The Effect of 3-D Reproductions on the Value of Original Art

We value certain objects because they are handmade, because of whose hand made them and because they are historically important. The actual brushstrokes, the actual paint.  There is only one.  It almost always begins it's life admired in a private home.  Later, perhaps, it lives in a public institution, admired by many.  In either case, the invisible aura of authenticity is important.  

Yet, look at the people who sell their beloved masterpieces at auction — they have in many cases lived with these paintings for decades, grown to love them dearly, and are parting with them only with the greatest reluctance. There’s a simple way to have your cake and eat it, in that situation: before you sell the work, you get a very accurate reproduction made, which looks to all intents and purposes identical, and hang it in the same place that the original had been. Aesthetically, one's life is reduced by only the most minuscule amount, if at all; financially, one makes millions. But no one does that.

Even fakes can acquire an aura: one collector had a beautiful Paul Klee drawing by her bedside, and learned after many years that it was a fake. It stayed by her bedside, as beloved as ever (if not nearly as valuable). But again, if it had been stolen, she would not have replaced it with a reproduction, or some fake fake.

The point is that so long as authenticity can be determined somehow, the value of an original unique artwork will always be orders of magnitude greater than the value of any copy. It doesn’t matter if you can tell the difference; the value lies in the authenticity, not in the aesthetics of the piece.

That said, advances in reproduction technology have changed what artists do, in profound and interesting ways.   (from a September 2013 Reuters Report)

How to Turn a $3 Garage Sale Find into $2 Million

This will NOT happen when you hire Magnusson Estate Sale

A New York family has turned a $3.00 garage sale purchase of a rare Chinese "Ding" bowl into a $2.22 million sale at a recent NY auction.  The unnamed family had displayed it in the living room for several years before becoming curious about its origins and having it examined by professionals.

It was sold to a London art dealer after a battle involving four bidders - far above the pre-sale estimate of $200,000 to $300,000.

The bowl is from the Northern Song Dynasty, which ruled China from 960 to 1279.  It is the only known bowl of the same form, size and almost identical decoration has been in the collection of the British Museum in London for more than 60 years. 

Source: Reuters

We frequently shop at "professional" estate sales in New Jersey, purchasing items that were not researched and priced properly.  We have witnessed sales made at the expense of the unsuspecting homeowner.  

Lauren Magnusson, Manager of Magnusson Estate Sales,  engages certified and accredited appraisers and specialists in her research and pricing strategies.

  

 HOW DO I SELL MY ANTIQUES?

The appraiser's job is to determine the scope of the project. This means that you should be prepared to answer important questions that will determine the answer to your question.

 - What is your motivation? Are you moving, downsizing, in need of cash, trading up or settling an estate?

- What is your time frame? When do you need to have the cash in hand?

- Do you have the authority to sell or are you calling on behalf of someone else?
 

- How have you ever sold your items in the past and what was your experience?

 

- Are you seeking offers or are you looking for an appraisal?

- What is the quantity and quality of your antiques?

- Do you have a previous appraisal? When was it conducted, for what purpose and by whom?

The answers to these questions will establish the plan of action, starting with making an appointment to examine the item(s). Many times, the marketplace and result expectations are quickly determined.   The end result is a successful sale in an appropriately timely fashion.

Expect to pay a fee for the appraiser's time, market expertise, knowledge and connoisseurship skills. 

 Remember...

you don't hire professionals because it costs you.

You hire professionals because it pays.

NOT SURE IF YOU NEED A PROFESSIONAL APPRAISER?

READ THIS

& 

DO IT YOURSELF

If you can identify an item of furniture, jewelry, decorative or fine art, you are on your way to determining a value. 

In 1993, the Getty Information Institute initiated a collaborative project to develop an international documentation standard for the information needed to identify cultural objects. The new standard was developed in collaboration with police forces, customs agencies, museums, the art trade, appraisers, and the insurance industry.  The result is the Object ID Checklist.

OBJECT ID CHECKLIST

Questions to Answer

 

Type of Object       What kind of object is it (e.g., painting, sculpture, clock, mask)?

Materials & Techniques       What materials is the object made of (e.g., brass, wood, oil on canvas)? How was it made (e.g., carved, cast, etched)?

Measurements       What is the size and/or weight of the object? Specify which unit of measurement is being used (e.g., cm., in.) and to which dimension the measurement refers (e.g., height, width, depth).

