BASICS OF BUYING CONTEMPORARY ART

by Annelien Bruins

Although price information has become more widely available through online sources the art world - due to its opaque nature - continues to be the only marketplace in which inside information is essential to succeed. Read on for some practical pointers on how to tackle the basics.

Ask questions

The most important thing you can do as a collector – especially when are just starting out – is to ask questions. As with a car or a house, you need to understand what it is that you are buying. This will become more important when you start spending serious money, but whether you buy high-end or low-end it is better to be well-informed.

Try to familiarise yourself with the artist, their gallery and their work. Most galleries organise opening parties for exhibitions which is a good opportunity to speak with fellow collectors, the gallerist and the artist. Another idea is to become a member of an organisation that organises tours to artists’ studio’s which is an enjoyable way to learn more about art and perhaps buy some works. Where possible, read up on the artist and if the artist has a secondary market, do some price research online.

What information is out there?

Over the last 5-10 years a number of internet-based price databases have been set up which can be useful tools for your research. Usually you pay a membership fee in order to access the information. Remember that price databases contain auction results; gallery or private treaty sales are not included as they are not public.

Paying for access, advice or negotiation

It is quite common for collectors to work with an agent when buying or selling art. It is important to realise that some agents take a commission from both the buyer and seller which means that a conflict of interest might arise. It becomes unethical in my view if the either side has not been informed of how the agent is being remunerated. If you wish your agent to make decisions for you as if they were making investments for themselves you need to make sure that you know that you are the only one they receive payment from.

Get a second opinion or independent advice

If you are going to spend a lot of money on a work of art it might be wise to obtain independent advice (i.e. not organised by the person you buy the work from) on the market value, condition and provenance of the work. Provenance is usually more of an issue with older works but nevertheless make sure you that know whether the work came directly from the artist’s studio or has been owned by other collectors (see below).

Get adequate documentation on your purchase

Make sure you have an invoice stating (where available/ applicable) the name of the work and artist, date or era of production, whether it is part of an edition and which number, materials used, measurements, sales price and any applicable taxes. You also want to know whether the work has been exhibited, who owned it before you bought it (provenance) and any literary references. Ask for a condition report (prior to shipping) and if the work is valuable perhaps it is worth instructing a conservator yourself to provide you with a report. If the work has been restored you need to know how the restoration was done and who did it. If there are cleaning instructions, obtain them from the seller. Make sure that the invoice states that the seller and agent have the right to sell the work and that there are no third party claims to it. Where possible get a certificate from the artist (if the artist died, from his or her estate) as well as high-quality photographs. The point to all of this is simply to maintain your artwork as well as possible and to prevent being unable to prove its authenticity in 20 years time.

Right of first refusal

If it is not written in the purchase contract, check whether your gallery wants to have the right of first refusal. This means that when you want to sell, the gallery will expect to be offered the work first in order to be able to control the market of the artist. Some collectors are happy to do this, others are not. Remember that if they buy it back from you, the gallery will need to sell the work again so do your research, get independent advice if you feel it is necessary and make sure you get the right price from whomever you decide to sell to.

View the work and read the catalogue

Wherever you buy, try to see the work in person. When buying at auction always get a condition report but remember that the report is likely to be written by an auction house cataloguer, not an independent conservator. Ensure that you read the sale catalogue properly as there will be information with regards to the conditions of sale, VAT, import and export regulations, storage, shipping and insurance and so on.

Art collecting can cost a lot

If you are serious about collecting art it can become an expensive hobby. Transaction costs are high (up to 25% buyer’s premium at auction but you would also pay for a gallery’s overhead) as well as insurance, storage and transport. If you buy internationally you need to take into consideration tax implications and/ or export restrictions that might have an effect on the final purchase price. In the UK, since 2006 Artist’s Resale Right is being levied on works of art by living artists. This means the artist gets a percentage of the sale price of their work for any sale subsequent to the first transfer from the artist’s studio. From 2012 the regulations will also apply to works by deceased artists up until 70 years after their death.

Buy for pleasure, not investment

It is sometimes said that you can buy for the purposes of pleasure and investment at the same time but I would not recommend this unless you are a seasoned dealer or collector. After all, your appreciation for your favourite painting might not be shared with the rest of the market and you would not buy shares of a company just because you like its CEO. As long as it did not cost you an arm and a leg, accept that you might get bored with the work, that its value might decrease from what it was when you purchased it or that your children will add their own paint spots to the Hirst. Ultimately art is there to be enjoyed and lived with.

Disclaimer

This article is not exhaustive and some examples mentioned are simplified illustrations. There might be considerations not mentioned in the article that relate to your situation. Please do not take the above as personal advice on buying art, whether for pleasure or investment. If you would like specific advice on buying or selling or art management issues please contact Bruins Private Collections Consultancy at info@bruins-pcc.com © Bruins Private Collections Consultancy 2009. All rights reserved.