by Catherine Novak
Collecting photography may be a labor of love, but taking care of it may be a burden best shared with experts. At the very least, it’s important to keep up with the value of one’s collection by obtaining an appraisal.
The first thing to realize is that there is a big difference between an "estimate" and a full-fledged appraisal.
Auction houses use both formal and informal appraisals all the time, says Rick Wester, international director of photographs for Bloomsbury’s, New York. An informal auction estimate can range from a quick verbally rendered statement of value to one that is more in depth and in writing.
He explains, "Auction estimates are not to be confused with formal appraisals. They don’t set a value. They’re an expectation of what something may sell for in the future."
There are many reasons to obtain appraisals, and as many types of appraisals as there are reasons. Some of those reasons are as follows:
Private collections are often insured on an agreed-value basis. Photography dealer and gallery insurance is usually based on a percentage of the selling price for owned inventory, on an agreed consignment-value basis for consigned work, or on sales price plus accrued expenses for sold work that is damaged. Museum collections are insured based on whether objects are on loan to the museum or owned by the museum.
Because it is the responsibility of the insured to prove any losses, a collector, dealer or museum should have a written inventory detailing the work by artist, medium, title, size and date. To determine the value of a photographic collection, a collector can either submit an appraisal of photographs or show recent (within the last year) invoices or valuation, or a collection listing by a dealer.
"People should be sure that their insurance appraisals are up to date at least every two years, " says Dale Stulz. Dale Stulz began and directed Christie's New York Photography Department from 1978 to1983. After relocating to the West Coast, in 1985, he founded Stulz Appraisals and Consultations, in Hawthorne, CA, near Los Angeles.
"Sometimes I have updated appraisals every six to nine months for some of the rarer material at this time with the market as high as it is," he adds.
Unlike household policies, which offer replacement value, most valuable-items policies require up-to-date appraisals. By obtaining insurance appraisals at least every two years, a private collector is more likely to keep up with the value of the collection. Like Stulz, some appraisers will even notify clients when one or more photographs have increased substantially in value.
The Internal Revenue Service requires an appraisal when a donation of one or more like items, for example, several photographs, is worth more than $5,000. A donation appraisal requires extensive write-ups, including biographies, bibliographies, auction and retail sales records and detailed descriptions of the works themselves. Individuals to substantiate their charitable donations must complete IRS form 8283.
"All charitable contributions appraisals have to have a fee," says Rick Wester. "On the 8283 form, the IRS asks the appraiser that the fee was based on a time-based fee, not a percentage of value."
Sarah Morthland, of the Sarah Morthland Gallery, in the Chelsea section of New York, joined forces with Robert Gurbo, the curator of the Andre and Elizabeth Kertesz Foundation to form Archive Management Services. She says that they established the business when she was asked by a photographer to manage his estate after he died. Morthland notes, "One aspect of our business is to assist an estate with organizing their archives for a multitude of purposes."
When an artist or a collector dies, the estate must be given a cost basis agreeable to the IRS. Both individual heirs and entire estates may use this type of appraisal. Often a "blockage discount" situation may apply. Having a large number of like items–whether of the same artist, school or time period–coming onto the market, could potentially depress the overall value of the items. This information is taken into account when determining an estate for tax purposes.
While similar to an estate appraisal, usually this type of appraisal is done while the artist is still living. One reason might be that the archive is actively marketing its photographs. Fair market value, marketability and reproduction potential all play a factor in this type of appraisal.
Sometimes an appraisal may be sought to establish a Fair Market Value. This is the price at which a photograph would change hands between a willing buyer and a willing seller participating in the sale of their own free will and with both of them aware of the market for the image.
In complex cases, an appraiser may have to do a discounted cash flow analysis to project anticipated future earnings, says Monika Half. "You’re adjusting today’s money for tomorrow." Monika Half, located in Bronxville, NY, has appraised photography as an independent consultant for more than five years after working for Christie’s New York for 12 years.
