The story of Joe Simon-Whelan is now legend in the art world: A man buys an Andy Warhol self-portrait for $195,000 in 1989, and finds a buyer willing to pay $2 million for it 12 years later if the work can be authenticated, but the Andy Warhol Foundation for the Visual Arts says the so-called red self-portrait is not the work of the modern artist. There's no sale.
Every appraiser or auctioneer has a similar story, though not all have unhappy endings.
There was the 16-by-22 inch painting that was hanging overlooked in a simple gilt frame on the wall of a home's back staircase. That painting wound up fetching almost $500,000 at auction.
Or the Chippendale piecrust table that the realtor handling a Jersey Shore beach house as part of an estate had considered selling as part of the house-until a sharp-eyed antiques dealer spotted the rare find. It brought in more than $6 million at a Christie's auction.
The moral of the stories: It is important to get reputable appraisals for valuable art, furniture or other collectibles, and when looking to buy or sell an item or a collection, it's crucial to use an established, knowledgeable and reputable firm to get the best and fairest deal possible.
There was a time, not too long ago, when that meant collectors were left with two choices for auctioning off valuable items: Christie's or Sotheby's. But times have quickly changed.
Today, the Internet has helped level the playing field, allowing smaller and less prominent firms to compete with the two powerhouses by marketing themselves to clients and marketing their wares to potential buyers worldwide.
"It's a vibrant part of the auction itself; it's very, very useful pre-auction, too," says Emerson Tuttle of Boston-based Skinner Auctioneers and Appraisers, which saw 20% of its lots and 15% of its total market value come via the Internet last year.
The Internet is a great place for people to find the information to help them best deal with their valuables, and not just those hanging on the walls, but also furniture, jewelry, wines and automobiles.
Getting well-informed, unbiased appraisals of everything one owns or wants to own is the first step.
"You need someone who is a specialist to look at your things," says Joanne Porrino Mournet, an executive vice president and auctioneer at Doyle New York, an auction and appraisal firm. "Mistakes can be made."
David Sleeman, director of Winston Art Group in New York City, says that in 2007 and 2008, before the stock market crashed, people were buying art in a sort of frenzy that did not always lead to good decisions.
"People were overpaying for things," he says. "They were buying perhaps not the best examples of the works of a given artist, but the market was so strong, people were competing and that was driving prices up.
"As art advisors, we are finding that a few people did get their fingers burned. Sometimes, we learn lessons the hard way."
The lessons can be very expensive.
Sleeman tells the story of a woman whose mother had told her that when she died, the daughter could have her Frederick Arthur Bridgman painting. So when the mother died, the daughter took the painting home and hung it on her wall before the estate was valued and closed.
After the closing of the estate, the daughter decided the painting didn't match her décor and sold it to a local dealer for $400,000. At tax time, her accountant asked about that money and the daughter told him. The accountant sought help from Winston because of the tax implications. The firm's research found that the dealer had resold the painting at auction for $850,000.
The daughter made several mistakes, including taking the painting before its value was included in the estate and not getting an appraisal on the painting before selling it.
"The IRS could have filed charges against her," Sleeman says. "The estate was reopened and the estate paid taxes on the $850,000. That's what the IRS deemed it was worth. … During her life, her mother could have gifted it to her and there would not have been this catastrophic tax burden."
It's important to get the right kind of appraisal. The type of appraisal will vary based on its use. To insure a piece of art or fine furniture, for example, it should be appraised at its retail replacement value so it is covered if stolen or damaged.
"When an individual owns any things of value, you need to have it insured. We do hundreds of appraisals every year," says Anita Heriot, head of the appraisals department at Freeman's, the nation's oldest auction house, based in Philadelphia.
"Many of our clients are serious, serious collectors of some bizarre things. They are very passionate about their collections."
The firm has appraisers who are experts in dozens of different areas, from American furniture to sports memorabilia. She recently evaluated a man's lifelong comic book collection.
Appraisals also are necessary to cover several different tax issues-an item handed down to heirs or sold as part of an estate, or donated to a museum for a charitable tax deduction.
Sleeman, whose firm is an independent art appraisal and advisory firm, told the story of another client who had spent $500,000 buying a piece of art in the retail sector. Later, at a cocktail party, a museum curator persueded her to donate the art to the museum. She claimed the gift as a charitable deduction on her taxes. But the fair market value of the piece was established at only $250,000, so that is all the IRS would allow.
"From a tax standpoint, that gift was gloriously inefficient," Sleeman says. "It points to the importance of the appraisal. Had she known it was only worth $250,000, she might have done something else for a gift. It's really important: Before you do anything else, an appraisal is the first step."
