The "Market Value Range" (MVR), or "How to get an appreciation of the market value of my artwork?"
THE CONTEXT
Determine the fair value of a work of art is not easy.
For some, the mere idea of paying $ 1,000 for a work of art is an unspeakable torment, if not an insult to the intelligence. In contrast, the art lover or the neophyte is irrevocably convinced to hold the "ultimate work" of this artist, this unique piece whose monetary value is, by definition, unlimited.
The subjective criteria often take over ("I like this artist", "Everything he does is awesome", etc.).
Reconciling the whole?
As part of negotiations to be concluded between collectors and sellers, it is essential to have parameters for identifying the anticipated value of the work that is the subject of negotiations.
This is what we call the "Market Value Range" or MVR.
THE MVR, WHAT IS IT?
This is an index specifying the minimum and optimum values for the work proposed in the negotiation and, of course, other things being equal (time, medium, size, etc.), excluding specific factors such as the reputation of a particular work or its intrinsic qualities. See for more details our page on "Key criteria to consider in determining the market value of a work of art".
The MVR is, roughly speaking, the price range (minimum-maximum) around which the price of a work of art will evolve in an open market over a given period of time.
So this is not an accurate assessment of the work in question. For a more specific assessment, consult our page "Individuals and firms providing assessment services of your works of art" to identify the appropriate resources.
Note, again, that it is a measure of the current potential demand in the market, not of a future demand.
HOW DO YOU DETERMINE IT? (EXAMPLE)
We use, to establish it, market data. Before you set up your price, you need to answer the question: how much am I likely to obtain for an artwork comparable to mine or that I'm interested to on the market now?
Two sources of information are available to assess this price:
- Recent auction results.
Serious auction houses publish the results of their sales to the auction.
Your methodology to generate your MVR.
We find that the average hammer price obtained by this particular artist for oil paintings of such a period and size is $ 10,000. We know that the seller, on this basis, will get about $ 8,000 ("hammer" price, less "seller" commission and miscellaneous costs) and the buyer, he will have to pay about $ 14,000 ("buyer" premium, plus various taxes).
The winning amount will be between the two, or around $ 11,000. At this price, both will have concluded a successful transaction. The seller has obtained $ 3,000 more, the buyer has paid $ 3,000 less. Of course, this calculation is correct when it comes to a transaction between private persons.
Your source data: the auction houses and business publishing auction results.
- Prices charged by commercial diffusers (art galleries, virtual galleries, art dealers).
Many galleries offer customers the works of an artist on the secondary market, often identified as "historical artists." The displayed prices will be for you an excellent indicator of the current valuation of a given artist works at this time.
Note: the galleries usually set the price listed on the basis of a commission of up to be between 30% -50% of the works they present, that is to say that the seller will receive at best 70% of the amount obtained from the sale.
Your methodology to generate your MVR.
For example, and to continue with the above example, a work sold $ 12,000 will cost the buyer $ 13,800 (sale price, plus tax). The seller will receive about $ 7,200 ($ 12,000 minus 40% commission).
Again, the winning amount will be between the two, or around $ 10,500. At this price, both participants have concluded a successful transaction. The seller has obtained $ 3,300 more, the buyer has paid $ 3,300 less. Of course, this calculation is correct when it comes to a transaction between private persons.
Your source data: prices displayed by commercial sellers that you will get by searching for the artist's name on one or more of our specialized Google search consoles.
By comparing the information obtained from these two sources and to the extent that they are mutually reinforcing, you can build your index, the "Market Value Range" or MVR, to be between $ 9,000 and $ 12,000, or +/- 15% of the average value obtained.
WHY TO DO THIS?
The objective is to ensure that collectors-vendor negotiations to be successful in an environment where both reap the benefits. The win-win formula.
But for that to happen, we need each other and have a relatively similar appreciation of the value of the work in negotiation.
Unfortunately, for all sorts of reasons, the expectations of each other can be very different, which could hamper future negotiations, if not totally compromised.
For example, if the collector is expected to pay $ 6,000 for the desired work and the seller expects to get $ 20,000, it is clear that the gap between the two is hardly reconcilable.
The PVM is not an absolute measure. It can reflect the intrinsic value of the proposed work and may be impossible to specify. This is the case, among others, if the number of recent sales is zero or insignificant, so very few works of the artist in question have been offered on the secondary market or whether the work has a historicity or specific qualities that make it unique, so difficult of appreciation.
PVM is a compromise measure that does not claim to accuracy.
Obviously, this requires minimal research on the part of each other.
And what's more, if you are not interested in doing the necessary research yourself, we can help you make the PVM, insofar as possible.