Category Archives: Articles

Andy Warhol portrait appraised by Lee Drexler for celebrity case

Farrah Fawcett
LOS ANGELES – An Andy Warhol portrait of Farrah Fawcett currently held by actor Ryan O’Neal is worth an estimated $12 million, an appraiser told a jury Friday.

New York art appraiser Lee Drexler testified in a lawsuit by the University of Texas at Austin against the actor in which the school is seeking to gain possession of the Fawcett portrait for its art museum.

O’Neal contends the artwork was given to him as a gift by Warhol and did not belong to Fawcett when she died in 2009. The “Charlie’s Angels” star left all her artwork to the university; her gift included another version of the Warhol portrait.

Drexler was the university’s final witness in its principal case, which started with opening statements Nov. 25. Her estimate could be used by a jury to award damages if it finds that O’Neal improperly took the artwork after Fawcett, his longtime partner, died.

Drexler said because of Fawcett’s fame and beauty, Warhol’s portrait of her was extraordinary. She noted the artist’s works remain hot sellers and said the average auction price for one of his pieces is $7.5 million.

“This is not average,” Drexler said of the silkscreen portrait Warhol crafted from Polaroid pictures he shot of Fawcett. “This painting makes your eyes pop. It’s magnificent. It’s just a gorgeous painting.”

Appraising Personal Property in Divorce
Consider Using a Single, Neutral Professional

BY J. LEE DREXLER

When an appraiser is retained to appraise tangible personal property (for example, fine arts, furniture, antiques, jewelry) in a divorce case, the people involved should know that if two appraisers are used (one for the wife and one for the husband), the values will be considerably different. Even assuming that both appraisers are experts with top notch qualifications, there is always some divergence on value. If two appraisers are used, there are two fees involved. Depending upon how extensive the tangible personal property is, using two appraisers may be very costly.

Appraisers must use “fair market value” for divorce purposes. This means “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts.” This is not liquidation value. What should be used for value are tag sale and auction values.

However, because there is a fair amount of judgment involved, there can be a divergence in value of up to 25 to 30 percent. If two appraisers are used and the tangible personal property is of high value, 25 to 30 percent can be a considerable difference. Sometimes, if one of the appraisers has not done his or her job well, the difference between two appraisals of the same piece can be much more than 30 percent. As very few judges have any expertise in tangible personal property, they often require a third appraiser, thus tripling the fee, or they split the difference down the middle, guaranteeing that neither party to the divorce will be satisfied.

While going through this process, both attorneys will spend a great amount of time and both appraisers will need to go to court. If two appraisers are used and it becomes necessary to have them go to court, they usually are paid in advance as expert witnesses in order to hold the date. As court dates change very rapidly, it is often necessary to pay an appraiser to hold one or two days, even if only half a day is needed. The entire process will take many hours of time and unnecessary expense.

As an alternative to this costly and time consuming process, both attorneys and their clients may want to consider hiring a single, neutral appraiser. In most instances where a single appraiser is used, the parties and their counsel approve. But there is authority for a court to appoint a single appraiser and apportion the fee between the parties even over the objection of one of the parties. Zirinsky v. Zirinsky, 529 NYS2d 298 (App. Div., 1st Dept., 1988).

With a single appraiser, there will be one appraisal fee (not two or three) and a minimum of appraiser and attorney court time on the issue of the value of the tangible personal property.

Choosing an Appraiser

Regardless of the number of appraisers involved in the matter, however, the appraiser or appraisers should belong to at least one of the two most prestigious appraisal societies: The American Society of Appraisers (1 800 ASAValu) or The Appraisers Association of America (212889 5404). Both of these societies have stringent entrance requirements.

It is also advisable to make sure that the appraiser has many years of experience. At the American Society of Appraisers, the designation ASA means a senior member who has at least five years of experience. At the Appraisers Association of America, there are a series of steps one must go through to become a member. In all cases, the appraiser should have passed the ethics exam (USPAP) within the last five years.

In addition, it is important to get the appraiser’s qualifications, find out how many matrimonial appraisals he or she has done, and whether the appraiser has experience appraising the specific type of property involved. An individual with experience appraising paintings may have no experience appraising jewelry or oriental rugs. The appraiser should be asked if he or she has testified as an expert witness and also if he or she has ever been court appointed as a matrimonial appraiser. In a complex case involving items of substantial value, an appraiser with at least 15 years of experience should be employed.