This type of analysis and appraisal requires building a cash flow model on a computer. If a huge estate is involved, says Half, an appraiser may have to segment it into condition of images, the strength of the images, their value and the anticipated interest rate.
On occasion an appraiser will appear in court to testify as to an image or photographic collection’s worth. In this particular situation, having proven credentials, whether through membership in a professional organization and/or extensive experience, can lend believability to the accuracy of a witness’s testimony.
"In expert witness work, the judge will first ask what society do you belong to," says Penelope Dixon.
While that may be true, providing the court with a detailed accounting of an appraiser’s background can also establish his or her credibility as an expert witness.
At the Andy Warhol trial, curator, auctioneer and appraiser Dale Stulz was brought in to reappraise the Warhol estate. Christies had valued it at about $7million. "I came up with a value of $80 million," he says.
Occasionally an appraisal is conducted to prove the value of a photograph or photographic collection as a guarantee for payment of a loan. But these types of appraisals are rare. In his experience, "the fewest number of appraisals are done for collateral for loans, " says Stulz. "Most lending institutions do not want to be straddled with works of art in case the borrower goes bankrupt."
Having an experienced appraiser, who knows the IRS regulations as well as the photography market, can be invaluable when the IRS discounts a donation for tax purposes or estate settlements.
"On the occasional appraisal scrutiny by the IRS," says Dixon, "I confront them that their appraiser has a totally different field of expertise or mistaken comparables."
Once you’ve determined that you need the services of an appraiser, it is then time to find one. It is vital that you seek the services of someone who is familiar with photography and the worldwide market for it. Merely selecting an "appraiser" is not enough. Most appraisers specialize in a particular field, whether antiques, real estate, porcelain or photography.
In some respects, finding an appraiser knowledgeable about photography actually is a simple process. To date, only a limited number of appraisers are qualified to evaluate photography. In some senses, they comprise the membership of a rather elite club. Most are well known by other appraisers and gallery owners in the photography field.
"What a collector should do is shop around," says Morthland. "Find someone you’re comfortable with."
She points out that there are different personalities, with each appraiser specializing in different areas. "Many times you’ll be calling the same people back in five to 10 years to update your appraisal," she adds.
"There are no legal guidelines for being an appraiser," points out Rick Wester. "There are paid membership clubs, but no state or federal laws or licensing," he adds. On the other hand, the IRS spells out what the qualifications of an appraiser are.
When looking for an appraiser, certainly personal recommendations from trustworthy gallery owners or photography dealers can hold a lot of weight. However, you may want to quiz your potential appraiser before hiring him or her. Find out what type of experience she or he has with photography. Most of today’s most knowledgeable photography appraisers started out in one of the auction houses and learned the photography world from the bottom up.
As Penelope Dixon, Penelope Dixon and Associates, Florida and New York, says, "A lot of the appraisers have been through the auction houses. Either you come out as an appraiser or as a curator for private collectors." Penelope A. Dixon began Penelope Dixon & Associates, an independent appraisal firm specializing in Fine Art Photography in 1981. She is a senior certified member of the AAA and a current member of ASA (where she became the first specialist certified in photography). Her 30 years of experience in fine art photography included positions at the auction houses of Phillips Son Neale and Argus, Ltd., in New York.
When interviewing to select an appraiser, ask whether she or he is an accredited member of the American Society of Appraisers (ASA), the Appraiser's Association of America (AAA) and/or the Appraisal Foundation (AF). While membership in any or all of these organizations does not guarantee professionalism, it does indicate that, perhaps, the appraiser is familiar with and adheres to certain standards of conduct.
Terry Etherton, owner of the Etherton Gallery in Arizona, is an accredited member of the American Society of Appraisers for about 10 years. In his view, "for a client to have an appraisal by someone with such a background–they’re likely to have much speedier processing and are less likely to be challenged–insurance- or IRS-wise."
