Secrets to Purchasing Art in Today’s Economy
Any fool can walk into a gallery and pay the asking price. They then return home feeling safe in the myth all art goes up in value. The truth is 80% of art goes down in value and the majority of collectors never live long enough to even recapture cost. Myths like this and when an artist dies their work sky-rockets in value, fuel this expectation.
The shrewd art collector knows these fallacies and take careful steps to not fall for them. They purchase art with a proven track record to go up in value. In stock market terms you can buy highly speculative penny-stocks or solid performing “blue-chip” investments.
What should the smart investor be looking for? It’s easy: household names. If the average Joe on the street hasn’t heard of the artist, then it isn’t “blue-chip”. True names like Rothko, Rauschenberg and DeKooning may have been good investments at one time, but will they continue to appreciate? Look to solid performers that never have been out of favor; Renoir, Picasso, Matisse, Rembrandt, Durer, Whistler, Miro, Gauguin, Degas and Chagall.
Even the collector that wants to just get their “feet wet” can purchase prints, etchings and drawings by the Masters. Buy unique pieces or prints from small editions. The “blue chip” artists have nothing to prove; they’re already in all of the museums. If a Monet etching is from an edition of 5 prints, probably at least 3 of them are already in museums or been lost in floods, fire or war. This makes only 2 examples for all world collectors and museums to fight over. Certainly a scenario guaranteed to make them go up in value. Master prints and drawings show greatest return on investment.
Just because an art work is rare and authentic, it will not go up in value if you over-pay for it. Art galleries generally have a 100% mark-up. If they pay $1,000.00 for a painting, they mark it $2,000.00. The trick to buy intelligently is to “haggle” like crazy. Initially, never offer the gallery more than 70% of the sticker price and compromise and pay at 75% of the original amount.
After agreeing on price, obtain all authenticity documents and provenance, catalog entries, book references, etc. The more the better. You need these when you want to sell someday. Put these in a safe place, like a safety deposit box.
Look for examples just a little off-beat or seminal examples of the artist’s method of creation. The regular examples will be hotly contested over, because they are easy for the layman to understand. The unusual will be priced more fairly and be of more interest to museums someday. You’ll be able to sell these at a premium compared to regular pieces that frequently appear at auction and have a set low value. Rarity is king!
Should you buy at auction? Auctions are not for everyone. If you don’t know what you are doing, you shouldn’t be there. Auctions are the proverbial dumping ground for problem pieces: artwork overly restore, glued down, cut down, sun damaged or outright fakes. Online auctions are the worst. Only fools buy there.
Read the auction catalog. You can tell how reputable an auction house is by its “terms of sale”. Most guarantee nothing. Beware of cruise ship auctions.
The new art investor should use reputable galleries rather than auctions. These galleries will direct you to the best they have to offer, rather than what is in vogue and hot at the moment.
The art world is filled with artists once promoted as a good investment and are not just frame and glass. Artists like Erte, Dali and Rockwell prints were touted as “blue chip” investments at one time. You may be lucky to jump on an emerging artist but it is highly unlikely.
The smart stock investor always covers their profit with a “put or call” against a future down turn in the market. The savvy art investor does the same. They use the gallery appraisal as proof of the value when they donate the well-known artist’s work to a museum for the tax advantages.
Someday, this period will be called “The Golden Age of Collecting”. More important items came on the market during the Great Recession more than any other time in history. As stock portfolios, retirement funds, home equity and college savings deteriorated, families were forced to sell important heirlooms. Wonderful items came off the wall, both here and in Europe. Even museums were forced to “deaccession” items to make up lost attendance revenue and lack of cash donations. It takes courage to buy at a time like this, but now is when galleries are hurting and there are real deals to be had.
If you purchase intelligently, get proper documentation and appraisals. You can take art you’ve outgrown and trade it for better pieces. Galleries are always glad to have back rare and important items. They don’t want paintings returned by living artists when they can get another one from the artist themselves, in a newer style at wholesale cost.
There is an old art collector’s saying: “Buy with your heart; always lose money. Buy with your head; always make money.” To build a great art collection takes courage and taste. Courage you have to be born with, but taste can be taught by a reputable art gallery or art appraiser. Don’t buy art because it matches your sofa.
Many art collectors hire an art appraiser to tell them what items are best investments and what they should pay. They want someone to advise them, not a salesman with a different agenda than their return on their money.
An art appraiser is the important link in your investment portfolio. They are a valued counselor to keep you level-headed and not ruled by emotion about a work of art. If they have been in business for decades, they tell how rare a work of art really is based on their long experience.
The Chicago Appraisers Association has advised collectors just like you for over 45 years. They helped build hundreds of portfolios. They are at your side when you want to buy and when you want to sell or donate. As the country’s oldest appraisers, they are at the forefront when an important old collection comes on the market. They are consultants to the best art galleries and do their research and authentication. They know where the “goodies” are!
If you need a top notch art appraiser, please give us a call. Our friendly staff can walk you thru every step to build an important collection and advise you on a realistic budget to fulfill your goals. There is no charge for this initial phone consultation. Let us be your personal investment counselor. We even put the fun into collecting and teach you many fascinating things about works you may want to own. Yes, you can have your cake and eat it too.