If a single appraiser is being selected for both parties, the attorneys want to be sure that the judge and parties will approve the selection. The appraiser should have a professional manner and good people skills to get along in what can be a highly charged, emotional situation. Often the husband or wife is upset about a stranger examining his or her possessions and needs a professional and calming presence so that the job can be done easily and efficiently. It is also important to know how long it will take to receive an appraisal after the initial inspection. Efficient appraisers usually finish a report in two to three weeks. For others it can take much longer and perhaps delay an entire trial.

Understanding the Process

Many disputes can be avoided if the parties and their counsel understand the appraisal process. What most people do not realize is how much lower “fair market value” is than “replacement value” or the original price paid.

For example, a Georgian style mahogany desk, custom made with a special dark finish, a specific number of drawers and a specially tooled leather top might have been purchased for $8,000. These costs include the decorator’s fees, delivery charges and extra design costs. However, for matrimonial purposes, the appraiser must think in terms of what this desk will bring if it is sold at auction or tag sale. As the owners are not selling from a shop, the price can have nothing to do with what it originally cost. Also if the desk has some scratches or chips, as almost all furniture has after it has been used, it will bring dramatically less.

A desk like this in good condition might sell at tag sale or auction for $1,000 to $1,400. The appraiser for an impartial matrimonial appraisal should value it in the middle at $1,200, a great deal lower than the original price. If the desk is badly scratched and damaged it might not sell for more than $500. Although the personal property is often simply divided between the husband and wife and not sold, the appraiser must always think in terms of sales price. This is the only equitable way for the parties to divide the property.

If items of high value are being appraised, particularly paintings or sculptures, comparables are necessary. For each valuable Item, the appraiser needs to find an arms length sale (usually at auction) of a substantially similar (“comparable”) piece by the same artist. The comparable piece should be similar in size, condition, period and artistic quality.

It is here, in the selection of comparables, that the appraiser’s experience, skill and judgment come most into play. The appraiser should subscribe to Art Net, which is the best service for finding comparable paintings and sculptures sold at auction. On the Internet, Art Net will show all the recent paintings, sculptures or prints by a particular artist sold at auction describing the size, medium, date and place sold, pre auction estimated price and price achieved. It will, in most cases, also show a photo of the artwork. With this information, an experienced appraiser should have very good comparables and make an accurate appraisal.

In cases of art work by young artists whose works have not come up at auction, so that no comparables are available, the gallery that sold and hopefully still sells the work needs to be contacted. Assuming the gallery is willing to sell the work at a certain price, this price needs to be ascertained. After that, the commission the gallery charges needs to be discussed. In most cases it is 50 percent, so that a painting bought from a gallery two years ago for $10,000 might be valued at only $5,000 for matrimonial purposes. However, if the work was done so many years ago that no gallery is presently carrying the artist’s works, and his or her works have never come up at auction, the value might then be as little as 1/10th or 1/100th of the price paid. Such a piece will have only decorative value.

Surprises can also happen when appraisers evaluate antiques. Sometimes an antique that a couple bought for a great deal of money is not a true antique at all but rather a later reproduction, worth a fraction of what they paid for it.

While doing an appraisal several years ago, this appraiser examine a desk bought from one of the finest and best known antique shops in the world. The couple had paid $85,000 for a purportedly 17th Century boulle desk inlaid with tortoise shell and brass. It had a full provenance from a highly reputable and famous antique shop stating that it was 17th Century from the period of Louis XIV. In fact, the desk was a 19th Century reproduction only worth $30,000. Other appraisers were brought in to give second and third opinions and eventually the shop returned the $55,000 excess to the couple.

Of course, just the opposite can also happen. One couple getting divorced thought that a painting one of them bought a long time ago for $500 in Puerto Rico was of very little value. In fact, the painting was by a leading Puerto Rican artist, Angel Botello, and was worth $20,000. They were both surprised that his work had become so valuable and they were able to sell it at a Puerto Rican gallery that specialized in works by Botello.

In some cases the appraiser hired might need to call in a particular specialist for an esoteric item, such as a 7th Century Tang terra cotta horse or an Egyptian 4th Century B.C. sarcophagus. The attorney should check with the appraiser to make sure he or she has good contacts with many experts and knows how to get in touch with them quickly and at reasonable expense, if any.