Any appraiser at least should be accredited by the American Society of Appraisers and follow the standards of the Appraisal Foundation. It's also good to use an established firm with a good reputation.
Sleeman stresses that using an independent firm ensures getting an unbiased appraisal. The appraiser has no vested interest in skewing the value of an item because he is also looking to make a commission off its purchase or sale.
"Some people spend relatively large sums of money to get advice only from the person from whom they are acquiring something. That's fine, if they have a good reputation. But if you spend a lot of money, it behooves you to get a second opinion from someone who is independent with expertise in the area," he says. "The advice is not as expensive as you might think."
Art advisory firms like Winston also help clients in a relatively new area of art management-collateralization.
"It's a growing area, of clients looking to leverage their art collections," says Sleeman. "Clients who are hedge fund managers or in real estate understand if they have a $30 million painting on the wall, they want it working for them."
Winston acts like an asset manager, helping arrange for a loan using a collection as collateral to finance new acquisitions, fund investments or manage short-term cash needs.
The firm also provides advice on the proper maintenance of art and when and how is the best time to buy or sell.
Some collectors stay abreast of their valuables and know almost exactly what they are worth. Others have as much knowledge as they have gained from PBS' popular Antiques Roadshow. Some have no idea what treasure lies in their home.
Tuttle recalls the story of a family living in a non-descript multifamily home in Boston who had called Skinner as auctioneer in their effort to raise money to fix up the house. An appraiser found a folk art painting, circa 1850, of a little boy sitting on a chair with a fluffy dog.
"It had the cuteness factor," Tuttle said. "It was in untouched condition. They consigned it to us. It sold for $886,000. To say they were pleasantly surprised is an understatement."
It can pay to keep in touch with an appraiser or auction/appraisal firm.
Among the items hot today are Asian porcelain and modern art-some works by Andy Warhol have been selling for up to $30 million within the last few years. Gold, silver and jewelry are also fetching high prices, due in large part to the continued softness in the economy.
On the other hand, demand for old masters' paintings and 18th or 19th century furniture has cooled. While these items likely have not depreciated in value, they may not be worth much more than they sold for even five years ago.
In most cases, experts agree, an auction is the best way to get the highest price for a valuable item or a whole collection.
"At a private sale, the buyer has as his or her object to pay as little as possible," says Tuttle. "Our objective is to get the highest price. The higher the price, the more we make."
Heriot says an auction is also "a safer place to buy some things than at a gallery" because with so many experts viewing a piece prior to auction, someone will spot, and make the auctioneer and others aware, if an item is not authentic or is in poor condition.
With so many firms out there offering different specializations-size, geography, services-a collector should be able to find the right one.
Skinner, for instance, groups like items in themed auctions. The firm holds sales several times each month, handling about 70,000 lots a year in 20 specialty areas, and auctions of similar types of pieces are held around the same time each year.
"We hold a books and manuscripts sale every November, at the same time as the annual book fair in Boston," Tuttle explains. "We think it draws people to the book fair, and while they are at the fair, they say, 'I have to make time to be at the auction.'
"The advantage is most people interested in that particular type of property already have you on their radar screen."
Doyle, on the other hand, likes to sell all the items of a collector or an estate together, and publicizes these sales whenever an owner will allow.
"We always suggest, if the client is comfortable, to use the estate name," Mournet says.
"It shows to the buyers that it's fresh to the market. It doesn't have to be a famous name. It adds a little history. People love to tell a story about the things they own."
The name of the estate probably helped boost the take from last February's auction of items that belonged to Lena Horne. The Brooklyn-born singer, actress and civil rights figure died in 2010 at age 92. Her daughter put the estate up for sale.
"To us, this was a very important collection to have," Mournet says.
Louis Webre, Doyle's director of media and communications, says the original value of the estate's 200 items was estimated at between $99,000 and $150,000.
"It was a relatively modest collection, but she was an important figure in the 20th century. The sales more than doubled the estimate," he says.
The auction brought in $316,000, including $20,000 for a small Louis Vuitton trunk valued at $700. About 1,000 bidders crowded Doyle's salesroom and jammed the phone lines and Internet to purchase Horne's costume jewelry, gowns, silver and other items from her home on the Upper East Side of Manhattan. Every lot sold.
To generate enthusiasm for the auction, Doyle and the Apollo Theater co-hosted a reception for 300 guests, including Horne's daughter and granddaughters, actresses Cicely Tyson and Anjelica Huston and leaders of the NAACP.
