What to Do When You Find Your Art Collection is Worth Less than Retail

Scenario: Purchased two paintings at a small local auction. Artist is still alive, but quite old and not painting anymore. Galleries are selling the same artist’s paintings for between $2000 and $2500. Are these 2 paintings worth as much as the ones in the gallery? The galleries/dealers do not want them since they have lots of inventory of this artist.

When an artist’s retail prices are high like this, but his wholesale or secondary market prices are low, you can bet that the supply of work by the artist on the market at any given time is far greater than the demand, and that his art sells slowly when it does sell. If an artist has any secondary market whatsoever, dealers tend to buy back the art for reasonable percentages of retail if only to keep it off the market, prevent prices from falling, and protect the artist’s retail price structure. In the case of this scenario, the dealers don’t seem to care one way or the other how much these paintings sell for outside their galleries– not a good sign.

If these same paintings are offered to the gallery on consignment, that probably won’t help either (it’ll certainly help the gallery, though, by taking them off the market). Since the gallery already has plenty of paintings for sale, they’re going to feature the ones they make the most money on first (like those they own outright), and save the ones they make the least money on for later. At best, these 2 paintings will be only two of probably at least several dozen pieces that any prospective buyer will be able to choose from. With those odds they could take years to sell.

The best bet is to try selling them independently, perhaps at a local auction, or consigned to an antique or collectibles shop or mall. This way, pricing them well below what the galleries charge and using those high gallery prices as evidence of how much money someone can save by buying these paintings instead. If the artist has reasonably good name recognition outside of the area that they were purchased, then selling them at a larger regional auction house or at an online auction may be a good option. Whatever is done, keep  the selling prices as low as possible.

In the art business, the younger and/or less experienced artists are, the weaker their secondary markets tend to be. Artists like this simply haven’t been around long enough to develop substantial followings, or for people who’ve bought their art to be putting it back up for sale, thereby initiating secondary market transactions. Better known artists can also have depressed secondary markets when the market is flooded with their art and not that many people are interested in buying it– such as appears to be the case with this scenario.

The general lesson to be learned here is that retail art gallery prices are not necessarily indications what art is worth on the open market. Galleries can price their art however they wish, and are under no obligation to price it according to what it may or may not be worth on secondary markets. If a dealer feels like marking a work of art up ten or twenty times over its secondary market value, that’s his or her prerogative. This is why you should always have some idea of what art sells for on secondary markets before paying retail at galleries or, as in your case, buying “cheaply” outside of the galleries only to find out later that you didn’t get the great deal you thought you were getting.

Source: Art Business

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About Art Collecting and Investment

Providing news about art collectors, collections and investments. Including the how to's, the why's and the where's of art collecting. Wanda Pepin, Christina Madden and Elaine Frenett are all professional artists who keep up on the world of art, while creating amazing works of art themselves.
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