Most appraisers charge a half day or full day fee for the on-site work depending upon the size of the collection and then, a separate charge for any necessary research. Some appraisers charge extra for preparing the report. Appraisers, of course, should never buy any of the items they themselves appraised in order to avoid any conflict of interest.

Conclusion

In most matrimonial cases, there are more than enough contentious issues. In order to minimize potential conflicts with respect to tangible personal property, attorneys and their clients should consider the many advantages of retaining one neutral expert appraiser.


J. Lee Drexler, ASA, AAA, is the president of Esquire Appraisals, Inc., located in Manhattan and Bedford, N.Y., appraisers of fine arts, furniture antiques and jewelry.

This article is reprinted with permission from the May 28th 2002 Asset Valuation Special Section of the New York Law Jounal, copywrite 2002. Further duplication without written permission is prohibited. All rights reserved.

 

Avoiding Fakes and Forgeries When Buying Paintings

Lee Drexler
May 5, 2003

Every year, thousands of people buy paintings they thought were by particular artists and later learned, to their dismay, that they are forgeries. There are ways to protect yourself if you are willing to take the time and effort to do so.

Unless a painting is already listed in a Catalogue Raisonne (a book that lists all the known existing works by a particular artist) that painting needs a certificate, or “cert” as it is called in the trade. A certificate is a guarantee or pedigree that a particular painting is definitely by the artist who it is supposed to be by. If you buy a painting by a living artist, the gallery that represents the artist can give you the certificate. If you do not buy it directly from the artist or artist’s agent (using a secondary source), you should send a picture with dimensions to the artist or agent and ask them to certify the painting before you buy it. This should be done if the painting is worth $5,000 or more.

It is important to know that almost every well known artist has only 2 –5 acknowledged experts in the world who can give a certificate that is accepted. No one will buy that painting without the certificate. So if you are offered a Modigliani at a good price, it needs a certificate from Marc Restelini or Ceroni. Without a certificate from one of them, the painting cannot be sold. What you think is a cheap price, might be a very high price indeed if the Modigliani has no certification. The value of the painting often affects the price of a certification. For example, some experts charge as much as $100,000 for a certification when the painting is over $2 million. Most galleries should have a certificate when you buy a painting. However, if you’re buying a painting and need a certification, you can find these experts by consulting with an art appraiser. For paintings by lesser known, deceased artists, there might not be a specialist to certify the work, but a qualified art appraiser would be able to either tell you if it is right or put you in touch with a specialist who knows the work and could tell you.

A few examples of experts who certify paintings are: Mr. Petrides for Utrillos, Mr. Daniel Wildenstein for Monet’s work, Maurice Tuchina and Esti Dunow for Chaim Soutines’ works, and Maya Picasso for Picasso’s works. All of these specialists charge a fee. You should ask them up front about how much it will cost.

In my experience as a fine art appraiser, I knew an individual who bought a Modigliani painting over 30 years ago for over $100,000. However, it was not certified at the time she bought it. She only had a bill of sale from a well-known gallery, guaranteeing the piece (unfortunately, that gallery is no longer in business). At that time, the painting was in Lantheman’s Catalogue Raisonne stating that the piece was correct. More than 30 years after she bought the painting, art experts decided that Lantheman made many mistakes and the fact that the painting was in Lantheman’s catalogue did not help the value of the painting. The owner of the painting tried to sell it at the value it would have been worth if it was right, which was $2.35 million. Unfortunately, because she cold not get a certificate from Mr. Ceroni or Mr. Restelini, no one would buy it from her. The painting was basically worth nothing and will remain so unless one day one of the top experts decides to give it a certificate and include it in a new Catalogue Raisonne. However, at this moment, because the top experts have been so pressured by owners of Modigliani’s who want certifications, there are no plans for the next many years, if ever, to publish a Modigliani Catalogue Raisonne.

Generally, if a piece appears in a Catalogue Raisonne prepared by an accepted expert, it is reliable. However, recently an expert forger by the name of John Drewe deviously changed the provenance on many well known artists. He took pages out of their Catalogue Raisonnes and substituted them with false information so that the art world would believe forgeries by his employee John Myatt were real. A person buying the forged painting would believe it was genuine because the buyer found and relied upon the fraudulent information in the catalogue. A lot of confusion and damage has been caused by this situation.