But Mournet says Doyle handles every estate-about three quarters of the firm's auctions are estates-in the same manner.
"It's a very challenging time in people's lives; the last thing they want to do is be trotting around to three or four different places," she says, noting that Doyle will not turn away items. "We'll take the Picasso and put it on the cover of the catalogue, but we will also help them sell the sideboard from the dining room."
Webre says the firm will find a home for any items that it can't sell-for instance, arranging for donations to groups that help the homeless.
Another way to choose an auction house is by its successes, often touted on its Web site.
In March, Freeman's announced it sold a Chinese blue and white Ming-style vase for a record $1.385 million, almost double what nearly identical vases have sold for within the last three years.
Record sales are only one part of the typical firm's Web presence. Most have extensive sites that outline consignment costs and buyers' premiums, alert clients of upcoming auctions for which they are seeking merchandise and let prospective bidders view items before an auction. Doyle even has an online form where people can submit descriptions and pictures of items to get an estimate of value.
"Kathleen Doyle, our chairman and CEO, was a real visionary about the Internet," Webre says. "Doyle was the very first New York auction house to offer catalogues on the Internet. We were the very first to do live interactive bidding through Amazon. We saw that the Internet never sleeps."
Using the Internet for bidding has changed some of the dynamics of auctions, although there's no substitute for the live process.
"The prices we get are a direct result of the enthusiasm of the audience in the room," Mournet says. "An auctioneer is a combination of professional cool and enthusiasm. I try to approach everyone … however briefly, to establish a relationship with the bidder. Smile, make eye contact, say thank you. You don't want people to be afraid of you. You want them to feel you really want them to get the piece, feel part of the process, that you are there to help them."
The Art Of The Real Estate Auction
It's hard to beat the law of supply and demand, so when no one wants to buy the $10 million waterfront mansion that's been on the market for more than a year, it may be time to change tactics.
That's where a firm like Concierge Auctions comes in.
The preferred auction partner to Sotheby's International Realty, Concierge uses targeted marketing to auction luxury real estate properties within 60 days of listing.
"Today's market has a large supply of luxury homes across all markets," says George Graham, Concierge's CEO. "Two and a half years post-Lehman, the world of luxury real estate has changed. People have become very utilitarian. They only want to buy something they are going to use."
So sellers are stuck keeping a property on the market for a year or more, continually lowering their asking price, and still often are unable to unload a home they no longer want, never visit or really need to liquidate for cash. In the meantime, the owner continues to pay property taxes and maintenance costs that can total $200,000 a year.
"The one piece of advice the broker gives is 'Let's lower the price.' The seller gets so frustrated with the process," Graham says. "Our sellers are the most motivated ones in the market."
What Concierge does is partner with a local agent who knows the local market well and then launches an intense marketing blitz that can interest as many as 200 potential buyers and attract ten bidders or more on average, according to Graham. The firm does extensive marketing on the Internet and in local print publications, as well as using e-blasts to give a property maximum exposure.
A recent example of where this partnership worked well was the sale of the Tulip Hill estate in Anne Arundel County, Md., considered to be one of the finest pre-Revolutionary War estates in the nation. Listed at one point for $7.5 million, the Georgian mansion on 54 acres wound up selling for $2.5 million, more than its revised estimate, in April 2010. Graham attributed that to Concierge's affiliation with listing broker Long & Foster Realtors, experts in historic properties in the mid-Atlantic region.
Concierge pre-qualifies all potential bidders in advance, so a seller can know that his listing is reaching only those who are seriously looking for a property and can afford it.
While most people turn to an auction after being unable to sell a home privately, Graham says some, like Cher, are doing so right away so they don't wind up wasting time and spending money maintaining the property. Last year, Concierge handled the auction of a home that had been newly built for her in the exclusive Hualalai Resort in Hawaii. Expected to go for between $8 million and $12 million, it sold for $8.72 million.
"She looked at her chances if she had listed it and figured she would end up in the same place [at auction]," Graham says. "In the end, she decided it was not worth carrying the property for all that time.
"But that is more rare," he adds. "Most people really need to be motivated before they contact us."
One of the hurdles sellers need to overcome is an inflated sense of value. While home values did rise precipitously over the last decade, they have declined since 2008's economic downturn and are likely not worth any estimate that is more than three years old.
"People need to realize the market is where it is," says Graham. "There is currently a backlog of properties that needs to be cleared before values will rise again.
"We will find a real buyer if the seller is prepared to stomach the medicine: What is it really worth today?"
