtain technical information about a diamond; ascertain a property’s current condition; or confirm its very existence. In these cases, the appraiser cannot provide a credible appraisal without conducting a personal inspection.
Source: The Appraisal Foundation 





3/15/2020

Coronavirus


If you are like me, you are probably getting all sorts of notices of auction house restrictions and closings. Christis's and  Phillips have announced closing and postponements.

Many other businesses are now having employees work remotely, and many school systems have temporarily closed. I would assume it will have an impact on our appraisal practices as well. ISA Annual conference is scheduled for late April, and ISA leadership, from what I understand is working with partners to weigh all available options, which of course could include cancellation. AAA has suspened all of its in-person programs and is looking to add more online options.

The Artnewspaper reports
Auction house has closed New York saleroom along with other offices—Sotheby's has not as yet announced any closures while Phillips has postponed all events and sales until mid-May

14 March: Phillips announced that it will postpone all sales and events globally until mid-May

Christie's is shutting almost all of its locations in the US and Europe, including New York, until further notice and postponing March and April sales due to the spread of coronavirus (Covid-19).

Phillips has also postponed all sales and events internationally until mid-May and closed its offices across the US and Europe.

In a statement released last night, Christie's says the decision is to protect the "health and well-being of our employees and our clients". Guillaume Cerutti, Christie's chief executive officer, says: “In the days ahead, we will be communicating a number of necessary changes to our usual course of business, including further changes to our sale calendar. These decisions are undertaken with a great degree of care and in close consultation with our clients.”

As of Monday, 16 March, as a precautionary measure Christie's flagship New York premises will be closed along with its offices in Brussels, Buenos Aires, Chicago, Dallas, Dubai, Düsseldorf, Hamburg, Houston, Los Angeles, Madrid, Mexico City, Miami, Milan, Monaco, Moscow, Munich, Rome, San Francisco, Santiago, Sao Paulo, Stuttgart, Tel Aviv, Toronto, Vienna and Zurich.

Christie’s King Street in London will, however, remain open, although the business is "reviewing the situation on a daily basis." The Amsterdam, Geneva and Paris offices remain open but with a reduced number of staff.

All but two sales—Prints & Multiples (18 March) and Chieveley House, Berkshire and Five Private Collections (19 March) in London—in March and April will be postponed for now (new dates will be released in the coming days, the firm says).

However, with the major May New York sales looming, the statement hints that more sales might be affected as Christie’s is "working through a restructuring of its forthcoming auctions, including significant changes to the sales calendar in the Americas and Europe."

The following auctions will be postponed—no new dates are announced as yet, the original sale dates are shown in brackets.

In New York: A Lasting Engagement: The Jane and Kito de Boer Collection (18 March); South Asian Modern and Contemporary Art (18 March); Contemporary Art Asia Online (19-26 March); Photographs (31 March); Dalva Brothers: Parisian Taste In New York (2 April) and Prints and Multiples (15-16 April).

In Paris: Dessins Anciens et du XIXème siècle (25 March); Oeuvres Modernes sur Papier (26 March); Hommage à Arp – La collection Greta Stroeh (26 March); Art Impressionniste et Moderne (27 March); Livres Rares et Manuscrits (7 April); Art Précolombien (7 April); Arts D’afrique, D’océanie et D’Amérique Du Nord (8 April); Collection Delanoue (28 April) and The Collector: Le Goût Français (29 April).

Meanwhile, Sotheby's also released a coronavirus statement from its chief executive Charles F. Stewart last night as a reassurance to clients, but did not announce any closures as yet. Stewart says: "So far, we have been able to conduct auctions and offer the full range services to our clients, despite modifications as appropriate in certain instances. While we cannot predict the future, we wanted to let you, our valued clients, know how we are addressing the epidemic and what you can expect from us in the near future."

Stewart says that the firm will follow "the advice of local government officials and health authorities and, where appropriate, have colleagues working remotely" and adds that Sotheby's "galleries in New York and London are open this weekend" with sale views open to the public.
Source: The Art Newspaper 



3/10/2020

Strength Reported in the Dec Arts


The Financial Times recently posted an interesting article on strength in the decorative arts market. I have only posted a small portion of it here, as the FT limits what I can post. If interested in the full article, follow the source link below. The article does a good job at defining the differences between collecting fine art vs the decorative art, and the barriers to entry on quality pieces are lower.

The FT reports
And it is not just new design; the antique and collectibles market is stronger than ever. Estimate-busting 20th-century pieces by Jean-Michel Frank, Charlotte Perriand and René Lalique achieved world-record prices at Sotheby’s auctions last year. Its design auctions fetched more than $190m globally. Bonhams tells a similar story, with strong sales in North America.

Collecting design is nothing like collecting paintings or sculpture, or even conceptual art. For a start, taking a chance on a new designer or two is unlikely to make a patron rich.