The aid of a top appraiser or expert might have prevented a lot of Myatt’s forgeries from being sold as most were of rather noticeably poor quality, although their provenances looked very good. Appraisers can be found through the American Society of Appraisers or/and the Appraisers Association of America. Both of these organizations have stringent requirements and exams before allowing anyone to become an appraiser. Of course, it is best to use an appraiser who has many years of experience. Both of these organizations have web sites and searchable databases that will help you find a specialist that meets your needs.

Even with information in a Catalogue Raisonne, it is a good idea to consult an art appraiser before buying a valuable painting. Even if the certification is reliable, an appraiser can tell you if the price and provenance is fair and whether the condition is good or not. Repairs are often difficult to detect without an expert.

It is amazing how many times I have heard a client say, in response to my questions about a painting in his or her collection, “I just bought it because I like it.” This is a fine approach if the painting is of modest value. But if it is an expensive painting, it seems to me as financially reckless as buying a piece of real estate without a title search and an engineer’s report. Of course, fine art is purchased because collectors love it. But it is also an investment and deserves financial care, the services of an experienced appraiser, information about the work in a Catalogue Raisonne, and where appropriate, a certificate of authenticity from one of the handful of experts qualified for that particular artist.

Lee Drexler, president of Esquire Appraisals (630 1st Ave., NY, NY) for 32 years and former president of the American Society of Appraisers, is a professional appraiser of fine arts, furniture, antiques and jewelry. She can be reached at 212-889-2580 or 914-234-0656.

Cheaper By The Dozen?: Blockage Discounts in Art Valuation By J. Lee Drexler and James R. Cohen

By J. Lee Drexler and James R. Cohen

David Smith, the now famous American sculptor, died in 1965 owning 425 pieces of his own creation. In the audit of the estate tax return, the IRS valued each piece as if it had been sold separately. The estate argued for a “blockage discount,” a valuation based on what could be obtained if all 425 sculptures were offered for sale at the same moment. The 1972 Tax Court opinion on the issue (57 T.C. 650), written by Judge Tannenwald, is the well-spring from which all art blockage discounts flow, and well worth reading for blockage and several other valuation issues. This article summarizes the key issues and offers valuable information for collectors focusing on single artists.


Biography:
J. Lee Drexler, President of Esquire Appraisals (www.esquireappraisals.com) has been an appraiser of fine arts, furniture, antiques and jewelry for over 37 years. She has been President of the Hudson Valley Chapter of the American Society of Appraisers (ASA), Vice President of the Manhattan Chapter and is a member of the Programming Committee of the Appraisers Association of America. She appraises a wide variety of fine arts, furniture, antiques and jewelry.

James R. Cohen heads the Estates and Tax Group at Kleinberg, Kaplan, Wolff & Cohen, P.C., a law firm in Manhattan which he co-founded in 1971. His focus is estate planning and tax advice to private clients, hedge fund, and other asset managers and artists. Jim has represented the estates of a number of artists in which blockage discount was an issue. He has written and lectured widely on tax, estate, and business succession planning, investment fund and hedge fund life insurance issues. Jim was named a New York Super Lawyer in 2006.


The concept of blockage discount is important to understand in valuing large collections of artwork by a single artist, particularly for estate and gift tax purposes. The David Smith case involved 425 pieces which were mostly very large, abstract sculptures. In determining the fair market value of these pieces the estate claimed a 75 percent discount; it valued the pieces at 25 percent of their “one-at-a-time” value, while the IRS decided that this “blockage” discount was not permitted and valued the pieces at a total of their one-at-a-time values.

When taxpayers and the IRS can’t agree, the matter is often resolved by the United States Tax Court. The 1972 Tannenwald decision concludes that “the impact of such simultaneous availability of an extremely large number of items of the same general category is a significant circumstance which should be taken into account.”

The court determined a 37 percent discount – pieces with an aggregate one-at-a-time value of $4,284,000 were valued by the court at $2,700,000. This “Solomonic” approach split the discount in half, between the estate’s assertion that it should be 75 percent, and the IRS’s assertion that it should be nothing.

The David Smith case is extremely important in that it gave official court approval to the concept of blockage discount in valuing art. But it provides no guidance on how to determine the discount. For such guidance, one has to travel a number of years downstream.

