William Joseph Verdult - Where's My $5 million?
by: Alton Perkins, CEO of Wealth Enterprises Corporation/Yazzy's Fine Art Corporation
Why do you see some listings especially on eBay that state, William Joseph Verdult for sale $925,000.00 or even $5,000,000?
Often this figure, which to some may seem astronomical, is the value most often set by the artist, in this case, William Joseph Verdult. Normally that value is placed when the painting is created or updated later by Verdult or the Corporation. This value is included on what is called a Certificate of Authenticity and Insurance Appraisal or COA.
A Certificate of Authenticity and Insurance Appraisal signed by William Joseph Verdult or the Corporation does two things:
- It tells the buyer or appraiser that the artwork is in fact authentic; and
- It gives a value primarily for insurance purposes if this work had to be replaced if it was damaged; then what would it cost to have William Joseph Verdult, replicate the work. This price is set either by the artist or corporation - in this case.
This document (COA) is important not only from a provenance (ownership paper trail) standpoint, but also from as I've indicated an insurance replacement or insurance claim standpoint. It is also important for tax donations as well. But we will leave that for another article.
Value can throw you for a loop
Frequently, the value displayed on a Certificate of Authenticity and Insurance Appraisal (COA) throws a novice buyer/investor for a loop. Often what a new person will say is , "Hey, I've got a Verdult. It's from the Dutch Master himself and I have a COA for $500,000.00. Now where can I sell this hummer and get my money? I don't have to take the whole $.5 million; I will settle for half of that”.
Ho do we know?
How do we know this? We experienced this ourselves. Fighting and literally cursing out auditors for more than two years. Demanding that the Corporation be given full value on its books for the amount listed on the Certificate of Authenticity.
We saw this first hand recently on eBay - with the painting entitled Rembrandt. Where the novice person ran ads on eBay as well as other places advertising the painting for $500,000; then $225,000; and now for considerable less. The person had paid far less for the painting - and before the ink was dry on the purchase contract, attempted to sell the painting, probably for 1,000 times what he paid for it. It just doesn’t work that way, at least as far as we can see. Since around the end of 2002 nearly five years, we've done research on Verdult paintings, tracked Verdult sales in the different markets, participated in almost 300 sales, and nearly 2,000 plus auctions. So we have a pretty good idea of exactly what Verdult artwork is selling for at any one time.
What causes the confusion?
Not only the experience of the buyer/seller in terms of pricing and value but other dynamics as well.
What causes a novice to come in thinking he can make such a killing in a week? Well I guess that's why the person is called a novice. I can't talk because we were one as well. We listened to a fast talking shyster who had COAs to match. Our only problem was when we went to our auditors to discuss the value with regulators....they schooled us pretty fast. So here is exactly what is going on.
There are four voices:
1) The artist's or company's value
2) The appraisals value
3) The trade value; and
4) Cash value
Artist 's Opinion
First the seller/buyers should know that the value on the Certificate of Authenticity is the company's or artist's opinion of what the artwork's value is if the art was lost or damaged and required to be replaced. This value can and often does conflict with the:
Appraiser's value
- what a qualified and certified Appraiser of William Joseph Verdult artwork will assess the value - under slightly different bench marks; and
- what the market will bear.
Frequently, we have seen where the qualified appraiser will set a market value usually about 33% of the artist's value on the Certificate of Authenticity.
What does this mean and what impact does this have?
From a tax, donation or insurance standpoint, a certified appraiser's opinion of value is very important. In establishing this "appraised" market value, the appraiser takes into consideration a number of factors, including past sales, condition of the painting, rarity of the painting, similar paintings by the artist, and similar paintings by other artists of the similar stature as William Joseph Verdult. Based on these factors the appraiser comes up with what is called its market value. Often the appraisers may include bartered transactions in his/her analysis.
Trade Market
Next, you have a third important area that establishes the value of Verdult artwork and that falls into what the market will bear for the artwork for either trade/barter.
In the trade or what is called the barter, paintings are frequently sold for land, cars, or other goods and services. Often the paintings trade at or near its COA insurance replacement value or its market value set by a third party appraiser. Note in the barter arena paintings are rarely, if ever, exchanged for cash.
Verdult artwork certainly has been bartered and exchanged for goods, and services at or near its COAs value or appraised price. For example click here to see a lithograph appraised by a qualified appraiser at $2,000 and being bartered for $1,500. We've even seen instances where that value has been reflected in loan transactions for banks; primarily off-shore.
Cash Market
Finally, you have the cash market; here people are looking for value based on cash sales only.
The cash value market is a different breed. Auditors' (Certified Public Accountants) and regulators' (Security Exchange Commission) normally base values not on bartered or exchange values - but on cash. Its assumed that the barter or trade has been considerably discounted. Therefore in most cases, CPAs and regulators want to see actual cash receipts of items sold. They base their value on cash, and normally will not allow, or will adjust downward any barter or exchange value. This is in line with major auction houses such as Sotheby’s or Christies. Both look for what the painting sold for in cash.
People that engage in barter or trade probably have no major challenges with trading the artwork at or near its artist’s established value reflected in the artist's COA. However, from an overall market standpoint, especially with major auction houses like Sotheby’s or Christies, they want to see cash - not bartered sales.
So from our vantage point to continue to make sure that Verdult artwork is reflected as mainstream art, we are certainly focused on pushing to establish transparency in the market place. We know of and acknowledge bartered sales for Verdult artwork. However, our major focus is on cash values.
Why? We believe this is in the very best interest of Verdult artwork over the long run, perhaps not for the bartered works, but certainly for the cash paying customer, and most importantly for our shareholders.
Thus the establishment of the Verdult Art Market Index. This initiative gives investors and art lovers an accurate picture of what their artwork is selling for in different markets (trade or cash). Like the Blue Book or Edmonds.com for automobiles that establishes different markets and different values, the investing public and interested parties will receive a true and transparent value of William Joseph Verdult artwork in the different markets.
Doubled Edged Sword
We have learned the hard way that this can be a doubled edge sword. On the one hand barter/trade transactions bring close to top "trade" dollar (in barter or trade) for Verdult artwork. Our goal is to shed light on the true true cash value of Verdult artwork. This requires cash receipts and the placement of major paper trails on the top web sites, and eventually at Sotheby and Christie.
So where is your $5 million dollars? In the barter area or off-shore you certainly may have this value already. And perhaps someday in the future the cash value may be $5 million as well. But today, we are not there yet. Common sense dictates, if a Picasso, Rembrandt, or Warhol isn't going for $5 million, other artists including our beloved Verdult are not either.
However, as noted on the Consuelo Mack Wealth Track Show, people should have art in their investment portfolio along with stocks ; bonds and real estate.
Is Verdult artwork a good investment? We firmly believe so. Has it reached the acceptance in terms of dollars of a Rembrandt or Picasso? Not yet. Will it? We think so. But again, that's an investment decision for the individual purchaser to make.
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