Inscriptions & Markings       Are there any identifying markings, numbers, or inscriptions on the object (e.g., a signature, dedication, title, maker™'s mark, purity marks, property marks)?

Distinguishing Features       Does the object have any physical characteristics that could help to identify it (e.g., damage, repairs, manufacturing defects)?

Title      Does the object have a title by which it is known and might be identified (e.g., The Scream)? 

Subject    What is pictured or represented (e.g., landscape, battle, woman holding child)?

Date or Period     When was the object made (e.g., 1893, early 17th century, Late Bronze Age)?

Maker      Do you know who made the object? This may be the name of a known individual (e.g., Thomas Tompion), a company (e.g., Tiffany), or a cultural group (e.g., Hopi).

Congratulations!

You're on your way to appraising an item yourself! 

The next steps are figuring out where the items sell most frequently and for how much. 

Estate Planning for Collectibles

Many people knowledgeable about the value of their estates: stocks, bonds, real estate  Few pay attention to their personal property.  I think this is often because your collection represents you and your passions and memories; and a price is not easily put upon that.  So, people avoid addressing it, because they haven't necessarily made financial investments in the item as much as they have coveted, loved, studied, and enjoyed those purchases or inheritances. It's often the most challenging of all your estate planning analyses.  Like writing a personal diary.

You or members of your family have such collections. It can be an emancipation, a liberation and a satisfaction to know that, if you address what will, at least, happen to your personal property, you can truly rest in peace.  If you don't, some relationships you have spent a lifetime making (both friendly, familial and your relationship with your "stuff") can spiral down a long and sad vortex, before they address the collection's value and direction (equitable distribution, estate tax, sale, donation) that should have been the job of the collection's owner. 

Identification And Valuation

A good estate personal property appraiser with high ethical standards, familiar with de-accessioning or tax choices, working in conjuction with your financial and legal team, can truly be a godsend.  Attorneys, accountants, lawyers and estate planners all know about financial instruments, business and real estate.  Your art, antiques, collections and jewelry must be part of your estate consideration, and sometimes will be the most contested. 

An ASA or AAA appraiser is good first phone call to make.  Schedule a consultative visit to come up with an action plan.  Determine the necessary scope of the job and discuss previous appraisals, including insurance, timing,  provenance.  Cataloging and photographing your items is best done by the appraiser in USPAP  (Congressional standards) format, with research and valuation assignation following.  

Get it on your calendar.  We find that our clients are so happy with getting this process underway;  knowing that your collection will be MOST APPRECIATED by future owners is a blessing.  Your spouse, your children, your heirs will love and respect you forever.

Sale vs. Bequething vs. Gifting

Art, Antiques, and other collectibles are often ideal assets for charitable giving, particularly if they've appreciated significantly in value.

1. Who would want them? Who would qualify as an acceptable institution?

2. Is there an endowment requited to maintain the collection at a museum?

3. What about fractional gifting, where you share ownership with the institution?

3. Capital gains vs. taxes?

4. Love a charity and want them to benefit?  Perhaps selling a collection and donating the proceeds should be discussed.

5. Beware of the "empty hook syndrome."  American grandchildren are already assuming a huge burden for an exploding aging population.  Your grandchild might get stuck with this unncessary and princely (with "late fees") bill, too.

Whatever strategies and techniques you use to transfer art and other collectibles in a tax-efficient manner is important to estate planning.  Do it right.

Beware! Of Auction House Appraisals

Victor Wiener was my very first-ever appraisal instructor (USPAP) and my inspiration for pursuing an advanced Appraisal Education. This article was on Chubb Insurance's website today.  


Why Auction Estimates Are Not Insurance Appraisals 


by Victor Wiener, LLC and Charles Wong, LL.M

 
Collectors often have difficulty in deciding what type of appraisal to use for insurance purposes. Aggressive marketing by auction houses (in which valuation services are offered, often for free, in the hope that a collector will decide to sell) has led many to believe that auction estimates can be used. However, it may not always be prudent to rely on these, as insurance compensation based on auction estimates may prove insufficient to purchase replacements for lost or damaged works.

There are many reasons for this. Auction houses are in the business of valuing goods for regular sale. They deal in large volumes and have business relationships and obligations to both sellers and buyers, not to mention their own interests. This can affect an estimate. Note, however, that the litigation cases discussed in this article relate to situations auction houses may find themselves in when providing estimates in their usual business; it is conceivable that they may encounter similar challenges when giving estimates for insurance purposes. 

