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London: +44 (0)207 038 3548
New York: +1 212 332 8158

In part one of this discussion we highlighted these basic steps that we need to think through whenever we consider buying or selling an object:

  1. What is it?
  2. Is it authentic?
  3. What is it worth?
  4. How best do we buy or sell it?

We dealt with 1) and 2) in part one so now we are going to discuss step 3): The knotty problem of arriving at a valuation.

What is it worth?

Science and Art

Valuations are the first place to start with both selling and buying an object. Often the decision to sell or not is determined by a realistic valuation of the likely sale proceeds, and when buying, clearly it is important to have an independant valuation of the object being considered. There are two ways of valuing, what I call the scientific way, and the Artistic way. In reality, you need to consider both.

The scientific approach

Usually the basis of a valuation is comparison with other similar objects that have been sold either at auction or in the wider market. For the former, websites exist for finding this information, for the latter a keen eye on the market is required, and newsletters like the Baer Faxt can help as they promulgate gossip. Occassionally, one can even work out the average price per square inch for a particular artist (size does matter, up to a point) and then apply that to form the basis of a valuation. This process is what I call the scientific approach and it works well where an object is relatively repeatable.

This picture is by an artist called John Atkinson Grimshaw. Many artists, and Grimshaw is typical of this, painted many works that are very similar. They found a formula that sold and then repeated this again and again. Almost every decent Victorian picture auction will have a couple of these in it, and they sell very predictably.

However, every now and then they would paint a masterpiece. In Grimshaw's case these were usually city and dock scapes like this one.

If you have one of those then the value can be way above the normal run of the mill example.

So this brings us to the Artistic approach to valuing! One just has to look at the picture and decide just how good it is, and then guess how many people in the market will love it as much as you. Ultimately the price at auction is only determined by two people, the buyer and the under bidder....

And that brings us to the concept of ‘Liquidity’ in any given artist’s market. If there are many potential buyers for each work that becomes available, then it becomes certain that the work will be competed for at auction. If, on the other hand, there are more works than there are buyers, less good works may sell at their reserve (i.e. only one bidder) or not sell at all (no bidder on the day). This does not mean that the work is valueless, just that on that particular day no one was prepared to pay the price asked.

The final problem for any vendor in those circumstances is that the failure will be recorded in all the online data bases, and that in itself further damages the future saleability of the piece.

In our next and final instalment we will discuss how best to buy/ sell, and the difference between primary and secondary markets.