When Chaz Walters began buying original art four years ago, he wasn’t looking for an investment. Walters explains his philosophy this way: “If I buy affordable art that I enjoy from young, unknown painters, maybe one day they’ll be a Van Gogh or Monet. But the most important thing is that the painting pleases my eye.”
Today, Walters, a residential real estate agent at Coldwell Banker’s Chicago Lakeview office, is a devoted collector who owns 20 works of art, many of which have appreciated in value.
According to art-collecting experts, Walters’ approach makes sense. “It’s a fallacy that you can buy art as an investment,” said Thomas DeDoncker, director of fine arts at Butterfields, an art auction house in Chicago’s River North gallery district. “I’ve seen inheritances and windfalls thrown into paintings, and five years later they’ve lost it all because they approached art as a commodity.”
Adds Jon Bourassa, vice president of New York-based Citibank Private Bank, which advises clients on the purchase and sale of art: “Do your homework. Before you begin buying, get an understanding of the complexities of the art market. It’s an unregulated entity and very inefficient in terms of pricing.”
While the stock market and the economy in general have an impact on the price of a work of art, a variety of subjective forces are equally influential. That’s what makes it risky to buy art purely as an investment.
The artistic merit of a painting, for example, is determined by its quality in relationship to the rest of that artist’s work and to other artists of the same period or movement.
Sometimes an entire artistic movement will be hot for a year, only to fall out of favor.
Why? “It’s hard to pin down what generates interest in a particular movement at a particular time,” said Roger Ponn, president of Chicago-based Roger Ponn Associated Appraisers. “The buying public doesn’t make that decision. It’s influenced, in part, by media coverage and the ability of the artist’s representatives to promote the artist.”
To add to the mystery of it all, a single sculpture, illustration, photograph or painting can sell for one price at an auction and another price at a gallery.
“More than any other asset, art is expressed in a range of values. It’s hard to tell on any given day if it will sell toward the high end or low end of the range,” said DeDoncker.
Although buying art that you will enjoy looking at should be your priority, you can still keep an eye out for pieces that might increase in value.
Combining the two goals is an art in itself.
If you’re new to art collecting and not sure exactly what type of art you want in your home, start by perusing art magazines and strolling through art galleries and museums.
To get a sense of which artists’ work might be hot–today or in the future–keep track of whose work is being exhibited repeatedly at galleries and museums. Pay special attention to retrospectives.
According to James Yood, a lecturer and assistant chairperson of the Department of Art Theory and Practice at Northwestern University in Evanston, “The Museum of Contemporary Art in Chicago just did a Sol LeWitt retrospective and the market for him went up this year because of it. If you find out there’s a retrospective of an artist’s work next year and you buy something by that artist now, next year undoubtedly there will be interest in that artist.”
When you become a member of your favorite museums you’ll get exhibition schedules for the year, allowing you to anticipate which artists might go up in favor, at least in the Chicago art market.
As a museum member you’ll also be invited to lectures on art and have the opportunity to interact with the curators.
Occasionally you may stumble upon an up-and-coming artist whose early work might be a good investment.
Work by highly skilled art students–some of whom are already exhibiting at galleries–is sold at affordable prices at art school exhibitions.
Check out the graduate school exhibits at The School of the Art Institute of Chicago, University of Illinois at Chicago, Columbia College in Chicago and Northwestern University.
Other sources for affordable art are printers that produce prints for major artists and sometimes sell them direct to consumers.
Three major print houses are located in Chicago: Big Cat Press, Landfall Press and Anchor Graphics.
What about that Fred Astaire movie poster you found at a flea market? Thanks to TV programs like PBS’s “The Antiques Roadshow,” the line between memorabilia and art has blurred.
When it comes to memorabilia, “The most important thing that determines value is rarity–how many were made and how many were saved,” said Leslie Hindman, chairman of Chicago-based Eappraisals.com and a former auction house owner.
Most art is purchased at auctions or galleries (also known as dealers).
Auction houses are usually more selective than galleries about what they sell, preferring higher profile artists.
You’re likely to find more new or “undiscovered” artists at galleries.
Galleries represent the primary retail market while auctions are considered the secondary market.
For this reason, auction prices are often lower than gallery prices. (Check www.artprice.com or www.artnet.com to see what various artists’ work has sold for at auction.)
According to Michelle Bucheit-Miller, a partner at Rita Bucheit Ltd., located in Chicago’s River North, gallery prices can be comparable to auction prices.
“People who go to auctions think they get a deal but that’s not always the case,” she said. “There are a number of very good art dealers who are extremely knowledgeable and would never dare to ask outrageous prices. They have to maintain a good reputation in the art community.”
“Buy art from people you can trust,” DeDoncker advised. “Get recommendations from museum directors and curators. Ask the gallery to provide you with names of clients. Be careful to not buy based on the salesperson’s personality.”
Walters, who adds to his mixed-media collection while he’s on vacation, has developed his own buying strategy.
“Most galleries don’t post prices on the paintings,” he said. “I ask the price and then cut it in half and start negotiating. I take out my credit card and tell them that I’m definitely going to buy today. More often than not I get it for half price.”
Online auctions may not yield a half-price masterpiece, but they are becoming more accepted by the art establishment as viable sources of quality art.
The pieces sold on eBay Great Collections (www.ebaygreatcollections.com), for example, are physically examined by experts who sign statements verifying the art’s authenticity.
You can also have your art appraised at www.eappraisals.com and automatically posted on eBay.
It’s far easier to buy art than sell it.
However, if you think you have a piece worth selling, monitor how much the artist’s work, and work by comparable artists, have been selling for before you discuss prices with galleries or auction houses.
“If you have something of great value, auction houses usually do better for you than a gallery because auction houses look for pieces that will create interest from the public,” said Yood.
Some galleries will sell art for you on consignment, while others prefer to buy it from you outright.
If an auction house wants to sell your work, you’ll agree on a minimum selling price (called the reserve).
Perhaps the wisest collecting strategy of all is to remember the real value of art. As DeDoncker noted, “One of the inherent beauties of art–whether it’s a lovely American turn-of-the-century ceramic piece or a California Impressionist painting–is that you interact with it. Art pays you a dividend daily.”