Is there such a thing as a free lunch? Auction houses may not have time to conduct proper research.

Consider the case of Guido Ravenna of Buenos Aires. In 1999 he received an offer from a South American dealer for a family heirloom known as the Pieta, conditional on immediate acceptance. Coincidentally, his wife was in New York and showed photographs of the painting to Christie's Old Masters expert who thought the Pieta was by Nuvolone, a minor 17th century Italian artist, and worth between $10,000 to $15,000.  Ravenna then accepted an offer of approximately $40,000 for the picture and some items of furniture. Six months later, the Pieta was consigned to the same branch of Christie's by the dealer who had purchased the painting from Ravenna. After a thorough physical examination, Christie's determined it to be a "highly important" painting by the Italian Baroque painter Ludovico Caracci and, in 2000, sold it at auction for $5,227,500 to the Metropolitan Museum of Art, where it now hangs as The Lamentation. 













Ludovico Carracci, ca. 1582; A faithful photographic reproduction of an original two-dimensional work of art. The work of art itself is {{PD-US}}: public domain - copyright has expired.
 
Ravenna sued Christie's. The federal district court acknowledged that Christie's was aware Ravenna would be relying on their estimate, but found that Christie's did not owe Ravenna a fiduciary duty as the advice was free and there was no previous or other relationship between Ravenna and Christie's. This is an important consideration when relying on a free appraisal. Always consider the legal implications of free advice; if in doubt, obtain reliable legal counsel. 

Is this what I think it is? Due diligence

 
Sometimes less than three months transpire between consignment to an auction and final sale. In an atmosphere of quick turnaround, omissions sometimes can occur.

The collector William Foxley acquired a Mary Cassatt from Sotheby's in December 1987. Sotheby's had indicated that there would be a letter from an expert 'discussing' the work. That letter arrived nearly six years later, and was based on an examination of color transparencies rather than an actual view of the original. Foxley later sent the painting for auction by Sotheby's; they informed him that the Cassatt Committee had determined that the work might not be authentic. 

Torn between two lovers: Auction houses may have divided loyalties

 
On any item sold, auction houses have two possibly conflicting relationships: with the seller, and with the buyer.

In 1946 the collector, Jane Koven paid $1,400 for a Braque pastel. In 1990 Christie's auctioned it on her behalf to Barbaralee Diamonstein for $600,000. Immediately afterwards, however, Diamonstein questioned the Braque's authenticity. Although Christie's experts were convinced that it was genuine, they felt compelled to refund the purchase price, but Koven declined to return the proceeds. Christie's underwriters paid Diamonstein, and sued Koven. The federal district court found in favor of Christie's, noting that Christie's had a 'dual loyalty': a fiduciary duty of loyalty to Koven, but which was superseded by their statement to Diamonstein that the work would be genuine. 


In another instance, Christie's, in 1991, was asked to value the works held by the Andy Warhol Foundation for the Visual Arts. Christie's appraised the collection at $95 million, but following related litigation, the New York County Surrogate Court held that the assets were worth $509 million. Surrogate Preminger's judgment noted that, at the same time as conducting the valuation, Christie's was also negotiating to sell Warhol works on the Foundation's behalf - conflict of interest that should have been disclosed in their appraisal. 


The court also observed that in appraising the Warhol works, Christie's had had a limited focus which was unacceptable. They had not sought evidence of Warhol's marketability, nor evidence of his importance as an artist. Nor did they consider comparable sales: they did refer to some Christie's sales figures, but not those of other auction houses. The judge held that sales by dealers, private treaties and auctions should all have been considered. 

A change is as good as a holiday: Revisions of estimates

 
Auctions houses are known to revise their estimates. This, not unnaturally, raises questions as to the reliability of the initial estimate.
In the Ravenna case an estimate of $10,000 to $15,000 on an initial view rocketed to a far higher figure when re-examined, admittedly physically rather than from photographs, which disclosed physical clues that led to its final attribution. 


Another case involved a Faberge egg described by Christie's as an Imperial Easter egg. It was bought, sight unseen, in 1977 for $250,000. On viewing it, the buyer thought it was not authentic and tried to withdraw, but paid when Christie's provided a written opinion from an outside expert that the egg was genuine. When the buyer consigned it to Christie's some years later, the same expert declared that it was not an Imperial Easter egg, but something lesser, and of lower value. 

