Fair Pricing of Art

How to determine if the asking price of a piece of art is fair:

Sometimes art is overpriced. An artist or dealer may tell you that every piece of art is unique and that the price of the piece you’re looking at is priceless. This logic doesn’t work with experienced art collectors. Art can be compared with real estate, every piece may be unique, but plenty of other pieces are similar or comparable to it. Just like similar houses in the same neighborhood, you can compare similar types of artwork before buying it  Art prices are not mysteriously pulled out of thin air, although sometimes you might wonder that.  You can compare and contrast between the art you’re thinking about buying and records of public and private sales of similar works of art that have already sold.

You can actually research art prices from previous sales records. Not only do such price records exist, but they exist by the millions and the great majority of them of are available in online databases or published in art price guides, auction record compendiums, CD-ROMS, and art dealer catalogues at the rate of about 200,000 new sales results per year. You can find these sales records in the art departments of most major institutional and public libraries, on the Internet, and at specialist art reference bookstores.

Begin your price research with the artist or seller. Ask to see recent sales results for art by whatever artist you’re interested in. Make sure that the artist has a track record of selling works of art similar to the piece you like for amounts comparable to what you’re being asked to pay. Most dealers have this information on file and will talk about it with you. Online databases that the artist may be a member of may help as well. Such as http://www.ebsqart.com/COA.asp where artists can register their artwork and it can the certificate of authenticity can be validated by the owner or seller.

The other part of evaluating prices is to find out what’s happening outside of the gallery or artist selling the art. Where else does the art sell and how much does it sell for? Try googling the artwork and the artist to see other places both online and off they may have their work for sale. These sales may take place at other galleries, at auctions, online secondary art market websites, or at all of the above, and once again, you should look for consistency in selling prices that are comparable to what you’re being asked to pay.

Checking auction records is easy– anybody can do it. All you have to do is look up the artist’s name in online art price databases (most of which are only accessible by subscription), price guides, books or CD-ROMS of auction records to see whether any of his or her art has sold. Each sales record you find tells you information like what type of art sold (painting, sculpture, etc.), it’s size, title, when and where it sold, and how much it sold for.

When an artist has auction records, that indicates that the artist has achieved a certain level of recognition and respect within the art community and generally speaks well for that artist’s market– and that the art has “ascended” to the level of currency. Instead of collectors asking “Who’s that?” when they see the artist’s art, they say “I know who she is. Her art auctions for X amount of dollars, and I’d pay this much to own a piece of her art.”

The most significant auction records for your purposes are those that describe works of art that are similar in size, subject matter, medium, date executed, and other particulars to yours. Keep in mind that auction prices represent wholesale values more so than retail ones, so don’t expect them to be as high as what you’re being asked to pay at a gallery. Do, however, expect them to be at least 40% of gallery retail and preferably higher. If you find auction records that are 30% or less of what you’re being asked to pay, this may be cause for concern. Either the artist or gallery owner should have a good explanation as to why the discrepancy is so large or you should consider shopping elsewhere.

Several additional tips for evaluating auction records are as follows.

* Check back through at least five years of sales records and look for indications that the artist’s prices either hold steady or increase over time. Consistent strength in selling prices means that demand for the art is solid and that the collector base is strong. Fluctuating, erratic, or declining prices are not generally a good sign.

* Pay the most attention to where the majority of the price results fall, not the minority. For example, if you’re thinking about paying $10,000 for a painting and you find one auction or price record of $6,000 and twenty for under $2000, be careful. The $10,000 painting could likely be overpriced.

* The more auction results you find, the more accurately you can evaluate prices. One or two isolated sales are not enough to base any solid conclusions on; you need at least five to ten records to work from.

Retail sales at other galleries– online or bricks-and-mortar– are just as important to know about as auction records and even more so when you have little or no auction records to go on. You can often learn about such sales by asking other dealers, collectors, and knowledgeable people in the arts community about the artist you are interested in. The more dealers who either handle the artist, recognize the name, or are willing to handle him, the better. Of course, their asking prices and sales records should be comparable to what you’re being asked to pay. When few galleries are familiar with an artist or are interested in handling his or her art, this may not be a good sign.

When you buy directly from an artist who does not exhibit regularly, you often find few, if any, galleries that recognize the name and few, if any, auction records. In these cases, ask the artist for names of people or institutions that own his or her art and, once again, do your best to find out whether that art has sold (hopefully regularly) for prices comparable to what you’re being asked to pay. The more collectors who own the art and the more consistent the selling prices, the more comfortable you can feel about buying the art.

In many cases, you will have little or no auction or gallery prices to go on, you can extrapolate values from auction records and retail prices of similar art by other artists from the same geographical region who have similar accomplishments, similar market bases, and were or are active during similar time periods. Evaluating prices in this manner is another form of working from comparables. When you’re buying from an artist, for example, find out what other artists who produce similar work and live in the same area charge for their art. When you’re buying period art like a landscape dating from the 1940’s, compare the asking price to prices of similar 1940’s landscapes by other artists who painted in the same region or area.

Once you’re comfortable with an asking price and ready to buy, make sure you get a detailed receipt describing the art and its condition and including a money back guarantee to protect you if, at any point in the future, you find out that the art was not properly represented. This receipt should be in addition to all other documentation that the seller provides relating to the art’s history, provenance, and authenticity.

A quick word about bargaining. Suppose for some reason that you still want the art after all’s said and done, but would rather pay a little less for it. Art prices are often flexible and making an offer is certainly an option, but don’t bargain purely for the sake of sport. Make sure that you have a good reason for wanting a better price and that you can make a case for your request. Experienced collectors do this all the time. They know that artists or dealers are much more likely to reduce prices based on good solid arguments than they are to lower prices just because buyers want better deals.

All this effort to buy a single piece of art may seem a little tedious as you read about it here, but in fact, it’s just the opposite. Buying art intelligently not only becomes second nature once you get good at it; it also becomes an adventure. Once you get the hang of how things work, your quest for knowledge turns into exciting detective work, and so much of what you discover is always rewarding. Experienced collectors, one of whom you may one day become, can research and evaluate most works of art in as little as fifteen to thirty minutes. For them, the importance of knowing about a work of art, including the fact that it’s priced fairly, cannot be underestimated. Having this knowledge not only increases their enjoyment of that art, but also of the art world in general.

This information is from, “THE ART OF BUYING ART, SECOND EDITION

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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