Dealer/Appraiser Conflict of Interest

News station KRQE in Albuquerque is reporting that a woman brought two paintings to a local area dealer/appraiser after discovering them in the basement of her deceased mothers home. The dealer recognized the artist of the two paintings as Harold "Buck" Dunton a Taos area artist, and informed the client who the artist was, and then offered $4,500.00, which the client then accepted expecting she was getting value from the dealer/appraiser.

The appraiser/dealer then sold the two paintings for $35,000.00 a few weeks later (appraisers should now be thinking conflict of interest and ethical responsibility). After changing hands two more times, the two Dunton's were auctioned for a total of $661,000.00. Yes, that is not a typo, but $661,000.00. Coeur d'Alene Auction sold the MULE DEER BUCK AND DOE (see image) for $402,500.00 and the FISHERMAN IN A STREAM for $258,750.00 during the July 2008 sale.

Now I am a antique furniture dealer and an appraiser. I get many calls where the client says they want an appraisal, but after a minute or two in a discussion about appraisals, it is obvious they actually wish to sell the property to me. I dont know what transpired between the appraiser/dealer and client, but if I am asked to appraise an item, I am upfront and say I will not purchase any property that I appraise. The conflict of interest is rather obvious.

The owner of the paintings sued the appraiser/dealer for fraud and negligence. Last week the verdict was returned with the dealer being found not guilty of fraud, but guilty of negligence and ordered to pay $15,000.00 to the client.

It appears the dealer appraiser knew of the artist, but may not had taken the time for additional research, as the difference in what he claims to sold them for and the final price realized at auction.

This story reinforces why a client for appraisal services needs to select carefully the appraiser. Even if the dealer/appraiser did not buy the two paintings, and instead said they were worth the $35,000.00 he sold them for, he was still negligent in not realizing the true value of the art he was looking at. To me, for not taking the time to select the proper appraiser, the client has lost over a half million dollars. I am sure the $4,500.00 offer sounded very good at the time of offer as the client stated the paintings looked like they were painted by numbers. As this situation clearly indicates, it certainly pays to select the right appraiser, with proper knowledge, experience, research capabilities and ethics. Given what was reported, I am surprised to see the appraiser did in fact belong to a major appraisal association, the Appraisers Association of America (AAA).

This report, along with the recent Dali sales and appraisal at the Houston Salvation Army give appraisers a lot to think about.

KRQE reports

Eller paid Hicks $4,500 for the two paintings, one of a fisherman and the other of a buck and doe.

Eller cleaned up the paintings and a few weeks later sold them for $35,000.

The paintings passed hands two more times, and then in July 2008 they sold at auction for more than $661,000.

"Yeah, I was upset," Hicks said.

Hicks said she has theories on why Eller paid her such a small amount of money when experts say they were worth more money.

"He really didn't know what they were worth, and he wanted to move them and figured--what is it?--a fast nickel beats a slow dime," she said. "Or he wanted to move them out of state because he didn't want the possibility of me stumbling into a gallery and seeing them.

"I don't know. I believed option B."

Hicks sued Eller for fraud and negligence. The case went to court last week, and the jury returned a split verdict on Wednesday.

Eller was cleared of fraud but found to be negligent and ordered to pay Hicks nearly $15,000. He declined a request for an on-camera interview but said he was satisfied by the verdict. Hicks said she can live with it, too.

"All we really have is our word," she said. "We give our word. Do we keep our word even if it's not convenient?"

To read the full article, click HERE.

There is also a video on the site which has some scenes from the court case and interviews with the appraiser and client. It is also embedded in the AW Blog post (I dont believe embedded videos are viewable for those getting subscribed to the email delivery service).

Iraqi Discovered Picasso a Fake?

Iraqi police recently discovered and released news of what they thought was a Picasso originally thought stolen during the Kuwaiti invasion. The painting was seized last week as it was being offered for sale in the amount of $450,000.00.

The Associated Press is now reporting the Picasso is probably not authentic. After some preliminary research and reviews, the paintings authenticity is certainly in question. The marks and seals on the back have some unusual spelling with words in all lower case. One marking is from the Louvre, which claims it has never owned a Picasso, nor does not sell it works of art as they belong to the collection of France. The Art Loss Register also has no record of the painting.

The Associated Press article states:

The painting has a tag on the back with several misspellings that says it was sold by "the louvre" to "the museum of kuwait," with the words Louvre and Kuwait in lower case. There are also several stamps bearing the name of the Louvre Museum in Paris.

But an official with the Louvre Museum said it has never had a Picasso in its collection and does not sell its works because they are government property. The official spoke on condition of anonymity according to museum policy.

The London-based Art Loss Registry said it has no record of any paintings missing from the Kuwait National Museum, and no record of this particular painting as missing at all.

The Picasso Museum in Paris and France's national museum were searching their archives for signs of the painting, which Iraqi forces seized Tuesday during a raid on a house near Hillah, about 60 miles (95 kilometers) south of Baghdad.

A local judge in Hillah, Aqeel al-Janabi, said Thursday the painting will be sent to Baghdad after an investigation but refused to provide details.

To read the full Associated Press article, click HERE.

Update on the Dali's Donated to the Salvation Army

A lot of questions are surfacing around these Dali's. Are they real, what about the $76,000.00 appraisal of two years ago. According the NY Times article the appraiser and dealer are one and the same.

Last week I posted along with a video (for those getting email delivery, see the video viewer on the Appraiser Workshops Blog or Appraisers Post sites) the story of an anonymous donor of a group of Dali prints and a sculpture to the Houston Salvation Army thrift store. The store has decided to sell the donated items through the store in a silent auction style. The question of authenticity still remains, and the the donated items have yet to be authenticated.

Fellow appraiser Jo Desmond forwarded the NY Times article to me on the donated items, and it stress the large the number of fake Dali's that are on the market and in private collections. The article states that each of the three lots being offered have bids of over $8,000.00. The article also has comments from Bernard Ewell, ASA a noted Dali authority, who states in the article "there is nothing certain in the Dali market."

The NY Times article mentions a value for the Dali items at $76,000.00 based upon a two year old appraisal document. I certainly hope the appraiser acted responsibly when it comes to Dali prints and the performed the necessary due diligence and had the collection of Dali items authenticated by an expert. If not, the appraiser may have questions to answer as this situation is turning out to be a rather high profile donation and sale, as indicated by the ABC news video and now the rather substantial coverage by the NY Times.

The appraisal, from the limited information given already sounds questionable based upon the statement where the appraiser claims he is not sure they are the same pieces he evaluated and sold. There is also a potential conflict of interest here, where the article states the appraiser valued and also sold the pieces. Additional question, how can the appraiser/dealer not know if these are the same items, is there not a work file? Depending upon the sale price and future authentications, this very well may turn into a complicated case which could end up in the courts. It sounds as if the dealer/appraisers has additional explaining to do.

As Dali authenticator Ewell states, you can not just assume it is an authentic Dali if a came from a known gallery.

As I mentioned in the previous post, let the buyer beware.

The NY Times article states

The works were given to the Salvation Army by an anonymous donor, and the man behind a two-year-old appraisal document — which suggests that they are worth more than $76,000 — says that he cannot be sure that they are the same pieces he evaluated and sold. Appropriately, perhaps, the answer to the question of whether the thrift-store Dalís are real Dalís turns out to be as elusive as the memory of a dream.

Dalí’s tremendous popularity, stemming from his accessible if hallucinatory style and relentless self-promotion, helped make him one of the most widely copied artists of the 20th century (as did his habit of signing blank sheets of paper for money).

“There’s nothing certain in the Dalí market,” said Bernard Ewell, an appraiser in Santa Fe, N.M., who specializes in works by Dalí. It’s impossible, just on the basis of a dealer’s reputation, to be sure you’re getting the real thing, he said. “It’s not that simple.”