But the fact that it is cheaper to start a collection makes design less risky and, in turn, more accessible — and fun. As New York gallerist Zesty Meyers puts it: “Compared to the fine art world, design is like a penny candy store.”

Compared to the fine art world, design is like a penny candy store

New York gallerist Zesty Meyers
He is right: there are many more actual things in the world to collect. Furniture and functional objects — particularly when manufactured rather than crafted — are easier to come by than paintings.
Source: The Financial Times 



3/08/2020

Working with Millennials


I just posted an article sent to me by Rosalie Wardell on how rug dealers are developing sales strategies on selling rugs to millennials. Now, an article from Wealth Management on millennial growth and interesting in passion investments and collecting. The article notes that more tan previous generations, millennial collectors are interested in more than just the passion of collecting, they too wish to see a return on their collecting. With that, appraisers and art advisors should soon start to see more business coming from the millennial generation.

Wealth Management reports
The millennial demographic is finally starting to pay off student loans, buy houses and save money. They’re accumulating wealth and depending on advisors to help them invest, but in typical millennial fashion, their interest goes beyond the standard stocks, bonds and other investment instruments that advisors generally recommend. Fine art is a commodity that appeals to the demographic, so advisors need to be able to help explain how it can be a financial asset and wealth-building strategy—and not just something to decorate the walls of the homes they’re finally able to buy!

Art has never been more accessible. Social apps like Instagram allow millennials to interact and communicate with artists and galleries, providing access like never before. Millennials were also introduced to art from an early age through brand partnerships. Famously, sneaker companies have collaborated with artists to produce custom shoes and unique colorways inspired by the artist’s style. In 2019, renowned British artist Damien Hirst worked with Vans to apply his favorite motifs to some of their most popular styles, while Nike’s collaboration with Netherlands-born Piet Parra led to one of their most popular sneaker releases to date. Brand collaboration goes beyond sneakers, as the world-famous Jean-Michel Basquiat’s art-inspired makeup line is among the most popular for well-known brand Urban Decay. For advisors working with millennial clients, it’s important to realize that art was an entrenched part of their culture growing up, and not necessarily some highfalutin collectable for the rich and famous.

More than ever, art is permeating consumer goods and pop culture, which created a low barrier of entry for the millennial demographic to gain interest. Now that they’ve started to accumulate wealth, they’re seeking out advisors who can help them conduct due diligence and learn about investing in art. There are reasons for advisors to take this sector very seriously, as millennials often identify the following as selling points:

Time—Generally, millennials are the youngest demographic to be able to accumulate the means to invest in art, which makes it an attractive asset class because they have the opportunity to let it appreciate over time. When advising, it's crucial for them to understand that art is a commodity whose value grows slowly, taking years or even decades. Because millennials are so young, they have the ability to see the complete cycle when it comes to an artist's rise in reputation over time. They don’t need to be investing in the Monets or Picassos of the world but, instead, can look for burgeoning artists that pique their interest and appeal to their taste. As their advisor, it’s important they realize that because of their youth, they’re uniquely positioned to let the artwork and artist appreciate over time.

Unparalleled access—Beyond visually focused social media like Instagram, the internet has made the art world more accessible than ever. Aside from being able to connect directly with galleries and artists, online marketplaces have also seen a rise in popularity, providing the “Google everything” generation with means to purchase fine art in a familiar, comfortable way—using the mobile devices they love so much. The art industry has been slow to adopt the e-commerce revolution, but millennials are more likely to buy fine art online than any other demographic, and the industry is starting to appeal to their state of mind. The internet can be a modern-day Wild West, so if clients are considering purchasing art online, investors need to do their part and help them vet the opportunity. Are they buying directly from a gallery? What is the overall earning potential for the piece? The internet provides access to art from across the world, but it’s the investor's job to ensure that clients are purchasing art that will actually accrue value over time.

Beyond just an investment—Unlike stocks and bonds, art also doubles as a hobby for millennials, and advisors can help young investors most in their research phase. Introduce them to the Sotheby's Mei Moses Indices and help them understand why it's the preeminent measure for the art market. Make sure they know how art is valued and what qualities drive value. While previous generations may have been more willing to allow advisors to handle their wealth as they see fit, millennials want to be involved. They want to be active and have a full understanding of how they’re diversifying their money, and the art world allows them to have a more hands-on approach. Whether it's communicating with an artist through an online art buying platform or arranging to see artwork in person through a gallery, investing in art allows millennials to be more involved with their investments.

More than with previous generations, art represents an investable asset class to millennials. Still scarred from the 2008 recession, they believe this physical asset will let them accrue wealth over time, while also giving them something nice to look at—and share on Instagram! The internet's ability to make almost everything feel accessible, combined with the art world introducing itself to millennials from an early age through brand partnerships and pop culture references, has made it an ideal market for the demographic. As this generation and the ones following it accrue wealth, advisors must know how to answer their questions and counsel them.
Source: Wealth Management