For centuries, philosophers have waxed and waned about the value of art. While we can’t resolve their debates, we can explain how art is practically valued in the market. Contrary to popular myth, the industry has a recognized and rigorous system for determining the value of fine art.

This system forms the basis of valuations, which collectors of all kinds employ for personal and business purposes. In fact, for many collectors, valuations represent another form of care; just as expert framing protects a work from sun damage, valuations verify a work's position in the market. How? Well, if you’ve ever wondered exactly what goes into valuing a work of art, then read on.

  

The Different Kinds of Valuations 

Our fine art valuations employ the Comparable Transactions Method – a methodology which positions a work of art within a constellation of comparable sales results and prices. Cross-referenced against the individual qualities of the work, this methodology produces a Market Value, meaning the value a work of art should exchange for in an arm’s length, above-board transaction. 

This underlying value is then adjusted for the purpose (reason) and function (market context) of the valuation, producing one of three values: Retail Replacement Value (RRV); Market Value (MV); or Marketable Cash Value (MCV).

Retail Replacement Value 

Say a fire strikes your house and destroys your fine art collection. If you have home contents insurance, your claim will be based on RRV. This approach considers the cost of replacing the pre-existing artwork with an equal work in an open and current market, including all associated costs such as freight or sales commissions. 

Market Value

The MV asks: what would a willing buyer pay a seller for a work of art, granted both parties have the relevant facts? This approach is theoretical – meaning it isn’t about what a work would actually sell for, but rather one of how much it ought to sell for. This method is most useful for estate and tax asset validation purposes.

Marketable Cash Value

MCV is the Market Value of a work of art, minus all selling costs such as sales commissions. Think of it as how much you would pocket if you were to resell a work of art in the open and current market. This approach is useful for divorce or partnership dissolution, forced sale and probate.   

 

Considering the Work of Art Itself 

A good valuer not only considers the market, but the work of art itself. In doing so, where a work comes from, who made it, and its visual and material qualities prove germane. A valuer will, for example, assess whether an artist is traded mostly in the primary or secondary art market, meaning commercial art galleries, auction houses or art dealerships. 

They will also establish whether an artist is Emerging, Mid-Career or Established, and if there are lacking comparable sales results use artists of a comparable career stage to establish Market Value. The physical qualities of the work of art are important. Is it a good example of the artist’s practice, in good or poor condition, large or small? Does it have that je nais se quois? 

Evaluating a work of art against these factors requires deep art historical, market and visual analysis skills, as well as ethics.   

 

Our Approach

Alongside our expertise, we also engage the principals decreed by the International Valuations Standards Committee and Auctioneers and Valuers Association of Australia, where our Director, Angela Tandori, is a Certified Practicing Valuer. Since 2001, she has been an active participant in both the primary and secondary Australian Art Market and has extensive experience as a gallerist, dealer, valuer, consultant and auctioneer.

For any additional or specific information feel welcome to contact us. To find out more about our valuation services, click here.