Joseph Nuzzolo, president of the Salvador Dalí Society, an appraisal service and gallery in Redondo Beach, Calif., added that though “a lot of people want to have an original Dalí, a lot of them get burned when they buy a fake.” So any unknown piece presented as the artist’s work calls for scrutiny, especially in a setting as unorthodox as this.

To read the full NY Times article, click HERE.

Canadian Auction House Ritchies in Ownership Dispute

Kenneth Kidd of the Toronto Star has an interesting article on the current ownership dispute at Rictchies, one of the preeminent auction houses in Canada. According to the article, the dispute is about a past Ritchies president who resigned this July and was attempting to purchase the company, the owner who withdrew $1 million from the auction accounts and a recently ended relationship with Sotheby's.

The Sotheby's agreement ended this summer after Rictchies failed to pay nearly $750,000.00 to consignors. Sotheby's in order to preserve its reputation made the payments. Over the past 7 years, the Ritchies/Sotheby's alliance had sold nearly $100 million of Canadian art. The Ontario liqueur board was also selling wine through an agreement with Ritchies, and has now backed away from the auction house.

From some of the statements in the article, the situation at the moment is very contentious. Past consignors are wondering when they will be paid and new consignors are not sure if the auction house will hold another sale and survive the current turmoil.

The article is very interesting and well worth reading.

Kidd states

For the past year, Ranger had been attempting to buy control of Ritchies from majority owner Ira Hopmeyer, talks that largely foundered because of an increasingly bitter dispute about the nature of at least $1 million that Hopmeyer had withdrawn from the company. Ranger wanted the money put back. In the wake of that dispute, Sotheby's has severed its link with Ritchies, one that had seen them jointly auction about $100 million worth of Canadian art since 2002. When Ritchies couldn't make good on roughly $750,000 owed to consignors from the May art auction, Sotheby's had to step in and pay the consignors, lest its image be tainted.The Liquor Control Board of Ontario, which had been staging wine auctions with Ritchies, went solo as well.By the end of July, Ranger had resigned and the entire staff of more than two dozen people were let go, though Hopmeyer has since hired a handful back, vowing to stage an auction next month.

Kidd continues

The ensuing swirl of rumours has left consignors with merchandise now sitting at Ritchies wondering whether they'll get paid for any goods sold, or whether they should try to retrieve their goods beforehand, even if that means paying a contractual penalty of 20 per cent of the high estimate of the value of those goods, a point Hopmeyer has been enforcing. For many, the woes of Ritchies reflect an industry due for trouble. "I'm surprised it hasn't happened sooner and more often," says Miriam Schiell, a Toronto art dealer and president of the Art Dealers Association of Canada, who counts herself "lucky" that Sotheby's intervened to pay her clients. "This is just a marketplace that's the Wild West." Which raises broader questions. Does a virtually unregulated industry in Ontario need more stringent rules? Should trust accounts be mandatory, rather than have the money of buyers and consignors slosh through the regular accounts of an auction house? And should auctioneers be obliged to pay consignors, as they are in Alberta, within 21 days, rather than letting them wait until the buyer finally coughs up the money?

To read the full Toronto Start article, click HERE.

More on the Nuns, Lawsuit, and the Bouguereau

Back in March on posted on the AW Blog about a Bouguereau painting purchased after an appraisal from an upstate New York monastery (click HERE to read original post). David Hewett of Maine Antique Digest updates the story in the September issue. The basis of the story was the nuns had the painting appraised, and then restored at the cost of $14,000.00. They then sold the painting to intermediary who was working Santa Fe dealer Mark Zaplin. The nuns sold the painting for $450,000.00. According to the MAD report, Zaplin invested another $50,000.00 in the painting and sold it for $2 million. Then came the intrigue, collusion charges, extortion claims and lawsuits.

Sotheby's at one time had looked at painting and deemed due to past history, restoration and need conservation it was not interested in selling at auction.

Hewett reports

Unfortunately, the newest suit filed with the Supreme Court of the State of New York, County of Albany, burst a few balloons with its denial that the nuns and the bishop were victims. It defends the price paid for the Bouguereau painting as "fair and reasonable" taking into consideration the subject and the condition. It alleges that two art dealers, Paul Dumont and Robert Boyle, conspired to extort money from dealers Mark LaSalle and Mark Zaplin, and when LaSalle spurned their entreaties, they carried out a systematic plot to destroy his reputation. The March 12 suit charges art dealers Robert Boyle and Paul Dumont with defamation of character, attempted extortion, and conspiracy. It charges that Bishop Clarence Kelly made slanderous and defaming statements, both to groups and individuals, and caused them to be circulated through a number of media outlets.The suit claims that Boyle and Dumont made the false statements to Bishop Kelly and his congregation in order to provoke the suit the latter filed against LaSalle and Zaplin. It charges that Bishop Kelly "failed to verify facts" and staged interviews and press conferences in religious settings, while appearing in religious vestments, which was deliberately to give an air of honesty and integrity to his statements.

Hewett continues

The defamation suit states that representatives of Sotheby's did view the Bouguereau painting in April 2006. Paragraph 36 of the suit reads as follows: "On behalf of a prospective buyer, representatives of Sotheby's auction house looked at the painting in Williamstown sometime in April, 2006. After its history, the nature of the restoration performed to date and the need for further restoration were disclosed to the Sotheby's representatives, they concluded that the painting would never be auction quality and no purchase offer was made." Sotheby's had not confirmed that statement by our deadline. Mark LaSalle's version of the events following the sale of the Bouguereau to Mark Zaplin claims that, once the news about the $2 million sale got out, and after an undisclosed commission had been paid by Zaplin to LaSalle and Dumont, Dumont and Boyle (whose presence in the case is never fully explained) "began to execute on a scheme to extort money from Plaintiff and Mr. Zaplin which included, among other things, the following actions…."

To read the full article, click HERE.

Journal of Advanced Appraisal Studies, 2010 - Call for Articles

The Journal of Advanced Appraisal Studies is quickly becoming the publication of choice for personal property appraisers. It is an annual journal written and edited specifically for personal property appraisers. It has been positively reviewed in Maine Antique Digest (click HERE to read the review) and endorsed by Wendell Garrett.

Original research articles, reviews , and discussions of professional appraisal issues and concerns from a variety of perspectives, theories, approaches, and methodologies are welcome. The next edition of The Journal of Advanced Appraisal studies will be published in March, 2010. Submission deadlines is fall of 2009. The articles must be original works, not previously published and a minimum of 3,000 words.

We are interested in articles covering the following personal property topics:

• Research Reports
• Opinion Pieces
• Interviews
• Book Reviews
• Ethics
• Valuation
• Authentication
• Appraisal Theory
• Appraisal Methodology
• Marketing
• Product Knowledge
• Legal Issues
• Conservation
  

For additional information and submission proposals on this exciting project contact the editor, Todd W. Sigety, ISA CAPP at toddsig01@gmail.com or 703-836-1020.

Dali Prints Donated to Salvation Army

Fellow appraiser Nancy Bosch sent me a link to a local Houston, TX ABC news video which reports on a group of Dali prints and a sculpture anonymously donated to the local Salvation Army thrift store. The Salvation Army decided it could maximize value by selling in store through an auction. The news report stated the expected sales would bring close to $14,000.00. Some people appear to be bidding on the Dali's, while others are taking a cautions approach and since there are so many fakes on the market, and they have not been properly authenticated.

To watch the video, click HERE.

I have also embedded the video on the home page of the AW Blog and the Appraisers Post.

Let the buyer beware.

Kansas City Art Investment Fund - Values Based on Appraisals

The almost lost Portfolio.com is back with a good article on a Kansas City contemporary art investment fund. Portfolio was closed for financial reasons, and the quickly reconstituted, which is good, because like Forbes, the Financial Times and some other investment and business publications, they typically run some interesting articles for investors on art markets and collectors and are of good use for appraisers.

