Welcome to Cynthia Shaver Asian Art Appraiser Newsletter February 2023,
The month of January I attended a webinar, for Northern California American Society for Appraisers, of guest speaker Dr. Aswath Damodaran of New York University on The Key Differences between Price vs. Value. It was a fascinating informative talk that had real-life experiences and examples two weeks later in one of my appraisal assignments.
I was hired by an insurance company to address an insurance claim by one of their clients, a general contractor, who hired a subcontractor that brought a ladder onto property in June 2022 and fell over damaging art pieces. The owner of the damaged art, who carefully had all original sales receipts and replacement value appraisals, refused to accept the offered amount, and wanted another appraisal. Out of two appraisals, one stated “…the owner paid too much for these items. Not worth anywhere near what he was told. They were not antiques or unique.” Another appraisal gave a replacement value even higher than the original purchase price.
I visited both the place of purchase and the replacement value, brick and mortar businesses in San Francisco. The place of purchase in 2021, was located on Jefferson Street on Fisherman’s Wharf and the other, replacement value appraisal on January 2023, on Grant Ave at the entrance of the stone lion gates to Chinatown. In both retail sites, the owners and staff were friendly and upfront. I introduced myself as appraiser there for comparison shopping for insurance claim and was told “the price is what the buyer will pay, the value is quite different, beauty in eyes of beholder,” in other words, buyer beware. Both businesses owned their buildings for over forty years, so paying rent was not figured into the overhead. This opened prices to be widely inflated, only to be bargained later. Even after introducing myself, the value of a Korean mother-of-pearl table was reduced fifty percent. I found the value elements in general were size first and then material. At the entrance to the gallery, were two contemporary, life-size, thin bronze rearing horses, with tails and mane flying. There were many different styles of crystal chandelier hanging from the ceiling, maybe thirty or more. We went by elevator to the second floor to the ‘Oriental Room’ where, in fact, were very large sculptures 36”l x 16”d x 16”h, of bone pagoda scenes and gods made from bone pieces like a jigsaw puzzle and Korean mother-of-pearl furniture of tables and chairs. The property was not unique, of average quality and easily available. The price paid was what the client would pay, after a healthy discount, and value was not a factor. Difficult then to write replacement value insurance report when the original price paid was extremely exaggerated. That was what I wrote in the appraisal report that the original sales price was overcharged by at least 50%, that the property was not unique nor antique and the quality in the middle range. This was the first time I encountered this situation where the actual price listed, and paid, was significantly over the value as compared to many comparable in the marketplace. In theory, the asking price of a property should be the replacement value of that property. In this case, the original price paid was too much and could not be used for replacement value.
This was an important experience for me. The salespeople, and the owners of the buildings, were not sleazy nor untruthful. They spoke freely with me after I introduced myself and handed them my business card stating I was appraiser of Asian art. Upfront they mentioned the price was what a customer was willing to pay, and value was not a factor in the decision. Business is hard, especially after the pandemic, and one business was in Chinatown and was suffering not only from the covid pandemic but the animus toward Asian people in general. Fewer tourists were coming to Chinatown in San Francisco since March 2020. I saw this as my husband, and I went down Grant Avenue from Sutter St to Broadway. There were blocks with two to three shuttered businesses, then a few stores selling fans, clothing and Chinese cookware. Business is hard and buyer beware.
Thank you for reading my newsletter. The Year of the Hare has begun, I have our son’s wedding to attend.