Journalistic irresponsibility re. art valuation (yet again)

While I hesitate to amplify, I find it harder to sit idly in the face of another article touting artificial intelligence as a panacea to art valuation. Moreover, this salacious column is predictably written by someone (Daniel Grant) with no firsthand experience buying, selling, or appraising art, and it is perhaps unsurprisingly riddled with misinformation, inaccuracies, and elisions.

As a small selection:

1. Any responsible mention of the use of AI to authenticate Old Masters should be accompanied by an acknowledgment of its severe limitations and its potential for misattributions and dispute (lest we forget the Raphael episode).

2. Appraisers do not "set prices" -- we set ascribe values. If Mr. Grant does not know the difference, he should not be writing such an article.

3. The statement that "only a small percentage of artworks are sold at public auction" is misleading. A very significant percentage of high-value works of art are sold at auction.

4. Mr. Grant asks how insurers are "supposed to write fine art policies for collections if the appraisers they rely on have little or no access to the prices paid for artworks." It's patently absurd to contend that appraisers have "little or no access" to private realized price data, when in fact it's precisely our job to research and report on such markets. All good appraisers do this -- and insurers know (or should know) to rely on valuations performed by those appraisers. Technology will not help with this.

5. Mr. Grant uncritically quotes an AI professional who says that "A.I. can understand why and when the value of an artist's work changes over time" However, Mr. Grant curiously does not quote a single appraiser. As a reminder, AI is only as good as what it is fed. AI has neither relationships nor private knowledge, nor any real intelligence in making the necessary decisions to such a pursuit as art appraisal.

etc., etc., etc.

Chubb Art Market Update

It was a pleasure and honor to give the 2025 H1 Art Market Update talk to Chubb’s Fine Art team last week. Thank you to Laura Doyle for extending the invitation, which provided an opportunity to reflect just before the fall auction season opens in New York this week.

By many measures, the art market continued to contract significantly in 2024 (e.g., auction totals down 25%, and off by 39% for $10M+ lots), and has remained soft on the whole in 2025, and yet the total picture has been much more complex than this.

Year-to-year comparisons of totals at equivalent auctions are not fully determinative with regard to the health of a market, nor can demand necessarily be wholly assessed given the circumstantial nature of supply, whether from estates or otherwise.

Strong sales in supply-challenged markets such as Old Masters have shown strength when exemplary works have become available (e.g., Canaletto), and we have seen surges in many markets, not least Surrealism (most visibly, Magritte and Carrington), key female artists in various sectors (e.g., Dumas record), and historically undervalued collecting categories such as South Asian postwar and contemporary art, as well as the personal property markets adjacent to art such as Design and collectibles, in which a series of extraordinary records have been set.

As the consignments for November are just being announced, including those at a level not seen in the first half of the year (esp. Klimt), we can begin to forecast what the fall might look like relative to the spring.

Heritage Auctions: a record price in the market for illustration

Heritage Auctions just made another extraordinary sale, fetching $13.5M for Frank Frazetta's "Man Ape" (1966), the highest auction price ever realized for a Comic or Fantasy work of art.

In the art market, we're accustomed to the duopoly of Sotheby's and Christie's dominating the field, but it's Heritage where we've recently seen a procession of extraordinary prices at the high end of the non-art market, with records routinely set for collectibles such as sports and entertainment memorabilia.

At one level, this sale of a highly sought-after piece of illustration fits neatly within into the paradigm of recent market surges for personal property with popular cultural meanings, and outside the market for traditionally recognized high art — precisely at a moment when the mainstream art market has shown signs of softening. But this sale also opens onto larger ontological questions about what distinguishes a work of illustration from a piece of fine art.

It's the Frazetta's familiarity from mass reproduction that propelled its price not only to an artist record but to an all-genre record. However, this sale also immediately recalls the sale of Ernie Barnes's "Sugar Shack" (1976) at Christie's for $15.3M in 2022, following a bidding war that catapulted its price 70x above its high estimate and leagues above the price realized for any other work by the artist. Demand for that painting followed from its mass reproduction as an illustration for Marvin Gaye's album "I Want You."

Complicating the picture is the fact that Frazetta takes visual cues from nineteenth-century European academic painting, whereas Barnes draws on the visual language of cartoons — and yet the current marketing and institutional contexts have established the Barnes as a work of fine art and the Frazetta as a comic illustration.