Portfolio reports on the Kansas City Collectors Fund which invests in contemporary art. Results are strong, especially for a market segment that has been hit hard since October 2008. The Collectors fund is showing an impressive 10% increase in value over the past 12 months ending in June. The prior year the the increased by 20%, more in line with the market at that point in time.

The interesting item here is the fund results and capitalization are based upon appraisals of the art held in the fund. We have to keep in mind, the investment gains are not realized, not based upon an index or daily buy and sell orders such as stocks or bonds.. Ultimately, the values of the art, and therefore the art investment fund are only as good as the appraisers conclusions. With the contemporary art market declining greatly over the past 8-10 months, and with continued volatility, the results, are to say the least surprising and of course are possible, but on the other hand, also possibly inflated. I would like to see the market analysis, comps used and justification of value as determined by the appraisers.

The fund currently has about 125 investors, owns 130 pieces of art that are placed in the investors homes on a rotating basis. Pretty unique.

Portfolio states The appraisals suggest a performance that significantly outpaces the Mei Moses Fine Art Index, which tracks the financial returns of the art market. “Is it possible? Yes,” said co-founder Michael Moses. “Is it difficult in this environment? Yes.” According to the index, returns on all art fell 4.5 percent last year and 31 percent in the first half of 2009. “It may be that the appraisers who viewed the work feel that its qualitative factors outweigh the decline in the quantitative measure,” he said.

The fund has only been in existence for two years, so it remains to be seen whether it can continue to perform in the long term.

Currently valued at $17 million, it holds pieces such as a massive, vibrantly painted aluminum structure by Frank Stella, The Mat Maker, and serene pastel drawing, Four Cakes, by Wayne Thiebaud. The approximately 125 investing entities, typically couples, don’t have to rely on brochures to view the fund’s more than 130-work collection—the pieces are stored in their homes on a rotating basis, another part of the fund’s diversification strategy.

The article continues But not everyone thinks art should share space on an investment palette.

Stephanie Guerin, a certified financial planner with The Planned Approach Inc., in Prairie Village, Kansas, encourages investing in assets not tied to the market. But she considers art a personal-consumption item, not an investment.

“There is potential there to make a killing financially, but it’s very, very speculative,” she said.

Still, members say the economics make sense, particularly because it’s a 10-year fund, and the investment is just as much about the experience.

To read the full article at Portfolio.com, click HERE.

The Gallery Business in Chicago

The Chicago Tribune has a good article on galleries in the Second City. Mark Caro and Lauren Viera report that gallery sales are not necessarily strong, and some galleries art struggling there are actually very few that have decided to close doors. The article mentions a NY Times piece in June which chronicled the closing of many New York City Galleries and compares to the Chicago gallery market, which appears to have faired better. Although, not without gallery casualties, the article claims Chicago art galleries are finding ways to survive and stay viable.

Caro and Viera report Compared with New York, where The New York Times reported in June that more than 20 galleries had closed, Chicago’s leading art districts have remained relatively stable. River North, the most established gallery area, has seen some businesses move or otherwise constrict their operations, but the bulk are still standing. The West Loop has suffered a few closings, while empty storefronts dot Pilsen’s developer-designed art district. [...]

For Carrie Secrist, who relocated her 17-year-old eponymous gallery from River North to the West Loop in 2003, business was humming until a few months into 2008, when buyers began delaying decisions to buy art — a dynamic noticed by several gallery owners. By the beginning of this year, Secrist said, “it seemed like everyone was just frightened to spend money. It seemed entirely psychological. [Colleagues and I] were looking at each other, thinking, ‘Will anyone ever buy art again?’ “ The free fall of what had been a thriving — and some say overvalued — art market has changed the way many galleries do business. David Leonardis took drastic actions. He closed his River North outpost in May[...]

To read the full Chicago Tribune article, click HERE.

Corporate Art

Robin Pogrebin of the NY Times recently published an excellent article on corporate and the benefits to the public, museums and corporation. In the past, corporations typically assembled collections and would occasionally lend out individual pieces for exhibitions. Now, the collections have gotten so large, with in-house curators, the collections are now going out as complete turn key exhibitions for both large and small museums and historical societies.

The article looks at some interesting concepts, including increased business, the cost of the exhibition (especially transportation) and the impact on the value of the collection to due the increase exposure, museum exhibition/catalog as well as adding to the provenance. The corporations and banks claim the return business gained typically outweighs the cost of staging the exhibition.

Overall a very good article to read and it is more than cursory, as it covers three pages. Link to full article at the end of the post.

Pogrebin states What museums need to be conscious of, art experts say, is creating the impression that these exhibitions enhance the value of corporate collections that might one day come to market. “A museum has to think very seriously about taking those shows,” said John Ravenal, president of the Association of Art Museum Curators and curator of modern and contemporary art at the Virginia Museum of Fine Arts. “The museum, by virtue of its stature and its public role, gives legitimacy or confers a certain kind of validity to these collections when it exhibits them.“If the collection isn’t a promised gift to the museum, then there is the potential for the museum to be used to unwittingly increase the value of a collection, whether its individual or corporate.”

Pogrebin continues “We have determined that a sale would result in an overall loss or a break-even, and that it is better used as a community support and marketing tool,” the bank’s Ms. DeSisto said: associating the bank with arts patronage and charitable giving, providing access to prospective clients in museum trustees and donors, offering opportunities for client entertainment.

Bank of America said its cost per exhibition can range from $5,000 to $25,000, depending on how far the artwork needs to be transported, and Ms. DeSisto said the expenditure — which she declined to quantify — has paid off.
“The income we have generated through increased business is superior to any income we could generate from selling the collection,” she said. “Attracting even one individual client can cover the entire cost of lending a turnkey exhibition.”

To read the full article, click HERE.

Accounting Firm Recommendation - Buy Antiques

Fellow appraiser Martha Peck sent me a good article from the Antiques Trade Gazette, which states major accounting firm Dilotte is recommending clients to purchase antiques. The rationale is that prices are currently low, with opportunities for future growth and value increases. The article states Deloitte's head economist reviewed data prepared by the Antique Collectors Club surveys and price data and determined antiques presented an opportunity for investors.

One important point made is that much antique furniture is better constructed and less expensive than quality new furniture. It is certainly good to see this type of analysis on antiques and value. Between the rise in cost of new furniture and the decline in prices of period antique furniture the large spread in value allows for greater opportunity and savings when purchasing antiques.

The article states Documenting the changes in the antique furniture market over the past five years, Mr Stewart wrote: “We think that the credit crisis could be supportive of antique furniture prices. First, a low return on cash provides investors with incentives to put money into less orthodox assets.

“Second, the credit crunch has highlighted the need for investors to put their money into a range of assets. Last year all the major assets – equities, houses, commodities – fell. Antiques are illiquid and they generally avoid the big price swings seen in financial markets.

“Third, for those who worry about the long-term effects of governments printing money, antique furniture offers a hedge against future inflation.”

But for Deloitte the best argument for buying old over new is “simply that antique furniture is better made and cheaper than new furniture”.

To read the full Antique Trade Gazette article, click HERE.

Request for Help

I am helping a student enrolled in a Master of Arts program at Sotheby's Institute with an appraisal project. Her paper is on blockage discounts and she has a prepared a short survey for appraisers.

She is having a hard time finding appraisers who have worked on assignments which have included blockage discounts or adjustments.

If you have worked on a blockage assignment, would you please be so kind and participate in the short survey. If so please send me an email and I will have the Sotheby's student contact you with the questionnaire.

The survey is short and will not take much time to complete. Many of the questions are yes/no/short answer with only 10 questions total.

Thanks for any help.

Todd
toddsig01@gmail.com

Art Critic or Art Appreciator?

The Business Standard out of India has a very good article on the art critic. The Business Standard states as times have changed and so has the need for the art critic, who is being replaced by the collector and appreciator (not to be confused with authenticator). Are we looking at a true change, or perhaps just a change in degree, semantics, and definitions?