Check with your potential appraiser to see if they have ever conducted the type of appraisal you need. Find out what they consider necessary for such an appraisal. Ask for several references. Then call those references.
Making sure the appraiser you use is familiar with IRS revenue codes is especially important when looking for an appraisal for charitable contributions or estate planning purposes.
Stulz says, "We’re all bound by the Internal Revenue Service code with respect to anything related to taxes." He also notes that many appraisers also subscribe to the Uniform Standards of Professional Appraisal Practices http://www.appraisalfoundation.org/uspap2000/toc.htm advocated by the Appraisal Foundation.
Keep in mind that one type of appraisal doesn’t fit all purposes. Etherton points out, "You can’t necessarily use an appraisal done for one purpose for another purpose."
According to Dixon, you can choose a less experienced appraiser for an insurance appraisal, but not one for a donation. "I’ll run into donation appraisals that look like insurance appraisals, with a list of pieces and prices and nothing else," says Dixon. "You can’t do that," she exclaims.
Etherton also says it’s important, according to the ASA, to take other factors into consideration for an appraisal to be considered valid and useful, including the following:
"If clients from my gallery needs an appraisal, I’ll refer them to someone who doesn’t have an interest in the valuation of the photographs," says Etherton.
Morthland says, "If we will be involved with marketing, we prefer an outside appraisal."
What an appraiser provides to a collector will vary depending on the nature of the appraisal itself.
Marjorie Neikrug-Raskin says, "I usually sit down and talk to people about what they can expect. First, I ask them the purpose of the appraisal. I explain things so they know what to expect. I have to help them understand their needs." Neikrug-Raskin, of Neikrug Appraisals, Ltd., New York City, opened her gallery in 1970, but then closed it after six years because of a family member’s illness. In some respects, Neikrug-Raskin is considered a "Grand Dame" of photography appraisers, with more than 25 years experience as an appraiser. A certified senior member in photography of the AAA and ASA, she says, "There are a lot of untrained appraisers, who wind up in court. You have to be very careful how you do an appraisal."
"You can’t get away with just getting an opinion. You really have to back it up with facts and comparisons," adds Monika Half.
Not only does she explain the process to clients, Neikrug-Raskin also writes appraisals "so a third party can understand it. To know what I am saying–to understand what I am talking about."
"For insurance purposes, I do put down what the photographer is selling his work for. I may not go far a field [with my research]. Insurance is for replacement, not fair market," Neikrug-Raskin explains. "I want my people to be insured properly and that they have no problem should there be a catastrophe."
Dixon suggests, "You can choose a less experienced appraiser for insurance purposes." However, for more complex situations, experience counts.
In addition to including the date the appraisal is conducted, a statement of disinterestedness and an assurance that there is no conflict of interest, most formal appraisals should also include the following information:
This area of the appraisal spells out why this person should be considered an accurate judge of the value of either a single photograph or photographic collection. While you may have obtained this information when hiring your appraiser, they still must make sure to include qualifications and credentials on the written appraisal. With the correct credentials, the IRS will be less likely to dismiss an appraiser’s judgment for the value of a photograph or photographic collection.
This usually includes what is called provenance–a history of the ownership of a photograph or collection. Often such information beyond the last owner may not be available from an auction house or gallery. For historically or culturally important photographs, a detailed history of ownership can be a major determining factor of a work's value. When a detailed history is not available, an appraiser will also take into account inventory labels, gallery labels, family seals, customs stamps, and various compilations of old sales records. Moreover, information on whether or not an image was originally a part of a private or museum collection can add to its value.
"The IRS still favors auction records as comparable sales," says Wester. "The assumption is that it is a public sale and the results are public."
Sometimes the inherent value of a photography or collection will differ from the selling prices. "As soon as you get to vintage," says Dixon, "you have to ask, who is the artist? What is their reputation? What medium are they using?" Rarity and condition also factor into an appraisal.
Identifying the photographer and their historical place in the world of photography gives a much-needed background as to why the work has the value assigned to it. For more complex appraisals, an appraiser will include information on how the photographer’s identity was established.