How much is that Dufy in the window? Type of value used

 
Apart from considerations affecting estimates, there may be a more fundamental issue. Under most insurance policies, collections should be valued according to their retail replacement value, that is, what a buyer or collector would have to pay to replace a lost or damaged work in as short as time as possible. This value is calculated from the point of view of the owner who wishes to maintain a collection.


On the other hand, auction estimates are calculated from the perspective of an owner who wishes to sell, namely: the fair market value, or how much the seller would receive at auction. This can dictate where replacements may be obtained. Dealers generally have stocks of specialized items at most times. However they charge a premium to cover their rental and storage costs, and consequently one usually pays more for the convenience of immediate replacement: in fine arts, dealers' prices can frequently be twice as much as prices realized at auction; in decorative arts, they can sometimes be as high as three to four times auction prices.


While auction prices can be lower, buyers must wait - sometimes years - for an appropriate piece to come up at auction, and items are frequently sold in an unrestored state, whereas dealer offerings are almost always restored. In another case, Levin v. Harned, appraisers alleged that the Levins had overpaid for certain antiques. However, the appraisers used as comparables unrestored pieces from the auction marketplace, whereas the Levins' pieces were all highly restored, sold by exclusive dealers. Generally, "retail replacement value" means that a collector would be compensated enough to obtain an appropriate replacement immediately rather than waiting for a similar item to appear at auction.


As a protection against rising market prices, collectors frequently select an insurance policy that compensates for the higher of two values: the retail replacement value, and the current market value, a term which is undefined in most policies. Be aware that when settling a claim, market value will most likely be interpreted as being analogous to fair market value. Accordingly, compensation will be based upon the price the work would have obtained if it were to have been sold as at the date of loss, and not what the insured would have to pay to purchase a similar work on the same date. 

Objectivity of Appraiser: USPAP considerations

 
Though reduced or no fee auction estimates may appear economical, as we have seen, auction estimates may be predicated upon inappropriate values and marketplaces. In contrast, a properly qualified appraiser who is not involved in the commercial aspects of the auction room should provide an appraisal report written in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP), in which factors such as appropriate value, appropriate market place, appropriate comparable sales, title, authenticity and condition are covered and explained thoroughly. 


This may prove more labor intensive and perhaps costlier than obtaining auction estimates. But should there be a loss, one should receive adequate compensation, and be able to move on.

What do you want to know?

I never would have guessed the top 10 searches of items people want to know about on this website, would you? WorthPoint

The TOP 10 inquiries at our firm:

1. Stuff

2. Antiques

3. Silver

4. Furniture

5. Art/Paintings/Prints

6. Jewelry

7. Statues/Figures

8. China/Crystal

9. Books

10. Asian works

What's your inquiry? Visit us and send us an email.

America's Top Doggies Market

Dog Lovers and Dog Art at Harding Gallery Sure do love our puppies here. Visit Polly and Sasha, mother and daughter Bijons (Polly ex-Westminster show!). Reagan Fausel will be visiting us soon, too! Lauren Magnusson and Billy have adopted Atlas.

And, we even have a few for sale.......

The Prince and The Pauper

Print signed L/L Carl Arnold

Brittany Spaniel Photograph, RW Tauskay (1888-1979 Upper Saddle River) Tauskay was the official photographer for the American Kennel Club

Dog on Point Oil on Board, Albert Willms (French, L.19th C.)

Guilty Conscience Oil on Canvas, Herbert William Weekes (British, L. 19th C.)

The Angry Historian: Don't Get Scammed: Use Common Sense

The Angry Historian: Don't Get Scammed: Use Common Sense: "I’ve written about fakes before, since I consider finding one both exciting and annoying. They are exciting because some detective work i..."

Who you gonna call? Pay Attention or the Tax Authorities will getcha

Just because an appraiser says they know about art or antiques or home contents, doesn't mean you should hire them. Some "appraisers" pay for an association with a appraisal society. That doesn't mean they've ascended to MEMBERS. It's important that your due diligence includes hiring the right appraiser: one who is ACCREDITED by the American Society of Appraisers or CERTIFIED by the Appraisers Association of America.

"In recent years, there have been many important changes in substance and in procedure in how appraisals of works of art are treated for tax purposes," Gilbert Edelson, administrative vice president of the Art Dealers Association of America, told audience members at the October 14 and 15 Visual Arts and the Law conference in Chicago.

Among those changes are the specific qualifications for those submitting an appraisal for tax purposes, and there are also increased penalties for appraisals identified by the Internal Revenue Service's Art Advisory Panel as being errant by more than 20%.

