The global art market can be intimidating and difficult to predict. I recently came across a slideshow from a wealth management website that gives a good primer for those who wish to better understand this aspect of the art world. It covers many of the basics such as selecting a qualified art advisor, gaining an understanding of the selling process, and so on. The article is informative, but there are several obvious flaws and omissions.
Transparency Above All: The article does not explain what disclosures one needs to look for. Without knowing that, transparency is a foreign term. My advice: hire an advisor you can trust. Get a few recommendations from qualified sources, and have conversations with each. Listen carefully to what they say, then choose the one who is the most transparent and makes the most sense. “Be careful” not to pick someone because they make promises of unusually high returns. That in itself should be a red flag. Many galleries and dealers will quote higher values just to get your business. Most often this will lead to disappointment.
Understanding What Provides Value: The article recommends hiring an appraiser, however, it does not give any advice about how to hire one. The fact is that there are many appraisers who are unqualified to appraise various collectibles. To make matters worse, some appraisers who claim to be experts really are not. Be weary of appraisers that offer to give you their stamp of authenticity, especially with art. In 99% of cases, there opinion is worthless, and most charge extra for this valueless service. Also, make sure your appraiser agrees to show you how they arrived at the value of your collectible. They should be more than willing to accommodate your request by showing you comp’s of similar items. Finally, remember that there are numerous types of appraisals (insurance, retail, wholesale, replacement, etc.), and prices can vary greatly with each.
Sell When Your Client is Ready: Generally good advice here, however, a few things to note. It is important to stay informed on the value of the art in your clients portfolio. There are many important tax and estate rules that can come into play and to be cognizant of, and advisors and collectors need to be aware of what they are and what options they may have. It is always a good idea to plan ahead because life, as we know, can throw unexpected curve balls. Consulting an accounting firm that specializes in fine art is your best bet.
Always Solicit More Than One Sales Plan: The article talks about auction houses providing guarantees, but is important to note that they only do so with valuable works (usually one million plus). Also, do not confuse auction estimates with guarantees, and be very careful not to select an auction house because they offer a higher estimate. High estimates can often be the kiss of death, as estimates that are set too high will often lead to an unsold lot.
Be Aware of Every Layer of the Process: Make sure that your art is protected at all times, and that proper insurance and legal documentation is in place “before” moving forward. Also, make sure all costs are spelled out and understood before proceeding…i.e, shipping, insurance, and if necessary: restoration, authentication, and framing expenses. These things should all be addressed before selling or consigning, if not, find someone else to do business with.
Select a Qualified Art Advisor: Excellent advice.
Additional Comments: There are many other dimensions to consider that the slideshow does not cover. For instance, technology and the internet are both transforming the market. Many artists are turning to digital art to easily sell and replicate their works and they now find exposure through social media. More collectors, most notably Millennials, are also buying art online. Increased online sales allows for greater diversity and ease of access.
Technology has made the globe more interconnected and international issues are having a greater affect than ever before. Recently, there have been concern over how oil prices, Brexit, and a slower Chinese economy will affect auction pricing. While this can all be overwhelming, luckily there are publications that provide insight on what is happening in the market, such as TEAFAF. The TEAFAF Art Market report is a yearly summery of the wider art market compiled by experts of the field. It looks at political and economic issues alongside sales records and synthesizes this data into a cohesive report. Last year’s edition showed that the US has remained at the forefront of the global market, but sales have been going down. The newest edition of the report will come out next month, so we can see updated findings soon.
Ultimately, the best advice is to find an art advisor that you can trust. As the slideshow states, it is important to work with someone who is open and honest about the process and has the knowledge to help navigate the ups and downs of the market.