The art of valuation: how is a work of art or a collectors’ item evaluated?

As part of our Art Advisory Services, we are often asked how the price of artworks and collectibles is determined, particularly in the context of a prospective sale at auction or a transfer of ownership or maybe the insurance of a work of art or a collectible. How do valuations really work? What criteria and methodologies are used? To answer these questions Laurent Issaurat, Head of Art Advisory Services at Societe Generale Private Banking is joined by Victoire Gineste, Head of Business Development and Auctioneer at Christie’s France.  Christie’s is a leading international name in the world of art and auction houses and is one of the partners of SG Kleinwort Hambros Art Advisory service.  

Laurent Issaurat: To start with, could you please try to define what makes the value of a work of art, Victoire? 

Victoire Gineste:  First, it is important not to confuse the ‘value’ of an artwork and the ‘price’ of an artwork. Keep in mind that at auction houses we talk about the value on what is called the secondary market, which means, the resell price. An object can have an emotional, decorative, historical or symbolic value that is not necessary linked to its financial value and, and therefore, to its price. Artworks are also in most cases unique objects, and so a whole range of criteria needs to be taken into consideration to define a value. Essentially, this means giving an opinion on the desirability of the artwork on what has become an increasingly selective market. 

Laurent Issaurat: Thank you very much for this very important opening comment. In practice, when it comes to the valuation of a work of art, what are the main criteria an auction house would use? 

Victoire Gineste: The first two criteria are intrinsic and specific to each piece or artwork: quality and rarity. This includes how well the artist is known, if the piece is authentic or not, it date, size, the subject depicted, and the technique that was used. In addition to the prestige of the artist, the market will favour the best within their body of work — what they are known for and, and therefore, what collectors are looking for. But other, more subjective criteria also come into play: changes in taste and market trends  can directly influence the price of an artwork. The ecosystem surrounding artists is also important to consider: who is collecting their work, who is representing them on the market, do they feature in the collections of major museums… The notion of “freshness” to the market is another important factor. If an item is a discovery or a rediscovery, if it has been outside the market for several decades, or if it is presented for the first time at auction, it is all the more desirable. In contrast, if a piece is coming back and back on the market too soon it might sell for less money or might not been sold at all — a risk that can also apply to works of art that are in poor condition. This is something you constantly need to look out for. Lastly, by an object’s provenance or “pedigree” we mean the chronology of its successive ownership, but also any major exhibitions it was part of or any reference made to it in publications. Pieces from prestigious or historical collections have extra soul, so to speak, which has a positive impact on their price. Strictly speaking, there is no order of importance for the different criteria; each one must be taken into consideration, and it is ultimately up to the individual collector or buyer to weigh them up according to their own priorities. 

Laurent Issaurat: It sounds like this is not exactly scientific or 100% scientific process isn’t it? 

Victoire Gineste: Yes Laurent, if anything an artwork is certainly not exact science when one of our specialists are asked to prepare  an estimate they will examine the piece and the information available with respect to this criteria in some cases  

Evaluating an artwork is certainly not an exact science. When our specialists are asked to prepare an estimate, they will examine the piece and the information available with respect to these criteria. In some cases, they may need to do additional research, speak with colleagues, and work with external authentication committees to confirm an artwork’s authenticity. Depending on the type of object or its value, our specialists may also request input from their counterparts in other offices abroad, who are specialised in their local market, and familiar with the taste of buyers in their region. To give an example, for the valuation a piece by the French-Chinese artist Zao Wou-Ki — highly sought-after by Asian collectors at the moment — our Paris team works in concert with the team in Hong Kong or in Shangai. This ability to meld cross-continental expertise for a single piece has become a decisive factor in a now entirely global art market. 

Laurent Issaurat: This is really fascinating it seems that they are a myriad of criteria and factors you need to take into account in the valuation of a work of art. Now when it comes to figures, how do come to financial estimates?  Do you use benchmarks of transactions on the market of comparable works of art? How do you do this? 

Victoire Gineste: With new technology and online databases, using comparable market data is for sure an integral part of the valuation process. That said, the data needs to be interpreted and contextualised by our experts. This is the very essence of any art appraisal. 

Laurent Issaurat: Thank you Victoire. Now, a question that our readers and clients will certainly ask is whether your estimates are confidential, and do they come at a cost? 

Victoire Gineste: At Christie’s we provide worldwide estimates for free and without any obligation. They are also strictly confidential. Discretion is at the very heart of our relationship with the families we advise and work with, both when they sell or buy. 

Laurent Issaurat: Excellent. Now, when it comes to the estimates themselves, there is often a lower and a higher end of the estimate. How does this work and what is the lower estimate in the respect of the so-called “reserve price”? Could you define what a “reserve price” is? 

Victoire Gineste: Sure. At auction, the reserve price is the minimum price below which the item in question will not be sold. By law, it might not be higher than the low estimate but can be set below the low estimate - if so agreed. In most cases, we will suggest setting the reserve price at the low estimate and review, if it is necessary, the day before the sale, depending on the interest in the item. Of course, the reserve price it strictly confidential and remains between the owner of the item and the auction house. 

 Laurent Issaurat: This is very clear, thank you very much. During your career, I supposed you’ve processed to a number of different valuations. Has it ever happened that your experts made a discovery in the course of their research and that this discovery had an impact on the valuation and the initial value of a work of art ? And could you maybe you give us an example? 

 Victoire Gineste: I have many examples and could share a lot of stories with you! But let me take one from the jewellery collecting world. A few years ago, we were asked to estimate a brooch from a private collection. We initially gave an estimate between €20,000 and €30,000. But looking carefully to the brooch, the finesse of the enamel, its delicate colours, and the craftsmanship caught our attention. We did some research to determine who could have created such a fine piece, which Maison, could have created it, and that’s how we found the drawing of a similar brooch in a book celebrating the work of Maison Boucheron. We contacted the team and got the confirmation we were so hoping for: the brooch, which was representing a cicada, was indeed a Maison Boucheron creation. They issued us with a certificate for the brooch, as well as additional information. The cicada that was entrusted to us was one of seven rare pieces of its kind made around 1900. The final estimate was raised to between €50,000 and €80,000, and it sold in the end for €355,500⁽¹⁾, with premium. 

Laurent Issaurat: What an amazing result, Christie’s, well done! This is much impressive. Victoire, I would like to thank you warmly for this very informative insight into the art of valuation.  

⁽¹⁾Price including the buyer’s premium, added to the hammer price. The buyer’s premium is calculated using a schedule that is published by the auction house ahead of the sale. 

CA379/Nov/23