APPRAISALS for TAX PURPOSES

In general, the donated object must be a capital asset - "that is, held for at least one year before being given away" - and donated to a nonprofit institution to be used for its exempt purposes. A fund-raising auction "is not one of the exempt purposes of a not-for-profit organization," he noted. If the institution decides to sell the donated item, it may not do so for at least three years. Charitable contributions may not exceed one-third of a taxpayer's adjusted gross income. Since 1985, donors to charitable institutions have been required to include a valid appraisal on their tax returns if, when the gift is an object, it is valued at $5000 or more, or over $10,000 when it is a closely held stock.

Special attention has been given by Congress to appraisers, and Edelson cited both the 2004 American Jobs Creation Act and the 2006 Pension Protection Act as having introduced "new standards for the appraisal of donated work." The Internal Revenue Service has written up guidelines and is awaiting final approval from the Department of the Treasury.

Under the proposed rules, the appraiser must be designated as competent by a recognized professional appraisers' organization or must have passed professional or college-level courses in valuing relevant objects. In addition, the appraiser must be paid to perform appraisals on a regular basis. Neither the donor, the person from whom the donor obtained the item, nor someone employed by the institution receiving the donation may perform the appraisal. The appraiser's fee may not be based on the estimated value of the object.

Valuations found to be grossly incorrect by the 25-member Art Advisory Panel may trigger a range of penalties for the appraiser, either 10% of the tax underpayment due to misstatement, $1000, or 125% of the income received for the appraisal. In addition, the appraiser may be subject to a civil penalty for aiding and abetting an understatement of tax liability and may be prohibited from submitting appraisals for tax purposes for a period of five years. Taxpayers are assessed 30% of the tax underpayment if the appraised value of the object is found by the IRS to be off by 150% or more. This is in addition to the payment of the adjusted tax and interest on that amount.

The contents of a qualified appraisal must include the identity of the artist, if known, and if unknown, to whom the work is attributed (school of or studio of, for instance), the title, media, dimensions, date, if and where signed, provenance, and publication and exhibition record. If the donated artwork is a multiple, the appraisal needs to include the edition number and size of the edition (if a sculpture, the name of the foundry). In addition, the appraisal needs to cite the cost of the work, when and how it was acquired, its condition, and when it was donated, and must supply a good photograph or transparency of the object.

---Maine Antique Digest, December 2010 by Daniel Grant (edited)

Brains + Lips = Win the Antiques Roadshow Game

The Antiques Roadshow website has a game you can play. You watch a little video segment. Along the way are multiple choice questions regarding the item (like "Who is Thomas Chippendale?") And finally, can you guess the price before the appraiser calls it? Thanks to 16 years of fine and decorative art study, I managed the multiple choice questions pretty well. The appraised values, however, weren't quite so easy. My timing was off. The objective is to "beat the appraiser." I contend that the roadshow appraiser knows so much more about the item, having researched the bejesus out of it, there's no way I can beat him. Drew's better at this than I am. This brings me to the BIG Antiques Roadshow FALLACY. The Roadshow Appraiser not only sees the item before he goes on television, he has the benefit of exhaustive research, executed by a team of appraisers with computers, libraries, sales results, and everything there is to know about the item including history and provenance. Sometimes AR knows about a piece before they even get into town!

We get a lot of referrals from the Antiques Roadshow for which we are grateful. But, because of this BIG FALLACY, some people think appraisers just know this stuff and can spout spontaneously. Some find it hard to believe that an appraiser doesn't know everything there is to know about everything. Oh, some appraisers (I live with one) have enormous brains,

indeed, as well as the ability to recall the data and use their lips

at the same time. But, mostly, appraising is all about honing one's connoisseurship skills, studying items, mediums, artists, makers and history AND researching comparables and sales results. Just so's you know, it's not spontaneous.