It is a very interesting and thought provoking article and I highly recommend you click through and read the full content.

The article states For centuries, the critic was an independent voice that analysed an artist, his oeuvre , his influences, and measured each exhibition, even each individual painting, against that background. You were able to negotiate the space between an artist’s attempt and his achievement, and deal with it in an authoritative manner. A critic pointed out shortcomings, devices of convenience, artistic complacency, the first deterioration in quality, and did it with the elegance of an observer with a bird’s eye-view with a comprehensive sweep over an entire generation of artistic peers and trends.

The article continues What’s an art appreciator? Well, actually not all that different from an art critic. An art appreciator is so well versed in art and trends and artists that he could well be a mirror image of the critic. The difference is hairline enough to have escaped the notice of many, but it is a crucial one: The art appreciator tells you what to look out for in a painting, what its highlights (and the artist’s highlights) are, what is part of the artist’s — or his peers’ — influence and trends, what the colours/medium et cetera reflect or suggest. The art appreciator celebrates each work, he does not underplay the strengths, nor over-suggest the weaknesses. In fact, the appreciator has nothing negative to say about an artist or an artist’s work.

Is that good, or bad? To understand that, you must understand how the appreciator came to replace the critic. Impoverished for years, the critics found that as the market grew, there was a good living to be made from writing on art — provided it was supported by the trade. A handful of brilliant art critics and writers were roped in by galleries to write the catalogues for forthcoming exhibitions. Catalogue writers make three to four times as much money than if they were to write for magazines and newspapers. There is also more space available to them here than in the mainstream media. There was literally no choice.

Art lovers and collectors look constantly for guidance, and have been influenced by what critics, and now appreciators, have to say. It is ironic therefore that when the art markets have crashed, it is principally for those artists that have been “celebrated” by appreciators.

To read the full article, click HERE.

Appraising in a Soft Economy

The Herald On Line has an article by Kristen Valle of the Charlotte Observer on individuals looking to value and possibly sell family heirlooms. I have posted on this on the AW Blog in the past, but this short article points out some interesting aspects for the appraiser. The article states business is booming around the state for the services of personal property appraisers. Valle concludes many of the appraisals are based upon the desire of collectors and owners to discover what the value of the property is, with the thought of selling if personal financial conditions dictate a sale.

The article states that most appraisals cost between $200.00 and $400.00, but it does not state if this is for once piece or a large collection. Last time I posted one of these local interest stories about appraisers and the fee was mentioned, and it was very low, I received a comment saying articles that misrepresent fees do a disservice to the industry. I agree with that comment, but on the other hand I also like to see the personal property appraisal profession get some much need coverage and publicity.

Educating the consumer and end user on appraising, what is involved in the process and the cost associated has been lacking for a long time within the profession. The article also lacks a bit of clarity and understanding on the various levels of value and markets an appraiser may provide, but overall, it does promote the profession and points out how the appraiser can help value and also assist in disposing of property.

Valle states Appraisers around the state say business is booming, thanks to clients who want to know whether they can strike gold with their grandmother's china or the table they picked up at a yard sale years earlier.

Nationally, appraisers, who can specialize in items such as jewelry, antiques or fine arts, are seeing a similar bump in business, according to the American Society of Appraisers, a trade association.

"I feel like I'm an economic barometer," said Jan Robbins Durr, the Matthews appraiser who researched Francis' pieces. "People are calling saying, 'I think I need an appraisal because I want to sell something,' whereas a year ago, it was, 'I need an appraisal because I want to be insured.'"

For some, selling heirlooms is a painful sacrifice; others say it's a profitable way to unclutter the attic. Lucky ones can make quick cash through an estate sale, auction or consignment shop. But appraisers warn that, because of the down economy and ease of finding rare items on the Internet, the resale value is often far less than the insurance-replacement value provided through an appraisal.

To read the full article, click HERE.

Russian Avant Garde - Let the Collector and Appraiser Beware

Konstantin Akinsha and Sylvia Hochfield have an excellent article in Art News about the faking of Russian Avant Garde paintings. The first paragraph immediately sets the tone, mentioning a 6 month Art News investigation, and the conclusion that there are more fake Russian Avant Garde Painting on the market than authentic. Many dealers and collectors now refuse to purchase or consider art without an iron clad provenance, such as an exhibition during the lifetime of the artist. There is even skepticism with expert authentications as well as books and catalogs. Collectors and auction houses have been all been deceived, while even some art with expert authentication have proven to be fraudulent.

When appraising, be cautious and look for a strong provenance.

The article states A six-month ARTnews investigation and interviews with scholars, dealers, and other sources in the United States, Russia, Germany, France, and Spain reveals that the number of Russian avant-garde fakes on the market is so high that they far outnumber the authentic works. “There are more fakes than genuine pictures,” said Alla Rosenfeld, curator of the Norton Dodge Collection of Soviet Nonconformist Art at Rutgers University from 1992 to 2006 and former vice president of the Russian art department at Sotheby’s New York. It’s impossible to put a number on them, said Natalia Kournikova of Kournikova Gallery in Moscow, but “we can say that almost every artist whose prices have risen has become the victim of fake makers.”

Peter Aven, president of Alfa-Bank in Moscow and owner of one of the world’s best collections of Russian avant-garde art, called the quantity of fakes “colossal.” It affects the market, said Rosenfeld, “because people are becoming reluctant to acquire Russian works.” The situation has gotten worse since 1996, when ARTnews published its first article about Russian avant-garde fakes, according to Aleksandra Shatskikh, one of the world’s leading scholars on the Russian avant-garde. “Russian buyers have entered the market, and the new demand has provoked a wave of fakes that is many times greater than the production of forgeries in the first half of the 1990s,” she said.

The article continues Considering the number of fakes and the sparseness of documentation, experts say, buyers should be cautious. Aven said he buys only works with “a 100 percent provenance. When sellers say they can’t disclose the provenance of a work, I refuse to even discuss it.” Unless a work has an “ironclad provenance or was reproduced and exhibited during the lifetime of the artist,” Aven won’t touch it. Rosenfeld endorses that kind of caution. A good provenance, she said, means that a work can be traced back to the artist or the artist’s family. It was “published in an old catalogue—new catalogues are not really proof—and there is documentary evidence, for example, a photo of the artist with the work in the background. But the combination of all of these—family, early documentation, exhibition during the artist’s lifetime—that’s very important. Strong documentary evidence that the work existed during the artist’s lifetime.”

To read the full Art News article, click HERE.

SF Art Dealer Charged with Selling Fake Miro's

Henry Lee of the San Francisco Chronicle writes a very good article on the sale of fake prints. The article revolves around dealer Pasquale Iannetti and his San Francisco gallery Pasquale Iannetti Art Galleries Inc. Iannetti is charged with fraud for selling fake Joan Miro prints. The article states Iannetti has also represented himself as an authenticator of art.

The article gives some good detail on the tracking of the fake prints from Europe into the US, to Iannetti's gallery and then a purchase of a fake print by a postal inspector for $14,750.00. Although the article does not name other San Francisco Galleries, it alleges others may be involved. Iannetti plans to pleas not guilty and states all facts have not been released.

As appraiser we often run into prints, many where the client believes they have something special, only to find out otherwise. With the large amount of fake prints on the market, I recommend caution to many appraisers who are asked to value prints, especially those which are highly forged such as Dali, Miro, Picasso, Chagall, etc. Identification and authentication are so important in the appraisal process, make sure you have done the proper amount of due diligence prior to coming to any sort of value conclusion.

It is well worth the time to read the full article, link at the end of the post.

The article states Iannetti is accused of knowingly selling seven fake Miró prints in amounts ranging from $3,600 to $17,902 from 2005 to 2008. But federal prosecutors said the alleged scheme may have dated to at least 1999 and was linked to an international art-fraud ring, in which bogus works were sold in San Francisco as well as in Illinois, Florida and New York. Iannetti was indicted on eight counts of mail fraud for allegedly shipping fake Miró prints to collectors in points as far flung as Connecticut and Singapore. He also was indicted on seven counts of wire fraud.