Artsy quote: Inflation and the Art Market

My comments are included in Veena McCoole’s article in Artsy, “How Inflation Impacts the Art Market”:

“Prices may be up, but if money coming in is also up, that doesn’t necessarily mean a downturn in art purchasing for some,” noted art advisor David Shapiro. “People in the market for a Pablo Picasso, perhaps, aren’t as swayed by inflation and day-to-day costs.”

Reginald Marsh, Art Auction, ca. 1940

Chelsea Gallery Walk

It was a pleasure leading the Chelsea gallery in late July for Risk Strategies Company’s summer event, visiting the Robert Indiana and Alicia Kwade exhibitions at Pace Gallery, Carmen Herrera at Lisson Gallery, and William Kentridge at Hauser & Wirth with colleagues in the artist legacy space. It was a great conversation and a memorable day/night.

RRV and FMV: a complex relationship

In 1972, Stephen Weil wrote the Art in America article “Prices-Right On!” in which he commented on the performance of a Parke-Bernet sale relative to pre-sale estimates: “In theory, at least, the top [high] estimate should be somewhat less, perhaps 10 to 20 percent, than the price a gallery would ask for a similar painting or sculpture. (For its higher price, the gallery may provide a range of works from which to choose, a chance to try works at home on approval, guarantees of authenticity, and condition, and even extended payment terms and the right to make a later exchange).”

In many (if not most) market sectors, it is still expected that dealers will command a premium relative to the auction market for similar property, for reasons such as those noted by Weil. The precise ratio, however, which is far from standard, is a constant source of challenge and inquiry for appraisers. The compexity can be highlighted, for example, when an appraiser is assigned to assess both the Retail Replacement Value and the Fair Market Value of works of art.

RRV, as defined by the Appraisers Association of America, is the “highest amount … that would be required to replace a property with another of similar age, quality, origin, appearance, provenance, and condition within a reasonable length of time in an appropriate and relevant market.”

FMV, by contrast, is “the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.” (See: IRS Publication 561). [NB: Notwithstanding its source, FMV and this definition of it are commonly used in a variety of non-IRS applications.]

Sometimes the appraiser, when assessing RRV in a market with few or no available relevant comparable retail sales or offerings, must look to the auction market and extrapolate upwards, but the ratio is not necessarily a summary 10-20%, nor is it 30-40% or some other fixed range that can be applied to any property, but rather it is a ratio that is specific to each market.

Speaking broadly, the delta between FMV and RRV for the same object tends to be much smaller at the high end of the value spectrum. For example, a Rothko that sells for $50 million at Sotheby’s might only be privately marketable for slightly more than such a realized auction price. It may well be that a dealer could only reasonably offer that same painting for $55 million, and therefore, in that stratospheric market, RRV may potentially be no more than 10% higher than FMV.

Consider, then, an emerging artist whose works are offered for $20,000 in the primary market. There is ample supply, no secondary retail market, and works that are occasionally offered at auction fetch only $5,000. In such a case such as this, RRV may well be quadruple FMV.

There are innumerable examples, principally at the low end of the market, in which a secondary market price on LiveAuctioneers will only be a small fraction of the original retail price. There are many works with no secondary market history and no ostensible attainable secondary market at all. In all such cases, the difference between RRV and FMV would follow from these variances.

There are also cases in which an appraiser must assess FMV for an artist whose works have never traded in any secondary market but show promise to attain strong prices if they were to be offered. Demand as well as supply in the primary market would be likely to offer insight as to what a secondary market may hold for the artist.

Phillips: A new tiered structure for the buyer's premium

Phillips announced today that they will launch a new tiered buyer’s premium structure by which advance bids (placed over 48 hours before the auction) will have lower fees than those bids placed during the auction or closer to it. Buyer’s premium for non-advance bids in the lowest value tier will be 29%, the highest ever at any of the major auction houses.

The application of preferential fees for advance bidding has a commonality with the principle of the third-party guarantee, by which the guarantor receives a financing fee in exchange for commitment, though financing fees paid to third-party guarantors are negotiable, whereas Phillips’s new tiered BP structure will proceed according to fixed rules.

Auction houses do not publicize whether a guaranteed lot sells to the guarantor or to another party, but since the financing fee paid to the guarantor/successful bidder is reflected in the total amount of buyer’s premium paid (both on the auction house website and on third-party price databases), one can review the hammer price in tandem with the premium price and interpret accordingly.

Similarly, one should expect that Phillips will not publicize whether a lot sells to an advance bidder or to a non-advance bidder. However, when one compares the hammer price with the premium price, one will be able to deduce, for example, by examining whether the latter is 25% or 29% above the former.