Additional information may include detailing any awards or degrees the artist obtained during his or her life.
In researching the market for either an individual photograph or a body of work, an appraiser may look at summaries of recent sales of the artwork or similar pieces, and a gallery's current asking prices for similar types of work. An expert appraiser will also search for any recent articles or academic information about the photograph itself.
Valuing a collection is an even more challenging task than appraising individual photographs.
"Collections are more complex and not that easy," says Dixon. "I have to do more research to establish a value."
Determining fair market value is generally mandatory for any competent appraisal. And especially with donation situations, an appraiser must be very careful to provide accurate and complete information to minimize IRS challenges. "I do research no matter what," says Half. "I have an extensive library here."
Furthermore, an appraisal should include the appraiser’s opinion of what the physical condition of the photograph is. Watermarks, stains, tears or other evidence of poor condition or poorly executed conservation will usually detract from its value. A photograph in excellent condition may find its value actually enhanced. For example, if a photographer developed several prints of the same image, but only one was in mint condition, it would have a greater value.
An appraisal should include information on the IRS standards adhered to, any Appraiser's Association of America or American Society of Appraisers standards used and the appraiser’s own methodology.
Half explains, "How do you value a photograph? What kind of criteria do you use? There are all sorts of variables, including the virtuosity of the photography." In essence, she says, "You have to know the entire body of work to judge a piece against it."
The more work a collector does properly before bringing in an appraiser, the lower the appraisal will cost. Taking images out of the frame is important for an appraiser to accurately assess their condition, especially with earlier photographic works.
"I say to my clients, ‘the more you provide me with, the less I will cost’," says Dixon.
If a collector has information in a database, providing the appraiser with a copy of this information helps tremendously.
Morthland also recommends collectors take the following steps to ease the appraisal process.
"For the collector, it’s an emotional process," points out Morthland. "For the appraiser, it’s a factual process, with a concern for aesthetics."
Giving an appraiser enough advance notice of the need for the appraisal can save money for a collector as well. Even if it is physically possible for an appraiser to evaluate a collection on April 1 in time for an April 15 tax-filing deadline, such urgency will command a premium price.
Realistic time frames are also important, because the appraiser you select may not be available immediately. After all, they will probably need to schedule your collection appraisal into their appointment book.
"An appraisal for a collection with 30 pieces of art and 70 books took a total of five days, to do, including the write up," says Morthland. On the other hand, the Ilse Bing estate, with more than 20,000 images catalogued and 50,000 total in the estate, took a year and a half, she says.
Fee structures for appraisals are often based on a projected estimate of the time needed to fully inspect and research the collection and then create the written appraisal itself. Fees will vary depending on the number of photographs, the number of artists, and the reason for the appraisal.
Expect fees to run anywhere from $150-$400 per hour and up. Some appraisers will set a fixed fee or a minimum number of hours to be contracted for, plus travel and expenses. Others will include mandatory administrative fees. Set fees of $1,200 to $2,000 per day, plus travel expenses may also apply. But due to the nature of the business, if an appraisal is particularly complex, such agreements are subject to adjustment. And, as Rick Wester says, "The fees are negotiable with clients based on our estimate."
While a competent appraiser should be able to determine a lot of information about a photograph by examining its physical condition and conducting market research on both the photographer and the image, they should not be held responsible for authenticating the image. Generally speaking, determining the authenticity of an image is beyond the scope of most appraisers.
"We work under the assumption that things are authentic. Because we work on an hourly basis, we, as appraisers, don’t have the time to analyze each item, print by print," says Stulz. On the other hand, he adds, "As an appraiser, I will ask to get it authenticated if I have any suspicion that anything is awry."
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Catherine Novak has been a senior associate editor for Bests Review Life/Health and Property/Casualty editions, a contributing editor for The Risk Retention Reporter, and a freelance writer for Risk & Insurance magazine. She also writes general feature articles.