Lee continues Investigators said they had identified art dealers who sold counterfeit prints purported to be by 20th century artists including Miró, Pablo Picasso, Marc Chagall and Andy Warhol. The fake prints were made in Europe and were then distributed in the United States, investigators said.

Typically, limited-edition prints such as the Mirós advertised by Iannetti are prepared from a master impression under the artist's supervision. Prints are usually signed by the artist and bear a unique number, such as "5/50" if the work is the fifth of 50 made from the master impression.

An undercover investigator had secretly met in Milan with Bonfiglioli before the Italian traveled to the United States in November 2007, authorities said. When he passed through customs at John F. Kennedy International Airport in New York, authorities found what turned out to be a counterfeit Miró print, Esteban wrote in the affidavit.

Officials secretly marked the print with invisible ink and let Bonfiglioli continue on his journey to San Francisco, where he visited Iannetti's gallery carrying a "cardboard tube under his arm," the affidavit said.

To read the full SF Chronicle article, click HERE.

The Psychology of Buying Art

Yael I. Friedman of Art Info has a very good article on buying art entitled Think Twice Before Buying. The article asks the question as to why so many collectors and art investors seem to buy without proper research and guidance. These buyers tend to be more sophisticated and suspicious when purchasing other investments, but appear to be lacking when art is brought into the investment equation. Some of the answers are an emotional attachment along with ego as a driving force as many collectors like to think they are "in the know". A very interesting article, as is the whole industry which attempts to take advantage with fraudulent art and misrepresentation. It is comforting to see that scholarship and connoisseurship which is now developing to counter the surge in fraud and misrepresentation.

Friedman states an ARTnews investigation concluded there is more fake than real modern Russian art on the market, the New York Times looked into the ongoing problem of art authenticity in Vietnam, and a recent lawsuit filed in Oakland County, Michigan, formally accused Park West Gallery of selling fakes to unsuspecting customers on a cruise ship last year. While these examples illustrate the rising recognition of unscrupulous behavior by the perpetrators, they also raise a question: Why are individuals of means, often extraordinarily savvy in their other financial dealings, so vulnerable when it comes to the acquisition of art? What is it about art that causes buyers to take such leaps of faith, often only to discover that simple research could have easily uncovered any snags or malfeasance?

Friedman continues in the meantime, art buyers, both the experienced and the uninitiated, must strive to overcome the emotional gratification that often blinds them to the pitfalls of their purchases. Phyllis Rogoff, a qualified appraiser who has worked in the art world for almost 30 years, exclaims she is “shocked at the lack of research. They want to be able to say ‘I have a piece like this.’” She finds that gallery openings are especially successful at exploiting this susceptibility and notes that “people get caught up in them — it is equivalent to auction fever.” She recalls an instance in which a client knew that Rogoff could negotiate a 20 percent price reduction on a painting he wanted, but “he was there at the opening with his wife, drinking champagne, and got caught up in it and bought it then.” The “glamour” factor, Rogoff emphasizes, is not to be underestimated.

To read the full article, click HERE.

Christie's Drops Plans for Art Investment Fund and Lending Division

Lindsay Pollack of Bloomberg is reporting that Christie's has canceled plans to open an art investment fund and an art loan division. The article indicates the decision is based upon the current state of the economy as well as the art market still not having shown enough signs of growth over the past months. This runs contrary to some recent reports that the art market has bottomed out, with some signs of recovery. It shows there is still a ways to go, and the overall sluggishness of the economy, high unemployment figures and general lack of confidence in a recovery is not helping.

Pollack reports Christie’s was exploring ways to create a separate financial division, instead of offering loans and other services as part of the larger auction company.

The closely held company wanted to compete more directly with Sotheby’s Financial Services, a subsidiary of Christie’s main auction-house rival. The financial division of Sotheby’s, a publicly traded company based in New York, generated $6 million in revenue during the first half of 2009.

HSBC Holdings PLC and Goldman Sachs Group Inc. were both approached about the ventures, but talks fell apart, according to a person familiar with the plan. Spokeswomen Juanita Gutierrez of HSBC and Andrea Raphael of Goldman Sachs declined to comment.

Fired Executives

Christie’s interviewed investment managers and bankers to gauge interest in an art-investment fund and took steps to establish a separate asset-management company aimed at raising $250 million to $350 million.

As the world economy continued to falter, Christie’s scrapped its plan and fired several executives in New York and London who were going to run the operation, according to the two employees involved in the project.

To read the full article, click HERE.

INTERPOL to Place Stolen Art Database Online

From an INTERPOL Press Release, the online database will have nearly 34,000 images and information on stolen art. You will need to fill out an application to gain access to the site. Click HERE to visit the Interpol website and press release.

The Press Release with hotlinks to the application follow:

LYON, France – INTERPOL has established direct online access to authorized users via a secure website to its international database on stolen works as part of its fight against the illicit trade of stolen cultural property.

Online access will not be limited to the law enforcement community but will be open to all interested users who first have to apply for access to the database, which features the latest information on some 34,000 works of art stolen worldwide. Interested parties wishing to access the database will first have to complete an application form in order to obtain an individual password for database access.

With direct access to the database, which will be continuously updated as and when the INTERPOL General Secretariat headquarters in Lyon receives new information on stolen works of art worldwide, authorized users of the database will be provided with real-time access to the latest information recorded in the database. The available information will not include nominal data, but strictly object-related information such as descriptions and photographs of stolen cultural goods. The co-ordinator of

INTERPOL’s Works of Art (WOA) department, Karl Heinz Kind, said contribution and access to the database represented ‘an important tool to counter the traffic in cultural property effectively’. He said that increased reporting activities by INTERPOL’s 187 member countries would be expected so that all member countries could take full advantage of the benefits of information sharing, as with all types of crime reporting.

“Accessibility to stolen art information is a vital contribution to creating public awareness on the protection of cultural property,” said Mr Kind.

“The inclusion of a stolen cultural property item into INTERPOL’s stolen works of art database, and extensive online access to the database, therefore represent an important barrier to the illicit trafficking of a stolen cultural object by making its sale more difficult,” added Mr Kind.

As access to the database will not be limited to law enforcement agencies, but will also be offered to all concerned cultural and professional bodies (including Ministries of Culture, museums, auction houses, art galleries, foundations, collectors), it will also be made that much more difficult for a seller or purchaser to claim not having had the opportunity to check whether an item was recorded as stolen.

Online access to the database replaces the “INTERPOL – Stolen Works of Art” DVD previously made available upon application.

Gerald Peters Gallery Sued

The Courthouse News Services has a short piece on the Gerald Peters Gallery being sued by long time customer Norman Waitt. Waitt was founder of Gateway computers and is suing the gallery for breech of contract in the amount of $3.5 million. There are also rumors that Waitt is claiming the prices charged by Peters where grossly inflated. I am wondering if Waitt had the art appraised and then found he had not received value from his purchases. It will be an interesting case to observe.

The post is short, so I will take the liberty to post it in its entirety.

From Courthouse News Service

MANHATTAN (CN) - An art collector claims that in the course of spending $10 million with the Gerald Peters Gallery, they developed a deal in which he could "live with" art for a while to decide if he wanted to keep it, and if not, he could return it for a refund or "art of equivalent value." But after he spent $3.5 million on three pieces, Peters refused to take them back or exchange them, Norman Waitt claims in New York County Court.

Waitt says he paid $1.1 million for a work by Thomas Moran, $1.2 for a second piece by Moran, and $1.2 million on a work by Samuel Seymour. When he decided he didn't want them after all, Waitt days, Peters refused to take them back. He bought the Morans in 2007 and the Seymour in 2008.

