Which valuation approach is most appropriate for works with strong comparable sale records?

• A. Market approach uses comparable sales; cost approach estimates replacement cost; income approach uses expected future benefits; use market for works with comparable records, cost for unique works or new acquisitions, income for investment-oriented collections.
• B. Cost approach estimates replacement cost for a work.
• C. Income approach relies on past auction results alone.
• D. Market approach is never used for valuation.

Answer: (A)

The market approach is the best choice when there are strong comparable sale records because it bases value on actual prices that buyers have recently paid for similar works. This method uses real transaction data to reflect current demand, prestige, and market sentiment, which is exactly what strong comparables provide. By comparing the work to similar pieces—considering factors like artist, size, medium, date, edition, condition, and provenance—you can anchor a value to prices that have already been realized. Adjustments can be made for differences (for example, a slightly larger size, a more complete provenance, or a premium frame) to fine-tune the valuation to the specific work.

In contrast, the cost approach estimates what it would cost to replace the work and doesn’t directly reflect how collectors actually value similar pieces in today’s market. The income approach focuses on expected future benefits or revenue, which is uncommon for standard artworks unless there is a reliable income stream (licensing, long-term loans, etc.). Finally, the idea that the market approach is never used is incorrect; when solid comparables exist, the market approach is typically the most informative method.