One must swim past the 1985 Louisa J. Calder Tax Court case, which allowed about a 46 percent blockage discount for a large collection of Alexander Calder’s works, but in doing so, used the Government’s annuity tables – the rates published monthly by the Government under Internal Revenue Code Section 7520. These tables are normally used to determine the present value of a definite stream of payments which will be made over a period of time (an annuity). It is a method for valuing a very conservative investment, does not make much sense to us as a measure of the risk for disposing of an art collection over a period of time, and has not found wide usage.

What was established by these cases is that time is the key factor. Whether used to do a formal discounted cash flow analysis, or simply used as a gauge of risk assumed by the purchaser, the longer it will take to sell a piece of art the greater the costs (for example, storage, insurance, promoting it for sale) and the greater the risks in a fluctuating art market; thus the greater the appropriate blockage discount. Georgia O’Keeffe, whose best-known works were large paintings and prints of sensual flowers, died owning many of her own works. Again resolving a dispute between the estate and the IRS, the Tax Court in a 1992 memorandum decision determined a 50 percent blockage discount. Unlike its predecessors, this decision sets forth a rational, mechanical way to compute the discount. Taking all factors into account (quality, uniqueness, salability, etc.), one determines how much time it is likely to take for the works in this group to sell. In the Estate of Georgia T. O’Keeffe, the Tax Court determined that works that can be sold in less than 7 years are entitled to a 25 percent discount and those which will take more than 10 years to sell receive a 75 percent discount. Since the collection owned by the artist at her death had, the court determined, approximately equal numbers of each, an overall discount of 50 percent was determined.

Now let’s take a look at some fairly recent and unpublished applications of the O’Keeffe approach. An American artist whose draftsmanship was particularly well-respected and whose paintings and drawings are widely collected, died owning a large number of the artist’s own works. An appraisal was prepared including a complete biography of the artist along with auction comparables, prices that the gallery representing the artist was able to provide, and a history of the sale of the artist’s works over a number of years. The appraisal was very detailed, voluminous and answered every question the IRS could ask. The dealer representing the artist also wrote a memo as to why the works were hard to sell. As the best works of this artist were on the secondary market (private or auction), they competed with the estate collection held by the dealer. In addition, although some individual pieces sold from time to time, there were no active collectors interested in forming a large collection. The basic approach set forth in the O’Keeffe case was followed: dividing the works into those that would sell in less than 7 years and those that would require more than 10 years to dispose of, with 25 percent and 75 percent discounts taken respectively. The appraisal was accepted by the IRS and by the State estate tax bureau in the state where the artist died.

A similar approach was used in appraising the estate of a well known sculptor. There were large collections of sculptures in both New York and Italy and it was at first a consideration that the appraisal in Italy would be done by photos. This decision was changed and the appraiser went to Italy, much to the benefit of the clients. In photos, the stone sculptures appeared to be in acceptable condition. In fact, almost all had been kept outside and were in poor condition caused by either the weather or vandalism. After seeing these sculptures the appraiser was able to make several different groupings varying from a 25 percent to a 75 percent discount. Some of the pieces were in such bad condition that they had become unsalable and this group was appraised for no value. Again, the valuation was accepted by the IRS and the applicable state auditors.

So it seems pretty clear at this point that the IRS accepts, as it should, the approach taken in the O’Keeffe case. But there is a wrinkle, which is best explained in the context of the audit of an estate which owned a large number of works by a well-known American painter. As often seems to be the case in recent audits, the IRS and the estate agreed upon the one-at-a-time values. Beyond that, the IRS and the estate agreed upon the basic O’Keeffe approach taken by the estate in establishing the blockage discount. Where the IRS and the estate parted company was on the effect, if any, of inflation or general increase in the art market over time. In estate, gift, or income tax matters, where the value of a work of art reported on a return exceeds $20,000, the IRS Art Advisory Panel becomes involved. The Art Advisory Panel is an ever-changing group of volunteers, experts in the art market (nationally prominent art museum directors, curators and art dealers), who help the IRS value works of art. In audits of estate or gift tax returns, IRS agents give great weight to the valuation opinion of the Panel. In several recent audits, including the estate of the well-known American painter where inflation over time had become an issue, the head of the Panel has taken the position that, after the blockage discount is established, it needs to be adjusted to take into account the potential increase in value of the works of art over the years it will take to dispose of them. The estate replied, employing the opinion of a professor at an Ivy League School of Business Management, that no such increase is assured. Take, for example, the major drop in the art market, particularly the modern art market, in 1990. The IRS and the estate ultimately agreed upon the value of the art, including blockage discount, and agreed upon certain other issues in contention in such a way that the precise effect of this inflation factor, if any, was impossible to determine. Thus, in determining blockage discounts, one should be prepared to negate a potential IRS assertion of an inflation factor.

