Valuation of Art

The appraisal and valuation of art can be a tricky thing. When it comes to real property such as vehicles and land/real estate, there is usually a much more precise set of values, expectations and market factors that can help establish what something is worth. Cars and real estate in particular can be valued fairly precisely based on the age of the item and the demand that is present for the same. Further, an appraisal that is clearly out of line with reality can be easier to spot when such things are in place. However, there other items that are a bit harder to value. Some of those items are real property. While there is a tried and true way to value art, the competence and motives of the appraiser is something that must be considered.

A good example of the concept noted in the introduction would be exotic cars. Indeed, the value of a Lamborghini is not only going to be based on the sum total of the car’s parts and such. The perceived market demand and exclusivity is a factor as well. When it comes to fine art, the presence of this dynamic is much more prevalent and obvious. For sure, a couple of blotches of paint, in and of themselves, is worth very little. However, if those paint blotches were rendered by Picasso or Da Vinci, that changes things a great deal. Even with that being the case, the valuation of the item comes down to what the buying market’s members are willing to pay. Since that tends to vary in terms of size and scope, that is what appraisers are for. Just like with homes and cars, the appraisers can look at what the item has sold for in the past, how demand level has changed (or not changed) since that point and so forth. It is not an exact science, but it is possible to get a good idea. Even so, it must be considered who the appraiser works for and how competent they are. The former of those two is probably the more important item to consider when it comes to the scenario posed for this short report. Indeed, a man bought a painting under the premise that it was worth $3,000 on the resale market. He thought he was getting a great deal given that he only paid a third of that stated value when it came to the auction won. As it turns out, a second appraiser that was not tied to the auction came forth and said the painting was only worth $500, about half of what was stated by the first appraiser (Finkel, 2008).

The question becomes, of course, whether the buyer has a cause of action against the appraiser for the auction. He bid on the painting under the stated premise that it was worth three times what he paid for it. The crux of whether he will be successful in the lawsuit would seem to come down to whether the valuation was guaranteed in writing. It is entirely possible that the first appraiser was just trying to over-state the valuation of the painting. It is also possible that he simply did not know the proper and correct value of the painting. Regardless, whether the valuation was asserted in writing is going to determine who wins the lawsuit in this scenario. The insurance rider that the new owner the painting made is not really an issue because the stated value of the painting will determine what the cost of the insurance is. The good news there is that he will get more than what the painting is actually worth if it is ever to be stolen. The bad news is that it would seem the man was bilked, by the auction house (Finkel, 2008).