Such variances in buyer’s premium underscore the importance for the appraiser of knowing both the hammer price and the premium price. For example, when assessing Marketable Cash Value (MCV), one cannot simply back out a rounded BP from a premium price, because the BP will be subject to fluctuation.

NB: artnet does not publish hammer prices except, occasionally, for lots that do not have reported BP, in which cases they only publish hammer prices.

Fair Warning

Last week Loïc Gouzer announced on social media that his art auction app Fair Warning would no longer submit auction results to Artnet, and that new results will henceforth only be viewable on the Fair Warning platform. He offered no explanation for this decision.

It's important to note the potential disservice that this willful opacity does to the reliability of art market services. While many of us follow the offerings and results of Fair Warning and have general knowledge of what has sold there, it is also reasonable and appropriate to expect that auction sales of significant works of art will be reported on the major third-party price databases such as Artnet and Artprice. Such reporting is part of running an auction venue.

While appraisers and other art market participants frequently have reason to cross-reference auction-house websites for analysis of certain details, it is nonetheless an expectation among us that realized auction prices will be published in the databases to which we subscribe and upon which we rely.

Fair Warning's refusal to submit price results to third-party price databases presents significant risk for errors in valuations. As one example, in November 2024, the all-time auction record for Elizabeth Peyton was set on Fair Warning with the sale of "Blue Liam" for $4,071,000, topping the artist's previous auction record of $2,645,000, also set at Fair Warning, with the sale of "The Age of Innocence" in December 2023. Had these results not been submitted to Artnet, and had someone relied only on the results published in Artnet without assiduously checking Fair Warning's app to see if a Peyton had sold there, that person could have missed the auction record and mistakenly thought that a lower price of $2,470,000 was her all-time record.

This failure to report auction sales results erodes confidence in the art market, and it undermines the one bastion of transparency that we have. Since private sellers have no legal obligation to disclose data about realized sales, we rely on auction data as the major market measure, and we expect it to be transparent and reasonably complete. Fair Warning has only made slightly over 50 sales to date. When their sales history grows, so too will this problem.

One can also consider whether the burden should lie at all on the business model of the auction price databases. As customers we pay significant fees to use their services, and we justifiably expect thorough reporting of results. Should there be any expectation that the price databases collect freely available data from an app like Fair Warning that refuses to report results?

Thank you Cheryl Karim and Ellen Hoener Ross of Gallagher for inviting me to speak this week to your young collector group. It was an honor to lead the group, and it was an exciting moment to do so, at the end of The Art Business Conference day, with so many interesting conversations fresh in mind.

The talk dealt with strategies for starting an art collection and navigating the complexities of buying art at galleries and at auction, and caring for a collection.

Among the issues discussed were: 1. defining the parameters of a collection; 2. factors that might signal potential market growth; 3. the relative advantages of buying art at auction vs. in retail contexts, for different types of work; and 4. assembling the right team to help you with your collection, including but certainly not limited to an advisor, an insurance broker, a framer, an appraiser, and logistics experts.

Comments in May edition of Artsy Insider newsletter

Thanks to Artsy Art Market Editor Arun Kakar for including my comments in the May edition of the Artsy Insider newsletter, released today. Here’s my contribution:

Artsy: For this month’s mailbag, we spoke to the independent art advisor David Shapiro. Based in New York, Shapiro is also a certified fine art appraiser and specializes in post-war and contemporary art.

How would you characterize the sentiment at this year’s New York Art Week?

DS: While I hesitate to characterize the sentiments of others, some may agree with my observations, which include the following: At Frieze, some galleries appeared to devote less to this fair than to others.

The compression of New York’s fair schedule into a single week highlighted a palpable difference in quality between Frieze and TEFAF, the latter being superior. As to the question of the extent to which larger economic factors may (or may not) be affecting commerce, one rarely knows the true volume of trade and actual extended prices in a retail sales venue.

As such, the more reliable market gauge, as usual, will be the auctions, after which sentiment will be rooted more firmly in fact.

My comments in ARTnews: Bazelon et al v. Pace Gallery

My comments are included in today's ARTnews article about the Bazelon et al v. Pace Gallery case regarding a sculpture whose attribution to Louise Nevelson is in question:

And as New York–based adviser David Shapiro, a certified member of the Appraisers Association of America, put it, “An appraiser’s job is to reflect what’s happening in the market. If we think a work wouldn’t be perceived as authentic, that must factor into the value. And if new information emerges, an appraiser can change their mind—so long as it’s disclosed.”

