Investing in art

May 15, 2013

I know many people who buy art because they like to look at it, but I also know quite a few who buy art as an investment. Buying art is not a get-rich-quick scheme, but it’s one of the most enjoyable investments as you might have it on your wall for a while before you sell it for a profit. It’s always a gamble, yet, if done right, it can return huge dividends.

People have been collecting art for centuries, and there is nothing new to it. No doubt, old masters and impressionists are and always have been solid investments, but these works are rare and rather costly. Emerging artists who are on the way up are the best place to put your money if you wish to make a wise investment. It might sound easy, but it’s not that simple to find the right pieces that will go up in value.

Now, the question is: where to start and what to buy?

The first and most important step: do your research. Art world does not function the same way as other investment areas, but the main principle is the same: buy early when the prices are still relatively low. Look for three main attributes: quality, rarity, and scarcity.

You have to remember that art is a long-term investment and you might have to hold on to it for a while, so choose something you love. Seeing art as an investment only takes away all the fun and pleasure from it. If you don’t like it yourself, chances are that no one else will, and you might never be able to get a good price for it.
When you find something you like, do your research on the artist and his artistic career. Find out about the artist’s recent work, exhibition history, art awards, and current projects. If possible, get to know the artist personally and pay a visit to his studio. The great majority of the artists around the world don’t have dealers to represent their work. And most of the dealers are too busy or too lazy to visit studios. Do it yourself.

Make sure that the piece you buy is clearly signed and dated, preferably, in the front and the back, with the name of the artist and the year of production.

Larger artworks are more difficult to store and maintain, go for smaller sizes. If you are buying prints, make sure they are limited edition (between five and ten), clearly signed with a pencil, and come with an authenticated well-documented provenance.

Try to narrow down the style and media that most appeal to you. If you are building up a collection, look for a particular concept or an idea, or a certain period in history. If you are not interested in learning about art movements and styles but still interested in collecting, stick with the subject matter that is easily recognizable or something that is fresh and new to the market.

You have to remember that when you buy from an artist who has already received the recognition of others, it’s more likely that you’ve missed your chance. Buy from the artists who are just coming up in the market and sell when you start seeing their names in art magazines, publications, and catalogues of the auction houses.

When you feel it’s time to sell, the second question arises: how to sell it?

Most of the art is sold through art dealers, galleries, and auction houses.

Selling art through a dealer could be expensive, because a dealer will only resell your art to a collector, an investor, or a gallery for a handsome profit, exactly what you could have done, if you only knew what the dealer knows.

Auction houses offer free estimation, private sales, corporate and commercial art placements, and many other services. Interested sellers are required to fill out the Auction Estimate Form, providing detailed information on the item and e-mail the form and photographs of the item to the auction house. Once accepted as appropriate for an auction, the seller and the auction house sign a contract, which states the reserve price and the seller’s commission. If you want to sell privately, the auction house can link sellers with prospective buyers in private with their identities undisclosed.

If you’ve been buying art for some time, nobody can give you advice anymore on what to buy. People are perfectly capable of deciding for themselves what they like and what they don’t. But recognising quality in art takes time, and learning about art is a lifelong process.To understand value, you have to look at hundreds, even thousands of paintings. When you start understanding value, you can understand opportunity. And when you feel that you can see art at a gut-level, consider yourself ready to begin buying and selling it for a profit.