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How to value a work of art?

Published in: Art Law
by Cristiano Delfino
Home > How to value a work of art?

A recurring topic in art law is the economic valuation of artwork. In this article, we will focus on the main factors that influence the outcome of the valuation. We will address in particular:


The artwork as an investment

The current socio-economic scenario is particularly complicated: climate crisis, economic instability, pandemics, war and inflation. That is why more and more people are constantly looking for the best possibilities to invest capital in assets that are not subject to intense market fluctuations. Well, a viable alternative to gold, currencies and government bonds are works of art. 

According to ‘The Art Market 2022’ (conducted by Art Basel & Ubs with the findings of Economics Art) after the critical year of 2020, 2021 saw a rise of 32%, with global sales of USD 26.3 billion. 

In other words, these are the so-called “safe-haven assets” that primarily allow investors to safeguard their capital from inflation and, in some cases, to reap speculative benefits as well.

Valuation parameters and the so-called artistic coefficient

The key factor in the valuation of a work of art is undoubtedly the reputation of the artist. As a matter of fact, the price range varies considerably whether an emerging artist or an established one is concerned. 

Other determining factors cannot be overlooked:

  • the age of the work;
  • the size, material and type of the work;
  • the availability of a certificate of authenticity;
  • the state of preservation;
  • the transfer history (provenance from renowned and prestigious collections, trade in auction houses and involvement in exhibitions);
  • the bibliography. 

The combination of some of these factors adds up to the so-called artistic coefficient. This coefficient is part of the equation used to calculate the value of a work of art: 

[(base+height) x coefficient] x 10 = value of the work.

The valuation of a work of art is an extremely delicate subject. Hence, we are required to perform accurate due diligence in order to be able to offer the elements necessary for a correct valuation. Now, let’s see what are the so-called non-objective parameters.

Other parameters influencing the price of the work

In addition to the coefficient and objective parameters, sometimes the price of a work of art can be significantly influenced by the personal judgement of the buyer or owner. The emotional and sensorial component, due to personal taste, can indeed significantly change the valuation of a work. 

However, other variables also play a role:

  • the market place;
  • the speed of exchange;
  • the mode of sale;
  • tax regulations; 
  • the right of circulation;
  • the fashion trend of the moment; 
  • financial market liquidity.

Unfortunately, in the art market there is no official institution that can provide market quotes for artists and their works. The soundness of the quote is tightly intertwined with the reputation and expertise of the industry professionals who have delivered an opinion on the work.

Due diligence, negotiations and sale

The evaluation carried out by unknown persons can certainly affect the ” price ” of a work of art but, in the medium to long term, might have a severe adverse effect on the artist’s reputation and the value of his or her works. 

It is always a good idea to rely on trustworthy art advisors, art appraisers, critics and auction houses or to seek the support of a qualified law firm.

In most cases, the purpose of an artwork appraisal is to manage the sale of a work or an entire collection.  Following due diligence, galleries, auction houses or art dealers (who handle the brokerage privately on the basis of their contacts and the requests of these contacts) are commissioned with the negotiations.

The most frequent types of contracts in the art world are the following:

  • commission contract
  • sale and purchase contract
  • consignment contract.

Selling works of art without a written agreement is never advisable as it creates a lot of uncertainty and is not standard practice especially when dealing with high value or high potential works or collections. 

The professional support of a competent law firm is also advisable in the case of works of lesser value because, as we have seen, the ” entry value ” of the work may vary greatly over time.

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Publication date: 1 November 2022
Last update: 7 September 2023
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