Opposites Attract Buyers

This weekend, we visited Pook & Pook Auction in Downingtown, PA and Rago's in Lambertville, NJ. In many ways, these two venues represent polar opposites of the auction market in terms of product offerings. Pook's Saturday sale featured about 750 lots of 18th and 19th century American furniture and decorative arts. The room was filled with buyers; the phones were busy and the internet bought some items. Almost nothing was passed. Prices for beautiful pieces of finely made antique furniture and tall case clocks seemed sadly low. Competition was stiff, however, for the best examples of paintings, pen wipes (who knew?), quilts, miniatures and anything rare and unusual. The John George Brown (American, 1831-1913) oil painting The Monopolist, hammered down for $115,000 (plus 18.5% buyers premium) on a $35,000-55,000 estimate. Rago's Saturday sale consisted of over 1000 lots of 20th and 21st century furniture and dec art. There appeared to be more workers in the room than buyers. The phones and internet were active. Modern furniture by known makers such as Nakashima, Springer, LaVerne, Parzinger, Evans and Robsjohn-Gibbings were popular. A Victor Schreckengost Jazz Bowl hammered down for the same price as the JG Brown painting at Pook's, plus Rago's 22% buyer's premium. David's estimate was $20-30,000. David presented quite a few "experiments;" decorations by offbeat or unknown artists. There were a lot of items passed or bought in. Many an antique collector has lamented that "they just don't make 'em like they used to." 21st century buyers are proving to be savvy, as well. Fine furniture and art have been and are still being made today. It appears that modern furniture by well-known makers seems to be selling better than antique. Decorations that are cool or rare are selling regardless of their age.

Estate Wars!!

Personal Property Consultants has watched many family dramas take place when a loved one or family member passes away, or when family members downsize. Regardless of how fair and reasonable people's intentions are, there's often misunderstandings. A professional appraiser, like us, can help with the identification, labeling, valuing and distribution advice for almost all things on the inside of a house. Hiring us is a great place to start the process. No one has ever regretted hiring us to help, edit, elucidate, divide, distribute, donate, sell or value their "stuff." OR.....you can go on National TV and duke it out! We think our methodology is more pragmatic and less embarrassing.

Playing the Antiques Roadshow Game

Do you love the Antiques Roadshow as much as we do?

Drew and I have been playing the Antiques Roadshow "game" for about 10 years. It goes like this: the owner of the thing presents his item and its story to the appraiser on the show; before the appraiser divulges their value determination, each of us predicts the outcome; closest number wins. If there's disagreement with their evaluation, we do the research to determine if they're "right." Truth be told, Drew's a winner. I'm betting you play this game, too. Some people in our (appraisal) profession don't have kind things to say about the show. They say that the values represented on the show are at best, dubious, or at least, not realistic representations of the marketplace. As entertainment and information, Drew and I find it compelling. In any case, it's a show we need to watch and know about because our customers, clients and friends watch it. If I had a nickle for every time a client said "I saw one of these on the Antiques Roadshow so I thought I better have it appraised" I'd have at least enough for a lifetime subscription to the Antiques Roadshow newsletter.

I like a couple of the appraisers a lot, mostly because I learn from them and they are funny, smart or both. We've met many of them and have a few on speed-dial. Alan Fausel on fine art, Noel Barrett on toys, David Rago on early 20th C. arts and crafts, Philip Weiss on collectibles, and of course, the Kenos on antique furniture are favorites to watch. Sometimes, they are like kids in a candy store. I've included links to each of their archived TV appraisals on video. I get a kick out of watching these more than once because I do learn something new every time. Then again, I have America's Funniest Videos on permanent DVR, too. Remember, AFV was America's first social networking site!