Waitt wants his money back plus $1 million, alleging breach of contract and negligent misrepresentation. He sued the Gerald Peters Gallery, of East 78th Street, and Gerald Peters. Waitt is represented by Peter Stern with McLaughlin & Stern.

Italian Marble

Fellow appraiser Judith Vance sent me this article from the Financial Times on Italian Marble from the Tuscon town of Pietrasanta. Michelangelo used marble from the quarries in the Apuan Alps. Today artists still come to the area to sculpt using the fine Pietrasanta marble. During the early years, the Pietrasanta marble was very difficult to acquire and Carrara, about 11 miles to the north was the main center for Italian marble. The article delves into the current sculpture studios that now populate the region. Some very well contemporary art artists have either sculpted in the area or had items made in the Pietrasaant studies, including Damien Hirst .

The FT states In the end, Michelangelo built a road up to the mountain, which he named Altissima (the highest). His reward was a marble of unsurpassed whiteness, ideal for sculpture. Artists – from Giambologna and Vasari to Joan Miró, Henry Moore and more recently Damien Hirst and Marc Quinn – have been flocking to Pietrasanta ever since.

The FT article continues The contemporary art emerging out of Pietrasanta has a different narrative. One glance at the galaxy of models of Christs, Madonnas and pagan gods that are still the bread and butter of most marble studios reminds you that sculptures such as “Anatomy of an Angel” are the fruit of a figurative aesthetic, rooted in the classical tradition.

Whereas avant-garde abstractionists, such as Moore, Yasuda and Blumenfeld, challenge Pietrasanta’s artisans to work in a different style, the contemporary figurative artists ask them to remain within their traditional framework and present the sculptures in a spirit of post-modern irony. As a consequence, the manuality that has gone into the work becomes curiously invisible, eclipsed by the work’s conceptual provocations – a pregnant man, a deconstructed angel.

To read the FT article, click HERE.

Goldman Sachs Owns Part of the Leibovitz Loan

It was briefly mentioned in the NY Magazine article I posted about yesterday, that investment banking group Goldman Sachs owned or funded a portion of the Art Capital Groups loan to Annie Leibovitz.

Katya Kazakina writing for Bloomberg states that Goldman Sachs has approached ACG and requested to take over the loan. ACG denies this.

Kazakina states “We are deeply troubled by recent developments concerning Annie Leibovitz and Art Capital,” said Andrea Raphael, a Goldman spokeswoman, in an e-mailed statement. “We have proposed to Art Capital that we terminate the current loan agreement with their affiliate so that we can work directly with Ms. Leibovitz.”

Art Capital spokesman Montieth Illingworth denied such a proposal has been made. Raphael declined to say how much of Leibovitz’s loan Goldman owns.

The company’s statement hints at a discord between the joint creditors and adds a twist to the financial and legal turmoil surrounding one of the most-famous photographers

Kazakina continues Goldman and Art Capital stood to gain 12 percent interest from their one-year loan to Leibovitz, Illingworth said. This means, Leibovitz would have to pay $2.9 million on top of the $24 million loan. Art Capital would also gain a commission from the sale of the collateral, according to its complaint.

Raphael declined to say if Goldman would buy out its own share of the loan or pick up the entire tab, which also includes the interest and fees.

‘Wish Them Well’

“If Goldman Sachs wishes to purchase our interests in this loan, we invite a bid and wish them well in their future relationship with this borrower,” said Illingworth.

To read the full article, click HERE.

Luxury Photograpy Books = $$$$$

As appraisers we often come across collections of books, some old, some new, some reference related, some coffee table style. Some books are in great demand, some are not. Some older leather books are sold by the yard as decoration for instant libraries, while others could be worth a large fortune.

With that in mind, a very interesting article was published in the UK Guardian on luxury special and limited edition photography books. Many of these limited edition books initial sell for thousands of dollars, and then can later demand hundreds of thousands of dollars.

As appraiser we should be aware of these special edition photography books and the potential values which they may represent.

The Guardian article states In 1999 Benedikt Taschen published Sumo, a retrospective of iconic photographer Helmut Newton. The monograph, complete with a Philippe Starck display stand, was the largest book produced in the 20th century. Measuring in at 50cm by 70cm, the German publisher had to call upon the Vatican's bible binder to help make it. The 10,000 copies sold at a staggering £6,000 each, while the first of the limited run, signed by 80 of the celebrities shot by Newton, later sold at auction for $430,000. Now, copies of Sumo often pop up on eBay – one recently sold for $15,000. Titanic stuff, but it doesn't end there.

The article continues, Any photography book, even with fairly standard reproduction, is going to cost far more than a book that is text-only. And the printing only accounts for a small percentage of the sale price. It's incredibly expensive to produce beautiful books in large quantities; if you can shift a few hundred copies it's considered good business. But, as in the case of the art market (or rather, those who can afford to buy art), there appears to be an enduring demand for extravagance, a desire to own the most in-demand relics of their favourite artist.

It is this very notion that Taschen works with – the idea that books can themselves become their own pieces of highly sought-after art. "The making of the titles is a collaboration with the artists," the publisher explains. "Their ideas are at the centre of the work and they are involved all the way through the process, making the books original, personal and desirable – like great art should be. Why shouldn't an art book be something to be revered?"

To read the Guardian article, click HERE.

Annie Leibovitz - The $24 Million Question

I have posted several items over the past few weeks on the financial troubles of Annie Leibovitz and her loan of over $20 million from Art Capital Group. Her real estate holdings and the rights to her photographs were pledged for collateral and now Art Capital Group is stating the loan is in default.

The New York magazine just ran a lengthy article on Ms. Leibovitz, encompassing her past accomplishments along with her current financial predicament. It is an interesting story, with good background along with information on her business including her agreement with Phillips. The article is by Andrew Goldman and is entitled How Could This Happen to Annie Leibovitz: The $24 million Question.

The article states Leibovitz’s life had taken a decidedly dark turn. Her reference to “tough times” was significantly understated. In the past five years, Sontag and both of Leibovitz’s parents have died. Her debts now total a staggering $24 million, consolidated with one lender with whom she is engaged in a lawsuit and due in September. If she can’t meet that deadline, she may lose her homes and the rights to her life’s body of work.
The article continues The Art Capital loan effectively consolidated all of Leibovitz’s major outstanding obligations, including her mortgages. The interest rate is unknown, but the term is just one year. That means Leibovitz has to come up with $24 million, plus interest, by this September. Under the terms of the agreement, says a person familiar with the loan, Art Capital could be entitled to up to 22.5 percent of all the proceeds from the sale of any of Leibovitz’s work—even for two years after she’s paid off the loan. And that percentage could increase to close to 50 percent if she were to default. Potentially, Art Capital may be entitled to her homes and even her catalogue of past and future copyrights. “They got everything,” veteran New York real-estate attorney Howard Brickner says, shaking his head as he wades through the public records associated with the loan.

To read the full New York magazine article on Annie Liebovitz, click HERE.

Restoration

Mid August, and there is not much interesting or exciting news in the decorative art or fine are markets. I look forward to September and the fall auction and show seasons. I did find an interesting article from a central Louisiana paper on the art of restoration. The article gives a local perspective along with commentary from local restoration professionals I thought it was applicable for the AW Blog and appraisers. As appraisers we are typically asked to refer a restorer to work property damaged in a move, or just to recommend a restorer or conservator to clean and freshen a piece of art or furniture, so the more we know about restoration and conservation scholarship the better.

The article states While experts say that some minor defects can add character to antiques, household furniture or art objects, many damaged collectibles can - and should - be restored, cleaned or repaired to display their original form and function.

"There are some amazing techniques available to restore items to their original shape and beauty," says DiAnna Tindell, a professional restorer who also operates Tindell's Restoration Schools and Studio in Cane Ridge, Tenn., which offers classes in restoration methods.

The article continues Restoration artists say it is just as important to know what not to do. A poor restoration job can devalue or even ruin an item.