PRMA: East Coast Private Client Catastrophe Planning Session

It was a pleasure speaking to the East Coast Chapter of PRMA about partial loss-in-value appraisals at the Gallagher offices in New York. Below is a slide from the presentation that summarizes some of the factors that can affect the relative loss in value (LIV) sustained by a work of art that has been damaged.

PRMA, New York Metro Chapter: East Coast Private Client Catastrophe Planning presentation

I will be speaking about partial loss-in-value art appraisals in the Private Risk Management Association (PRMA), New York Metro Chapter's East Coast Private Client Catastrophe Panning presentation on March 19, joining experts in adjacent fields to address this important and timely topic. Sign up here. Full event description below. I look forward to seeing you there!

Please join the NY Metro Chapter of the Private Risk Management Association (PRMA) for an enlightening panel discussion focused on catastrophe planning within the private client insurance sector. This event promises to be an invaluable opportunity for professionals seeking to deepen their understanding of risk management strategies. During the panel discussion, industry leaders will address the unique risks faced on the East Coast and explore key considerations for effectively managing these risks on behalf of our clients.

In addition to the panel discussion, the event will feature a Risk Management Gallery, where subject matter experts will be available to share their insights and expertise on topics such as disaster mitigation, post-loss fine art appraisals, and textile restoration.

We look forward to your participation in what promises to be a highly informative and engaging event.

Space is limited. Please register as soon as possible to guarantee your spot.

We will be providing delicious food and drink for all attendees as well. Hope to see you there!

The NY Metro Chapter Committee Members:

Kurt Thoennessen, CAPI – Arthur J. Gallagher & Co.

Dana Acabbo - Make the Switch Insurance

Mike Smerkanich, CAPI, CPRIA – WTW

Kathleen Atkins – Hub Private Client

Jennifer Brown – Art Peritus

Hannah Noel Brudnicki – Nomadx

Hannah Iversen, CAPI, CPRIA – NFP

Kelley Beach - Marsh McLennan Agency

Alex Horowitz - Berkley One

Michael Kelly - Smith Brothers Insurance, LLC. USA

Kevin F. Madden - Amwins

Chris Martens – Assured Partners

Zyggi Nemzer, CAPI, CPRIA - USI Insurance Services

Phillip Rehg, CPCU, CPRIA - HUB International

David Shapiro – David Shapiro Fine Art

Alison Sweeney – Distinguished Fine Art & Collectibles

Jennifer Najeer – Arthur J. Gallagher & Co.

Jake Dimitro – Fabric Renewal

The market for pastels, George Condo and otherwise

In an Artnet News article published on Friday, Katya Kazakina writes about the market for George Condo’s pastels, which are the subject of two concurrent solo shows in New York, at Hauser & Wirth in SoHo, and at Sprüth Magers on the Upper East Side.

As Kazakina reports, the pastels, all variably large in scale, are priced between $600,000 - $1.5 million, mostly at $1.2 million, and are “selling fast.” Kazakina muses: “Was it savvy to focus on works on paper?… Are they a good deal? Will they prove to be good investments?”

She notes, perhaps with a subtext of her now-familiar bearishness that “Condo’s best result for a resold work on paper at auction was for Tan Orgy Improvisation (2005) [illustrated below], which made just over $1 million in 2018.”

While this is true, rather than reach back over six years, one will find a more relevant comparable in the recent sale of a smaller but stylistically closer work, Abstract Face (2) (illustrated below), which fetched $516,600 at Christie’s, New York just over a year ago, on November 10, 2023; the price flew above a high estimate of $350,000. Abstract Face (2) lacks the rich color backgrounds seen in the works presently on view at Hauser & Wirth and Sprüth Magers, and as such, the strong realized price for such a less complex piece further suggests that the current primary-market prices may be a “good deal” and that the works might in fact be re-sold for a profit in a future secondary market.

(l.) George Condo, Tan Orgy Improvisation, 2005, acrylic, oilstick, and pastel on paper, 60.4 x 61.75 inches; (r.) George Condo, Abstract Face (2), 2012, pastel on paper, 30 x 22.5 inches

The works currently on view at Hauser & Wirth and Sprüth Magers are mixed media, with acrylic and pastel. This combination of media can be seen in many Condo works, including Force Field (2010) (illustrated below), which set his auction record, selling for $6,857,413 at Christie’s, Hong Kong (online) on July 10, 2020, at the height of the pandemic. The essential difference in materials between that work and those presently on view at Hauser & Wirth and Sprüth Magers is the support: Force Field is on linen, not on paper like the works currently on view.