Because the current estate and gift tax rates top out at about 50 percent (more in some states with state estate tax added), the blockage discount can have a huge effect upon the tax ultimately paid. Appraisers, attorneys, trust officers, art dealers, and others involved in the valuation of art should be aware of this important aspect of art valuation.

 

Buying And Appraising Gold Jewelry: An Expert Shares Tips From Her Book ‘Fabulous Finds’

By J. Lee Drexler and James R. Cohen
November 11, 2012

Excerpted from “Fabulous Finds” by J. Lee Drexler and James R. Cohen. Available from Quill Driver Books, an imprint of Linden Publishing. Copyright © 2011 by J. Lee Drexler and James R. Cohen

Jewelry of all types, particularly gold jewelry, is one of the most popular things to buy personally and as gifts. Unfortunately, in the vast majority of jewelry purchases, people pay far too high a price. The average jewelry sale is figured at “triple keystone” price, which is what the trade calls triple cost. In other words, if a jeweler shows you a book with an item listed at a price of $3,000, he probably has paid $1,000 for it. He might offer you a “bargain” of a 20 percent reduction bringing the price all the way down to $2,400. Don’t feel that you’re taking unfair advantage of him, as he will be making $1,400 on an item he purchased for $1,000 — a profit of 140 percent.

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It is important to know certain basic things about gold jewelry. If jewelry is stamped “750,” it means 750 parts gold with 250 parts alloy, so it is 75 percent pure gold. That is the same purity as 18-carat gold. Gold marked “585,” or 14-carat, is about 60 percent pure gold. Similarly, “375,” or 9-carat gold are both 37.5 percent pure gold. Although in England they sell 9-carat gold and think highly of it, in the U.S. it is considered just costume jewelry, and is therefore not a good investment. You would probably never be able to resell it for anywhere near what you paid for it.

Generally you can expect to sell a piece of jewelry for the pure gold weight. To figure out the base value of your gold jewelry, you need to weigh it on a jeweler’s scale. Whatever it weighs, you must make deductions for the amount of alloy in the gold: for example, 18-carat gold is 75 percent gold, so deduct 25 percent from the value to figure its gold weight. So, if the current price of gold is $1,000 an ounce, and an 18-carat piece weighs four ounces, the value of the pure gold in the piece is $3,000, the price that you could expect to receive if you sold it.

On the other hand, if you buy the same 18-carat bracelet on Forty-Seventh Street, you should be able to find a shop that would sell it for approximately $4,000, about a third over its weight. Outside the jewelry district, triple keystone is the standard, and you should expect to buy the same pieces for approximately $9,000. None of the above holds true for pieces being made today by top name designers like Bulgari, Buccellati or Cartier, where a gold bracelet that has three ounces of pure gold could see for as much as $30,000 (ten times its weight). Of course, there are particularly well-designed pieces by famous jewelers, so you are paying a very substantial premium for the design and for the “name.” But if you were to sell these designer pieces, while you will definitely get some premium over weight, it will not be vastly more than the weight that an ordinary gold piece would bring.

Lee Drexler, president of Esquire Appraisals (630 1st Ave., NY, NY) for 32 years and former president of the American Society of Appraisers, is a professional appraiser of fine arts, furniture, antiques and jewelry. She can be reached at 212-889-2580 or 914-234-0656.

 

Appraising Oil Paintings: An Expert Shares Tips On Buying And Selling Art

By J. Lee Drexler and James R. Cohen
November 21, 2012

Excerpted from “Fabulous Finds” by J. Lee Drexler and James R. Cohen. Available from Quill Driver Books, an imprint of Linden Publishing. Copyright © 2011 by J. Lee Drexler and James R. Cohen

Many people think they are making a great purchase when they buy oil paintings at reputable, large art galleries in Manhattan on Madison Avenue, Fifty-Seventh Street or in Tribeca. Oil paintings by unknown but decorative modern artists sell easily for over $10,000 each. However, if you try to resell these paintings, you may receive far less money than you paid. Generally, the only way to sell these works is to accept one-half of the sale price or possibly much less than what you paid in the gallery. Sometimes the gallery is willing to sell the painting on a consignment basis and will only take one-third or one-half of the sales price. This is a better arrangement if the work sells. But it could take one to two years before it does; or it may never sell.