Continuing Care Retirement Communities

July 26, 2010 Senate Begins Hearings on CCRCs On July 21, the Senate Special Committee on Aging chaired by Herb Kohl (D-Wisconsin) convened a hearing on the state of the CCRC (Continuing Care Retirement Community) industry. For readers or followers of the newsletter, Apex Health News, you may recall a number of articles on the state of the industry and specifically, how the CCRC and Senior Housing industry has been impacted by the economic downturn in general and the the languishing housing (residential) market specifically. In addition, Reginald Hislop, III, Managing Partner of Apex Healthcare has written numerous articles on his Blog regarding CCRCs and their fortunes in the current economic climate. Recall that in the wake of the failure of the Erickson Retirement Communities, some associated but not related concerns regarding other high-profile CCRCs in financial distress (the Clare in Chicago, etc.) and negative industry outlooks and debt downgrades in the sector via Fitch, the Senate Special Committee on Aging began an investigation into the CCRC industry. The most notable step taken was a request to the GAO to complete a study on the industry. Somewhat simultaneous with the GAO request, the Committee sent out letters of inquiry to five CCRC organizations. A report summarizing the information received via the inquiry was produced. As he reviewed the findings in both reports, he noted similarities in themes. He also noted that the Committee’s skew would be toward calling for added regulation of the industry, directed state to state. As the Senate Special Committee has only “fact-finding” and “recommendation” powers, we didn’t expect a great call or swell for federal involvement beyond this point. Providers and trade associatons however, should take caution as the recommendations from the committee reports (GAO and other) are likely to produce added regulations for the industry on a state to state basis, especially given the nature of the findings. Mr. Hislop's summary of the information is below. The vast majority of states offer minimal regulation of CCRCs and fewer still (17) include requirements for periodic actuarial studies (a recommendation from the Committee). Twelve states have no regulations at all. CCRCs that were tied to certain forms of debt instruments such as bonds were more closely watched financially than those that had other forms of debt structure or no debt at all. While bankruptcy and/or failure in the industry is rare, the biggest risk to residents in financially unstable CCRCs is abrupt rate or fee increases. A secondary, less likely risk, is loss of principle or investment via a downpayment or entry fee should the CCRC become illiquid. Only 16% of CCRCs pursue voluntary accreditation. Recent downturns in the economy have added real estate and credit risk to the industry. Providers have found it difficult to secure new debt or to refinance existing debt at competitive terms in the current credit markets, making operating costs associated with debt more expensive and/or, keeping the CCRC from proceeding with needed capital improvements. From a real estate perspective, the fall in housing prices coupled with a very slow re-sale market for existing homes has hurt CCRC occupancies and thus, revenue profiles. Operating cash reserves and cushions as well as investment reserves have declined significantly over the past two years. Of the facilities reviewed by the Committee, four out of five claim to have reserves equal to two months or less of operating expenses. Three of the five report having debt levels greater than asset equity and one reports having a refund liability on contracts equaling eight times more than net worth. The Committee is recommending that states adopt more uniform regulations for CCRCs in the focal areas of licensing, reserves, recurring monitoring and analysis, periodic reviews and analysis, and consumer disclosure. Important or notable recommendations include requiring periodic actuarial analysis, periodic financial examinations conducted by the state or under the auspices of the state (i.e., independent accounting firm following a prescribed methodology), a review of marketing practices, audited financial statements, and a review of financial ratios to assure capital stability and liquidity. On a final note, Mr. Hislop found both reports interesting in terms of their similarities and their differences. It is clear from the report generated via the Committee’s direct inquiries that the inquiries were made to less established CCRCs and/or newer developments. This sample, in our opinion, is hardly representative of the industry. In the GAO report, the investigation probed through activities in only eight states. While he found the GAO report more “balanced”, neither document shed any new light on the industry or its issues. The bottom-line and somewhat concluded within both reports is that the industry, while somewhat temporarily troubled by the economy, is good for seniors and offers a significant and important option for retirement and long-term care. The troubles that are so often highlighted in recent times, are representative of a small slice of the total industry, typified by newer developments, focused on affluent seniors, in crowded markets, heavily leveraged, and in his opinion, less than adequately researched prior to development. Stabilized projects under the control of experienced ownership groups and operators, will continue to prosper and remain stable, even through the slow recovery.

Fraud for Gold - SHAME ON THEM

NJ gold selling consumers beware! The Star Ledger published an article Thursday, July 2 Cash-for-Gold fraud tips the scales against sellers. We've been warning our clients and friends for years to avoid selling their precious metal jewelry and coins to charlatans. "They sound so nice and professional."

The Better Business Bureau and Consumer Reports has been warning that consumers have been underpaid or flat-out robbed by television and internet cash-for-gold operators. The NJ Office of Weights and Measures has formed a Precious Metals Task Force to conduct surprise inspections of scales. The biggest rip-offs are the "transient buyers;" the ones that take out the full-page ads in the Star Ledger! Springs were found in their scales, cheating customers out of accurate measurements of their gold and silver. Some fraudulent NJ dealers even had store-fronts, with scales that were all inaccurate in their favor. What a coincidence!

In case you're interested in selling your unwanted gold and silver jewelry, we've just gotten a new state-of-the-art scale to help you take advantage of $1200/ounce gold. Fridays are a good day to meet with Drew and weigh-in on your decision making. He'll explain the testing and weighing methodology. Give a call and make an appointment! You'll be richer for it.

FYI - For our Clients Who Own Fine Works of Art & Those Who Wish They Did

Is it time to Buy or Sell?