"A lot of what I do is to undo the well-meaning efforts of people who don't know what they are doing," says Cynthia Stowe, a painting restorer who operates Cumberland Art Conservation in Nashville.

Stowe says that a competent restorer will only use methods that can be completely undone, if necessary.

"My goal is to return a painting to an owner in a condition as nearly as possible to the condition when it left the artist," says Stowe, who works primarily on 19th-and early 20th-century paintings. "But I'm completely aware that what is considered state-of-the-art now (in terms of restoration techniques) may not be considered state-of-the-art in the future."

Leaving damage unfixed is sometimes best for an object, Tindell says.

The original varnish may be uneven on a piece of wooden furniture, but its value as an antique could be compromised by re-varnishing it, for example. Or a repair could prove more costly than an item is worth.

Stowe notes, however, that owners don't weigh an item's value only as its monetary worth.

To read the full article, click HERE.

Billionaire Art Collections

Forbes Lifestyle on line has a good article listing many of the top international billionaire art collections. To make the list, the collection needs to be valued at a minimum of $700 million.

There is a sideshow and video connected to the article. The sideshow names the collector, a little info on the collector and the collection and the overall value of the collection.

The list includes:

• Philip Niarchos
• Eli Broad
• David Geffen
• Ronald Lauder
• Naser Khalili
• François Pinault
• Leonard Lauder
• Paul Allen
• Leon Black
• Steven Cohen
• Henry Kravis
• Samuel Newhouse, Jr.
• Esther Grether
• Leslie Wexner
  

The article states Wealthy patrons and collectors have been the lifeblood of the art world for centuries, from Italy's Medici family to American industrialists Henry Clay Frick and Andrew Mellon. That is still true today even as art valuations drop. Indeed, in a downturn like this one, billionaires are some of the only people who can still afford to buy expensive art or help prop up museums.

To read the article, view the list of collections and watch the video click HERE.

Fisk University and the Stieglitz

Gail Kerr writing for the Tennessean on Fisk University and the Stieglitz collection states the collection in now open for public viewing. The exhibition area has been updated, and according to Kerr the collection is fantastic, and perhaps most importantly, people are starting to come to the university to view the collection. Kerr believes there are opportunities for Fisk to benefit financially from the collection if it is marketed properly and grants are sought. If you recall, Fisk was having many financial issues and was looking to sell portions or fractional interest in parts of the collection. Mainly to the Walton museum, Crystal Bridges in Bentonville, Arkansas.

Kerr states The collection contains 101 works from artists including O'Keeffe, Pablo Picasso and Auguste Renoir. It ranges from African-American art from the Democratic Republic of Congo to line drawing sketches to beautiful, breathtaking paintings like O'Keeffe's Radiator Building — Night, New York (see image).

Kerr continues Today, Fisk has an unprecedented opportunity to turn that around and make this an asset. If it can attract 200 visitors a day, at $10 a head, that's half a million in revenue over the course of a year.

It doesn't have to cost money: use free social media. Send out press releases. Ask the city's Convention and Visitors Bureau to help promote it as a tourist attraction (the Frist center has an upcoming Georgia O'Keeffe show — surely tying together some marketing and programming would be a cinch).

Do what TPAC does so well: Apply for foundation grants to assure free admission for students of all ages.

To read the full article, click HERE.

Follow the Money

Last week the Art Newspaper ran a good story on galleries moving to the vacation spots of the wealthy. Given the current economic climate and lower real estate values for property and leases, it has become easier for well known galleries to open satellite branches where the wealthy vacation. One quote I find interesting and disturbing is by Mr. Goldberg of Bernard Goldberg Fine art as he reports his main NY gallery sees very little foot traffic, "with sometimes one visitor a week."

The Art Newspaper states Rent for the new gallery Bernard Goldberg Fine Arts is in the $100-$125 per square foot range. “A year ago, the rents were $200 a square foot,” says Mr Goldberg, whose premises are just steps away from Hermès and other luxury boutiques.His new quarters have already scored considerable interest, with a Noguchi 1926 plaster portrait bust, an Archipenko 1948 terracotta sculpture and a Charles Burchfield work on paper on hold, with one reserved by a southern museum and prices from $85,000 to $450,000. "So far clients are wealthy collectors from New York, Palm Beach, California and elsewhere," says Mr Goldberg. "The reaction is always the same. We didn't think we would find this quality in the Hamptons. On the other hand, our New York gallery is totally quiet, with sometimes one visitor a week, whereas here I have 20 to 30 clients a day.

To read the full Art Newspaper article, click HERE.

Read the Proposed Regulations Changes on Fractional Gifts

As reported early this week, Sen Charles Schumer of NY was introducing a bill that would change the deduction period on fractional gifts from 10 years to 20 years. The ten year period along with restrictions on the gifts were made less attractive in the Pension Protection Act bill passed in 2006 with annual appraisals and potential for reductions in values. This bill introduced goes back and amends the IRS tax code from 1986.

To read the full S. 1605 bill, click HERE.

The bill states in part:

(iii) in the case of an initial fractional contribution, the contribution is made pursuant to a written binding contract which requires the donor--

`(I) to contribute not less than 20 percent of all interests in the property on or before the date that is 11 years after the date of the initial fractional contribution, and

`(II) to contribute all of the interests in such property to the donee (or if such donee is no longer in existence, to any person described in subsection (c)) on or before the earlier of the date of the death of the donor or the date which is 20 years after the date of the initial fractional contribution, and

`(iv) if the value of the tangible personal property with respect to which the undivided portion of the taxpayer's entire interest relates is greater than $1,000,000 (or such greater amount as determined by the Secretary), the taxpayer attaches to the return for the taxable year in which such contribution is made a statement of value obtained from the Internal Revenue Service.

The Rise of Consignment Shops

Valli Herman of the LA Times reports on the growth of interest in consignment shops. As the economy stalls, especially in California, bargain hunters for furniture and household items are out looking and spending. The supply appears to be plentifully as well, as sellers are looking to convert household items into cash. Valli mentions the monthly Mani's Sunset Estate Auction at Bonhams and refers to it as a high end consignment shop open once a month. Appraisers should not forget the consignment market place when looking for comps, as it is now becoming more attractive to both buyers and sellers.

Valli states No matter what you need or want -- vintage pianos, affordable baby furniture or midcentury collectibles -- it's a market that's thriving like few others.

She continues Though the term "consignment" often conjures images of resale shops selling women's clothing, it's an attractive option to sell big-ticket items such as furniture. The consignors own their property until it's sold, so the consignment store needn't tie up cash in inventory -- a plus for credit-strapped retailers finding it difficult to keep aisles stocked with merchandise. Sellers also retain their privacy, gain access to sophisticated shoppers and, if all goes well, earn higher profit than if they tried to unload the goods themselves.

The consignment procedure is similar whether you deal with an esteemed auctioneer or your corner resale store: You sign contracts that specify how buyer and seller will split the proceeds, how the final purchase price will be calculated and how unsold items will be handled.

The proceeds can be split any number of ways -- 50/50, 38/62, perhaps a sliding scale that changes according to the purchase price. Some consignment stores define the length of a contract and the conditions under which an item may be discounted.

To read the full LA Times article, click HERE.

Swann Galleries to Auction Howard Hughes Plane Wreckage

Lindsay Pollack writing for Bloomberg is reporting Swann Galleries in New York will auction of property from Howard Hughes' plane crash of the XF-11 in 1946. The collection was assembled by William Durkin who pulled Hughes from the wreckage. It is Durkin's estate which is selling the property through Swann.

I always find it interesting when unique and unusual items come on the market and how values, or perhaps purchase price is determined. As appraisers we need to be aware of these types of sales of unique items with provenance, historical significance and pop culture (past or present).

Pollack states items are projected to sell for between $40,000 and $60,000 at Swann Galleries in New York on Sept. 17.

