Types of Valuations
We understand that each valuation will serve a different purpose. The replacement value for insurance purposes of a piece will be very different to the asset liquidation value. To do this we use principles determined by the International Valuation Standards Committee around valuation types.
TYPES OF VALUATION
Replacement for New Value is primarily used for insurance purposes should the work of art be lost, damaged or destroyed.
International Valuation Standards define ‘Replacement for New Value’ as:
"The cost of replacing the pre-existing artwork with a substantially similar (equal to but not better than) artwork at current new prices."
Fair Market Value is primarily used for estate and tax asset validations. Market value is distinct from market price. Market price is defined as ‘the price at which one can transact’ and market value as ‘the true underlying value’.
International Valuation Standards defines Fair Market Value as:
"The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion."
Marketable Cash Value is primarily used when assets need to be divided, as in the case of divorce or partnership dissolution. The value of the work is based on the Fair Market Value minus all associated selling costs, such as dealer commissions and auction house premiums.
Angela Tandori Fine Art carries out valuations in accordance with the principles determined by the International Valuation Standards Committee. To value art we predominantly use models of comparison and substitution of market data. The International Valuation Standards Committee defines this approach as:“The sales of similar or substitute properties and related market data, and establishes a value estimate by processes involving comparison. This approach to the valuation of personal property is dependent upon the Valuer’s market knowledge and experience as well as recorded data on comparable items.”