ArtPrice Report of May's top Sales:

A Top 10 at $324.3m In just one week (05/04 - 05/12), Christie’s and Sotheby’s generated six results above the $25m line. The combined revenue from the top 3 results ($95m for Picasso’s Nude,Green Leaves and Bust + $47.5m for Giacometti’s Grande tête mince + $29m for Warhol’s Self Portrait) almost equals the total generated by Sotheby’s, Christie’s and Phillips de Pury from their 2009 May sales ($180m from 734 lots). The combined revenue from Christie’s and Sotheby’s Impressionist & Modern Art sales was up 205% vs. 2009. In May 2009, no-one dared to offer Picasso’s major works for sale. A year later, his works are at both ends of the Top 10 (in 10th position, his Femme au chat assise dans un fauteuil fetched $16m, estimated $10m - $15m ). His peer Henri MATISSE is in 6th position with Bouquet de fleurs pour le quatorze juillet ($25.5m, Sotheby’s).

Top 10 Hammer price in May 2010

....from Swimming to the White Elephant

Lynn, do you collect anything?

Yes, I collect friends, music and occasionally broken green pottery.

Why broken green pottery?

I like green pottery and I feel sorry for the broken ones.

When and how did you get into the appraisal of antiques?

Through my husband's Comedy Club, Rascal's, back in the early 90s. Seemed like a seamless transition from Competitive Swimming.

How's that?

He had a restaurant called "The White Elephant," which required frequent replenishment of "things to sell." I was a buyer for them. Obviously I used my very special swimming techniques.

Thanks, Lynn, for filling us all in. Now we know.

HNWI + Art = Investment

WSJ, Kelly Crow:

Christie's International auctioned $232 million of post-war and contemporary art at its evening sale in New York on Tuesday, led by a record-setting $28.6 million waxy painting of an American flag by Jasper Johns.

"Flag," which was completed in 1966 and hung for decades in the home of the late "Jurassic Park" author Michael Crichton, sold to New York art adviser Michael Altman. It was priced to sell for up to $15 million.

Mr. Crichton's collection of colorful, mid-century artworks helped the sale beat Christie's own presale expectations as well as eclipsing the house's $93.7 million sale last May -- proving collectors are once again willing to chase after newer works that carry the right pedigree.

The mood was chipper throughout the sale, with collectors like hedge-fund manager Steve Cohen and former superagent Michael Ovitz taking spots in skyboxes overlooking the auction house's crowded sales room, where others like entrepreneur Eli Broad and author Salman Rushdie took their seats. Two men on the front row wore ballcaps: fashion designer Marc Jacobs and fund manager John Angelo, who sits on rival Sotheby's board.

Yet the night unquestionably belonged to Jasper Johns, the artist from Georgia whose seminal series of late 1950s and 1960s depictions of flags, targets and alphabets represent some of the earliest examples of Pop art. Christie's sold eight of the artist's works for a combined $43.6 million, including the $4.1 million "Figure O."

The sale's other big winner was Andy Warhol, whose 1965 diptych of a lavender-faced Elizabeth Taylor, "Silver Liz," sold for $18.3 million, above its $15 million high estimate. Warhol's portraits of Hollywood starlets like Ms. Taylor or Marilyn Monroe are among his most coveted pieces, and at least four bidders competed for "Liz," with New York dealer Dominique Levy getting it.

The Christie's sale also amounted to a test of Robert Rauschenberg's market. Three telephone bidders went after his 1960-61 "Studio Painting" – one of the artist's so-called "Combines" because he hung a small bag on a clothesline that runs between the work's pair of painted canvases. A Christie's specialist who often represents Parisian collectors won it for $11 million, over its $9 million high estimate. A Rauschenberg silkscreen, "Trapeze," also sold for $6.3 million. (Final prices, unlike estimates, include the auction house's additional fee.)

Altogether, 74 of the 79 works offered found buyers, helping the sale reach 98% of its potential total value -- one of the most successful showings since the recession. The Crichton estate's 31 pieces alone sold for $93.3 million, against a $69.6 million high estimate. The sale broke at least five records for artists including Johns, Mark Tansey, Sam Francis, Lee Bontecou and Christopher Wool. Around 74% of the offerings went to American buyers, the auction house said.

Other sellers included Mr. Ovitz: Christie's helped him sell a pair of works, including Neo Rauch's surreal café painting, "Seek," for $1 million. The work had been priced to sell for between $800,000 and $1.2 million. Mr. Ovitz also sold Eric Fischl's 1984 image of a nude woman basking in her own reflection, "Vanity," for $1 million.

Sotheby's holds its post-war and contemporary sale on Wednesday, and boutique auctioneer Phillips de Pury follows on Thursday.