Among the items, which Durkin assembled, is the control yoke -- the plane’s steering wheel -- a letter from Hughes to Durkin thanking him for his assistance, and photos of the plane and crash site.

“I will always be grateful for your courageous action and am glad that you were uninjured,’’ Hughes wrote Durkin. He mailed Durkin regular checks of $200 (about $2,200 in 2009) for some time. Durkin died in 2006. The collection is being sold by his heirs.

To read the complete, yet short article on the sale, click HERE.

USPAP - July Q&A's

The Appraisal Foundation has published the July USPAP Questions and Answers. This month the Q&A's deal with keeping records, and if as an appraiser you work for a large appraisal firm, does the access to the records have to be in writing. As many, but not all personal property appraisers are in small firms or are solo-professionals, there is not too much to learn from the post, but the simple answer was no, it does not have to be in writing to comply with USPAP. The appraiser just needs access, and the access to the records can be either oral or written.

The second of only two Q&A's is a bit more interesting to personal property appraisers and discusses "significant professional assistance". I just posted on the Personal Property Appraisers Post a short article on appraisals, competency, hierarchies and the Peter Principle. Some of the comments and responses to the post discuss the need for expert opinions when dealing with unfamiliar property. It all fits well with the question of documenting significant professional assistance as in the USPAP Q&A. The better we as appraisers understand the nuances of USPAP, the better appraisers and the more compliant we will become.

Click HERE to read the July 2009 USPAP Q&A's.

Colleges Cutting Back on the Arts

I have posted in the past on cut backs in conservation programs at various institutions of higher learning. Patricia Cohen writes an article for the NY Times in which she details how many colleges and universities are cutting back programs dedicated to the arts. Cohen, not only touches on the arts, but also mentions other areas where cuts are being made, larger class sizes and increased fees.

Cohen states tens of thousands of students at public and private colleges and universities around the country will find arts programs, courses and teachers missing — victims of piercing budget cuts — when they descend on campuses this month and next.

Cohen continues At Washington State University the department of theater arts and dance has been eliminated. At Florida State University the undergraduate program in art education and two graduate theater programs are being phased out. The University of Arizona is cutting three-quarters of its funds, more than $500,000, for visiting classical music, dance and theater performers. Wesleyan University’s Center for the Arts, which supports four departments — dance, music, theater and visual arts — is losing 14 percent of its $1.2 million budget over the next two years. The Louisiana State University Museum of Art, one of the largest university-affiliated collections in the South, saw 20 percent of its state financing disappear. Other private and state institutions warn of larger classes, trimmed offerings, higher tuition and fewer services, faculty and visitors.

To read the full article, click HERE.

Yves St Laurent at Christie's, Part II

Reuters is reporting there will be a second Christie's sale of items from the estate of fashion designer Yves St Laurent in the fall in Paris. The sale is scheduled for November 17-19 and will include nearly 1,200 items from a Normandy Chateau as well as items from the Parisian residences. The first sale was fantastically successful, selling over $500 million worth of property during a period of economic uncertainty. The second sale is considered much more modest, with expectations and estimates in the $5.7 million area. A Christie's rep states a sale of "more understated charm." Very nice code words for lower values and quality when compared to the original sale.

Reuters reports A second auction of art works once belonging to Yves Saint Laurent will be held in November after the main part of the late designer's huge collection was sold earlier this year, auctioneers Christie's said on Monday.

As well as modern art and Old Master pictures and drawings by artists including Picasso, Fernand Leger and Miro, the sale in Paris will include furniture and various Art Deco objects that decorated the sumptuous rooms of Saint Laurent's chateau.

To read the full Reuters article, click HERE.

Goering's Art Collection Cataloged

As many of know, the Nazi's were large collectors of stolen and looted art. Herman Goering, Hitler's number two was also a collector of art and competed with Hitler for the best available stolen and looted art. Catherine Hickley of Bloomberg writes an article on a new book, “Beyond the Dreams of Avarice: The Hermann Goering Collection,” by Nacny Yeade a provenance researcher at the National Gallery of Art in Washington DC. The book is available through the publisher for $250.00 at http://www.goeringart.com/. The new book catalogs nearly 1,800 pieces of art which were collected/stolen by Goering. The article does state most of the art has found its way back to the families of the original owners.

The book states, and I have heard this before, that Goreing collected more for the sake of amassing a large collection rather than seeking true quality. In any event, Goering still had an assembled a large collection of looted and stolen art from invaded territories and countries. The book says he was particular found of nudes and Dutch old masters, but there was even a few impressionist paintings which the Nazi's deemed degenerate art.

Hickley states Among the art stolen from Jewish families like the Rothschilds and Goudstikkers were works by Joshua Reynolds, Paolo Uccello, Francois Boucher, Jean-Honore Fragonard and Anthony van Dyck. After his buyer, Walter Andreas Hofer, had selected the best, Goering would go to the Jeu de Paume in Paris to view the booty before it was shipped to Carinhall.

Yet he deluded himself that he wasn’t stealing. “During a war, everybody loots a little bit,” Goering said in the Nuremberg interviews with the psychiatrist. “None of my so- called looting was illegal.”

He also tried to make his plundering look like legitimate transactions, Yeide says. He asked dealers to send him bills he never paid or pretended works were on loan.

“A characteristic of his seems to be this disconnect between his actions and his statements,” she says. “That does seem to be part of his nature -- denial.”

Hitler’s Gift The catalog features works that Hitler gave to Goering, including an official portrait of the Fuehrer and a watercolor Hitler painted himself. Hitler also gave him one of the best- known paintings in the collection, “The Beautiful Falconer” by Hans Makart.

Goering and Hitler competed for the best of the spoils seized from Jewish collectors. Hitler generally won, amassing a huge trove for the art museum he planned for the Austrian city where he grew up, Linz. He reportedly once said that while he collected for the German people, Goering collected only for himself, according to Yeide.

To read the full article, click HERE.

Changes to the Pension Protection Act? We Are Still Waiting

Over a year ago I posted on the AW Blog about possible changes in the Pension Protection Act. Sen Chuck Schumer of NY and Sen Charles Grassly of Iowa were looking to repeal or change the way charitable donations are calculated, specifically with regard to fractional gifting over time. For perspective and past background click HERE to read the previous post. Progress appears to be made, but as the changes are not necessarily considered a priority in todays economy, and are more along the lines of a correction, the wheels of government move very slowly.

Shelly Banjo of the Wall Street Journal just reported that Sen Schumer is proposing changes to fractional gifting to museums by changing the donation period from 10 to 20 years, to allow for some form of appreciation, the museum would have to report to the IRS on an annual basis, exhibit the art at least once every 5 years and donations of over $1 million to be reviewed by the IRS Art Advisory Panel. It appears the annual valuation process and potential for a decrease in value still remains, but is marginalized by the extended donation time frame.

Banjo states Restrictions in the act prevented donors from realizing tax benefits on the appreciation of the art's value and limited the time allotted to complete the donation to 10 years.

Wealth advisers and estate lawyers soon stopped recommending the practice and "these gifts virtually dried up," said Michael Conforti, president of the Association of Art Museum Directors.

Now Sen. Schumer hopes to "restore the incentive for collectors to share these works of art with the public," he said.

Banjo continues "This bill remedies some of the problems with respect to the current law, but it doesn't go far enough," said Neil Kawashima, a partner with McDermott Will & Emery LLP in Chicago who represents wealthy families with respect to estate and gift planning.

Sen. Charles Grassley, an Iowa Republican who spearheaded the initial changes, said the proposed bill is already a compromise.

"Some museum officials thought Congress went too far to shut down abuse. I agreed to look at a compromise that would preserve accountability from donors and museums to taxpayers," Sen. Grassley said. "I still think partial donations of art are of questionable value to taxpayers, but museum officials and their champions feel strongly otherwise, so I'm willing to continue to listen."

To read the full WSJ article, click HERE.