What to Say When Clients Want to Know if Art is a Good Investment

Not too long ago I received the following question from gallery owner Steve Harrison:

I had a visitor in my gallery yesterday and asked, “Now because this is original art it won’t depreciate will it?” How does one answer that question. I spend a lot of my time trying to figure out an answer to that question. Of course, a person should buy what they like and no one should ever bank on an “investment” whatever that might be. Still when a person is spending gallery prices for original art, the question “Will this painting retain its value” is a question that deserves an answer. How do other people answer it?

Another variation of this question is “Will this art increase in value? Is it a good investment.” I’ve certainly heard variations of these questions many times from Xanadu clients.

There have been a number of articles in the press and online lately talking about the incredible premiums collectors are making when selling work at auction through Sotheby’s or Christie’s. These articles have added to some art buyer’s perception that art is an investment.

These can seem like difficult questions to answer because the perception is that if we tell the client that the piece isn’t guaranteed to be a good investment, we may lose the sale.

My approach to handling this issue is simple and direct. While it’s certainly possible that the artists I’m working with are going to become wildly successful and have the value of their work skyrocket, I don’t want my clients to purchase worked based on potential investment value. I would certainly never use an artwork’s potential value as a selling point.

In responding to a client who is asking about investment potential, or, as Steve asked, about a work’s likelihood of retaining its value, I take a soft, generic approach. I typically answer by saying something like”

“I encourage collectors to buy art because they love it. If you buy a piece that you love, it will pay dividends to you every day for the rest of your life!”

If pressed further, I’ll add that there is no guarantee of the future value of any piece of artwork. The value can go up, but it’s also possible it might go down.

A client’s ability to reap the rewards of an increase in an artwork’s value will depend on his ability to resell the artwork. If the client tries to sell the work through a gallery, he can expect to pay the gallery a commission, likely around 50%. Auctions charge a lower commission, but are typically most interested in selling the work of blue-chip artists. In other words, buying art with the expectation of making a profit, or even of recovering the initial investment, is very risky. It may take years before a client could hope to sell the work at a price that would cover the initial purchase.

I suppose the prospect of a piece of artwork not being a good investment might dissuade some buyers, but I’ve found that it isn’t a factor for the vast majority of my clients. I would never want to put myself in the position of having a client return to the gallery some years after their purchase to discover that the value of the work hasn’t increased dramatically, and then have them blame me for misleading them.

Art can enrich collector’s lives in so many ways – it brings beauty into their homes and finding and acquiring art can be a great adventure. I’m in the business of providing a venue where people can be exposed to exciting artwork and I strive to create a great buying experience. If a client is looking for an investment, I recommend they talk to their stockbroker!

How do you Answer the Art as an Investment Question?

How have you responded when clients have asked if your art is a good investment or if it will retain its value? Has this been a factor in past sales? Share your thoughts and experiences in the comments below.

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About the Author: Jason Horejs

Jason Horejs is the Owner of Xanadu Gallery, author of Dad was an Artist | A Survivor's Story and best selling books "Starving" to Successful & How to Sell Art , publisher of reddotblog.com, and founder of ARTsala. Jason has helped thousands of artists prepare themselves to more effectively market their work, build relationships with galleries and collectors, and turn their artistic passion into a viable business. Connect with Jason on Facebook

25 Comments

  1. Love your response to this question Jason. As an artist and an art collector, I always view the purchase of artwork as a way to enhance the beauty of my home and to acquire artwork that will bring me joy every time I view them.

    The thought of reselling them or buying them as an investment never enters my mind. I purchased art because I fell in love with it.

  2. Many years ago when I opened my first gallery in East Burke, Vermont, I was also often asked a similar question and my response was almost identical to yours. “Buy art because you love it. When you buy a piece that you love, it will inspire you every day for the rest of your life and, it may very well increase in value!”

    PS: thank you for sharing the information and wisdom that you have acquired in your posts and emails. Most appreciated.

