Things You Should Know About Investing in Art

Jackson PollackIt’s official, art is making stunning leaps in the investment world.  Yesterday, the New York Times reported that Hollywood mogul David Geffen sold a classic drip painting by Jackson Pollack for $140 million. That price, if officially confirmed, would be the highest sum ever known to have been paid for a painting, exceeding the $135 million that the cosmetics heir Ronald S. Lauder paid in June for Gustav Klimt’s “Adele Bloch-Bauer I.”

For the rest of us, investing in art on a much lower budget can be intimidating. Yet affordable art can increase in value and add to the wealth of its proud owner. So what are some of the things that you should consider when shopping for art?  Let’s consider an investment in a painting:

First, understand the sometimes elusive pricing structure of art.  The difference in price of artworks can be astonishing. For two almost identical paintings (the canvas, oil) in different places you will be asked to pay from $500 to $5000. How do you make the right choice in a situation like that? Often buyers simply don’t recognize the factors that price consist of.

If you buy a painting from an art gallery, what are the factors that influence the price?First of all – rent of the gallery space. The majority of galleries are located in places where low rent is usually not the case. Salary of employees, cost of advertising such as publications in press expenses for posters, catalogues, invitations to opening of exhibitions, and financing different “noncommercial” art projects all effect the bottomline of art pricing in a gallery and you will pay top dollar.  Typically, galleries double the price of an artists original price for a piece.  Sometimes they encourage the artist to raise the base price in order to create a buzz – often the more expensive a piece, the more interest it will generate.  That base price is again doubled. But buying from an exhibition or through an art gallery can make sense. They will offer you the works of art that have already gone through preliminary selection and tough competition. You know for sure it is a good investment.

If you are buying a painting directly from an artist, all you can do is basically rely on your own taste and on some attributes of professionalism and success that the artist portrays. What kind of attributes are they? There are some questions you may want to ask your artist. Does he or she have any works in large museums? Is he or she a winner of any art competitions? Where was his or her recent exhibition? What is he or she’s education? A list of exhibitions will tell you a lot about him or her. Ask him/her to show you a catalog of exhibitions, posters, booklets and other advertising material that he/she has. A good website is also a sign of professionalism. Certainly not all talented artists have their own websites but most of them do. And if you wish to get artwork, which in the near future will rise in price, you should choose among the artists who have already reached certain level of success. If an artist cooperates with large poster companies, it is a very good sign.

If purchasing direct from an established artist, you may or may not save money.  Often established artists represented by galleries are required to sell their work equal to gallery prices.  If a gallery offers you a painting for $2000, the artist will most likely get $1000.  However, if you buy direct from the artists, he may receive a large cut but still pay commission to the gallery representing him/her.  Many established artists do not have this agreement with their representatives or choose not to be represented.  In this case, you may purchase the painting from the artist’s for their original wholesale price.  You are also in a position to better negotiate with an individual artists as well.  But a cautionary note, if an artist is too eager to lower their price this should make you pause and ask yourself why.

Purchasing art by emerging artists (not represented by traditional galleries and with few shows under their belt) typically can cost substantially less but you may not experience an increase in the value of the work for a long time, if ever. If you are buying art for investment purposes, buying emerging art requires a good eye and gut feel.  However, many a riches have been made this way. 

Purchasing art online can provide the best of both worlds in terms of the quality of the artists and the potential for making great buys.  However this can be very daunting.  If you go to Google today and search under the category of “art” you will need to cull through 1,950,000,000 websites.  This is because millions of individual artists have their own sites and so do thousands of galleries and brokers – from all over the world.  To save time, visit websites that showcase hundreds of artists by region, style, subject, or medium. In most cases sites like this will represent emerging and established artists and provide biographies about the artists.  Many sites like Studio Art Direct have a juried process.  Because online galleries, like Studio Art Direct,  are wall-less, they can carry many more artists and artworks and often at prices siginifcantly less than traditional galleries.  Studio Art Direct is typically 30% less than brick and mortar galleries with artist receiving a 70% cut rather than they typical 50% cut.  Searching for art online will most definitely provide you an enormous amount of interesting things to look at in a very convenient way. This way of research has one disadvantage – good artwork may not look as interesting on the screen as in real life and sometimes the opposite maybe true. On the other hand, if you become interested in some paintings, even in digital format, the original will definitely make a much stronger impression on you.  Most online galleries, like Studio Art Direct,  provide a satisfaction guarantee and will refund your money if you are not happy. 

Studio Art Direct is unusual in that all artworks are created by regional artists, so if you reside in Oregon or Washington, you can usually ask to see artworks in person. 

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