An art gallery dealer whom I know regularly sells a minor artist’s work for $6,000-$8,000. She is the only one that sells his works and thus constitutes the entire market for his artwork. One time I was handling an estate appraisal and I asked her what she would pay for one of his paintings. She answered that the most she would pay was $400. Unfortunately for my client, I could not find anyone else who would pay more. Just to make sure you are doing the math, the proposed sale price to the dealer was between one-fifteenth and one-twentieth of the price my client had paid to buy the piece from the same dealer five years earlier.

On the opposite side of the coin is the couple who bought Jasper John’s American Flag for $1,000 at Castelli Gallery and sold it twelve years later for $1 million. they were lucky, perhaps astute, but you can’t count on this happening to you by any means.

The safest way to buy art is at Sotheby’s, Christie’s, or a top auction house, where if you go to resell, you will usually be able to get close to what you paid. But you must know what you are doing or have an expert guide you.

If you have a great eye, the way to make the most money buying art is to buy a relatively unknown artist’s work at a gallery before the artist becomes famous and while the prices are still low. If you hit it right, you can have an astronomical increase in value. You have to have a good enough eye, a deep enough pocket, good luck and the patience to succeed.

Lee Drexler, president of Esquire Appraisals (630 1st Ave., NY, NY) for 32 years and former president of the American Society of Appraisers, is a professional appraiser of fine arts, furniture, antiques and jewelry. She can be reached at 212-889-2580 or 914-234-0656.

Buying And Appraising Silver: An Expert Shares Tips From Her Book ‘Fabulous Finds’

By J. Lee Drexler and James R. Cohen
December 16, 2012

Excerpted from “Fabulous Finds” by J. Lee Drexler and James R. Cohen. Available from Quill Driver Books, an imprint of Linden Publishing. Copyright © 2011 by J. Lee Drexler and James R. Cohen

People sometimes get cheated buying silver. As an appraiser, I have heard of some incredible mistakes people have made both in the United States and abroad. First, it is necessary to know some relevant facts. Sterling silver is 925 parts silver and 75 parts alloy. That is why sterling silver is often market “925,” particularly if you buy it abroad. Silver items made in Italy or Germany are marked “800” which means they are 800 parts silver and 200 parts alloy. Modern silver items are worth less if they are 800 or 835 rather than 925. However, if it is a well-made piece, the differences are very slight.

As has been the practice for hundreds of years, all silver is marked with either a hallmark, number or inscription. If you know how to look for it and what to expect, you will find it. In England, the mark is a running lion, along with a letter for the date on which they made each piece of silver. In France, there is a mark consisting of a helmeted man. In old russian silver, which is quite valuable, the mark “84” is used. A great deal of silver plate is marked “EPNS” (electroplated silver on nickel), or with varied letters or numbers. However, sometimes silver plate is passed off as sterling silver.

The problem is that it is very difficult for the layperson to tell if something is sterling silver or silver plate. “Real” silver, as indicated above, is usually 92.5 percent, 83.5 percent, or 80 percent pure silver — marked “925,” “835,” or “800” respectively. But silver plate is a coating of silver over another metal, and unless it is a fine antique, it is worth only a small fraction of real silver. In Mexico, silver called Alpaca is actually silver plate, but some merchants try to fool you by calling it Mexican silver. When my friend was in Mexico sitting on a beach, a peddler offered her a pretty silver bracelet marked with “925” and the government stamp “Hecho en Mexico.” She was sure it was silver and so she bought it for $100. When she returned home, the bracelet’s color had started to change, and she brought it to me for a test. I cut into the bracelet (in a place that would not show), put a little hydrochloric acid on it, and it fizzled away, showing the green color that indicated there was copper underneath. Within a week, the color of the bracelet had changed completely to an ugly green, making it unwearable. A word to the wise: When in Mexico, do not buy silver from street peddlers!

Lee Drexler, president of Esquire Appraisals (630 1st Ave., NY, NY) for 32 years and former president of the American Society of Appraisers, is a professional appraiser of fine arts, furniture, antiques and jewelry. She can be reached at 212-889-2580 or 914-234-0656.