(l.) George Condo, Force Field, 2010, acrylic, charcoal, and pastel on linen, 45.6 x 82 inches; (r.) George Condo, Female Gathering, 2024, Acrylic, pastel and metallic paint on paper, 80 x 78 inches

Among drawing media, pastel is frequently regarded as among the most similar to paint, with its pure powdered pigment and minimal binder giving a vibrancy seen in few drawing media. Historically, pastels have sometimes been called “pastel paintings” — without a bit of wet paint.

For some artists, like Nicolas Party (or Rosalba Carriera and others, long before), pastel is the main medium — their painting medium, one might even say. Party’s highest auction sales, by far, are for pastels (though on linen), topped by the sale of Blue Sunset (2018) for $6,667,293 on November 30, 2022, then Still Life (2015) for $4,990,125 on May 28, 2023, both at Christie’s, Hong Kong (both illustrated below).

(l.) Nicolas Party, Blue Sunset, 2018, pastel on linen, 70.9 × 59.1 inches; (r.) Nicolas Party, Still Life, 2015, pastel on linen, 59 × 70.9 inches

When one wonders about the long-term market viability of pastels on paper made by artists who also make oil/acrylic paintings on canvas/linen, one might do best to look further back in time to artists who made both pastels and paintings.

The most compelling example might be Edgar Degas, whose all-time auction record for a two-dimensional work is in fact for a gouache/pastel on paper, Danseuse au repos (ca. 1879) (illustrated below), which sold for $37 million at Sotheby’s, New York on November 3, 2008. [NB: One Degas sculpture has sold for a higher price at auction.]

In fact, the seven highest auction sales of two-dimensional Degas works are works on paper, made partially or wholly with pastel. If a major Degas oil painting were to be offered for sale, it could of course realize a strong price, but to date, the highest realized auction price for a Degas oil is $13.6 million, i.e., slightly over one third the highest realized auction price for a Degas pastel / gouache.

Another such example is Mary Cassatt, whose auction record is also for a mixed-media work on paper that includes pastel. This is Young Lady in a Loge Gazing to Right (ca. 1878-79), which sold for $7,489,000 at Christie's, New York on October 20, 2022, significantly above the high estimate of $5 million, and also above the auction record of $6.2 million for a Cassatt oil painting on canvas.

(l.) Edgar Degas, Danseuse au repos, ca. 1879, gouache and pastel on paper, 23.25 × 25.25 inches; (r.) Mary Cassatt, Young Lady in a Loge Gazing to Right, ca. 1878/79, pastel, gouache, watercolor, and charcoal with metallic paint on paper, 25.25 × 19.9 inches

Wikipedia is not a reliable source

Today I discovered that Wikipedia does not have a page on “art appraisal.” They do have one on "art valuation,” though its contents, perhaps not surprisingly, are stilted.

In the first paragraph, its author-less voice proclaims that art valuation “is more of a financial rather than an aesthetic concern” — as if our financial valuations of art are not defined by well-honed “aesthetic concern,” usually over decades. The reader is then informed that our “subjective views” play a part as well, when in fact we are compelled by USPAP to perform our valuations in an independent, impartial, and objective manner. [NB: Opinions of value may vary (even significantly) even among seasoned appraisers, but any USPAP-compliant appraiser is bound to perform valuation services in this manner.]

Also worth adding, there is no Wikipedia page on the Appraisers Association of America, the premier association of personal property appraisers who focus on fine and decorative arts. There are two other major associations of appraisers, namely the International Association of Appraisers (ISA), which is also not represented on Wikipedia, and the American Society of Appraisers, which is represented by a brief Wikipedia page with no mention of art appraisal.

Why should we care? We all know that Wikipedia is not a reliable source, and we yet we all use it to some varying degree for expediency, trying to block out how fundamentally flawed it is. Misrepresentations and omissions of content are already a problem when it comes to personal consumption of information, but the problem is now compounded in the age of AI, which scrapes from all corners of the Internet, including Wikipedia.

What if you asked your AI tool how art is valued? What if it scraped that page, and then you used it in a professional capacity? What if you asked it who the people are who make their living by valuing art?

There are clearly vastly larger problems on Wikipedia with regard to bias, misrepresentation, and exclusion, but this is my corner of the world, so it is my example to highlight with respect to the potential for promulgation of misinformation. Yes, we should edit Wikipedia to rectify this tiny injustice, but the larger principle will remain that today, with AI scraping Wikipedia, it is nothing short of an echo chamber of unattributed statements, many of which are plainly wrong.