  3. Great Question-Greater answer, Jason.
    Your last sentence tells the whole story.
    The client that is concerned about accrued value certainly has some investment experience otherwise the question wouldn’t come up. Every stockbroker (I’ve seen and known a few, not many) and every prospectus (that nice brochure that promises riches beyond belief) has a disclaimer which stated simply is “Past performance is no guarantee of future success.
    Every artist I know says about the same thing- every new piece has no built in success. It’s a new untried idea.

    What’s left? The enjoyment that comes from seeing a piece that moves you in emotional and spiritual ways. (That’s a small “s” with no religious undercurrent attached). If something speaks to your soul, your natural response is to claim it. If the work hangs on your wall where every day you get to say, “how amazing it is that I have this?” What else is there to be said?

    Quick story. I had a bank purchase one of my etching-engravings a long time ago. They were building a collection of “Central New York artists” was my guess. The bank no longer exists.Goodness knows where the art assets are.

  4. This is a question I occasionally receive in my gallery. My response is typically: “There is really only one reason to buy art, and that is because it resonates with you, and because you will enjoy it for years to come.” Planting the seed that they will enjoy it years to come is a strengthening sales comment. If one of my artists which the customer is inquiring about does have work with prominent collectors, or is in museums, I will point that out, and add that it is typically a good indicator that they are investment quality, however no gallery can guarantee any artist’s work. Always follow a statement like that up with a positive question which focuses them back on the artwork and will illicit a positive response from them.

  5. Sadly I’ve never been asked the question, which speaks to the way I market my quality pieces, not the quality itself. In the past I’ve mainly exhibited in public gallery exhibitions, largely staffed by volunteers whose mandate is to offer free access for education and enjoyment; marketing and sales are not really a factor. I do question the salespeople in my private galleries, but their concern is making the sale and they rarely give useful feedback to the artist. In some ways that’s why I prefer online platforms which have the facility for the artist and buyer to interact through email. I’m fairly sure that several of my high ticket items have sold online to collectors, but they’ve come to their own conclusions without voicing their intention. If I was asked I would say that financially it is as safe or risky as any purchase, but on a personal basis art is a great investment in wellbeing. The art I surround myself with, both my own work and that of artists I admire, brings me great pleasure and feeds my soul and you can’t get any better investment than that.

  6. I was an art collector and investor before I started to paint. I’d tell them something like “I’m not a financial adviser, however a little research will show fine art has traditionally done better than the stock market. Like buying a stock, it can obviously be a risk and it could take significant time to build any significant value. ON the other hand, the artist could have a life changing event and stop making art, and fade into obscurity, like a company can suddenly go out of business if a CEO has been embezzling or something. SO if you want to buy art as an investment, look for art by artists doing (and selling!) consistent work in a recognizable style. Whatever you do, don’t buy the artists one off piece because you think it will be “rare”, buy what the artist is known for.”

  7. I love your response, Jason. I’ve never had to answer that question, thankfully. I purchase art because I love it and the same has held true with those who have purchased art from me. I hope I never have to answer that question for anyone but at least I will be ready for it now.

  8. I create stone original sculptures and make bronze series from the originals. Clients who purchase stone originals sometimes ask whether bronzes will increase or decrease the value of their originals. I answer much as Jason reports above, then say I don’t know for sure but imagine demand for the bronzes will increase the value of the originals because of increased exposure to that particular piece and to my work in general. I’ll appreciate any feedback on that view. Thanks.

  9. In my gallery I always answer the question that I never sell art as an investment. You buy the art because you want to live with the art. That alone has many returns.

  10. I’m an English ‘artist’ now retired and living in Spain. I’m getting to paint to my hearts content. I went on a city break to Boston, New York and Florida, Naples, Tampa and Fort Lauderdale. One of the things I wanted to do was look in on the galleries. I came to the conclusion that if you want to make an investment in art then buy a painting form a gallery outside of these towns and sell it in town as I swear they just add a nought on the end.
    Also I’m always surprised by the estimates of the value by TV antique experts when a ‘known artist’ is only valued at the price us amateurs can ask a friend for a commission of a painting of their dog.

  11. Great answers to a common question. It would never be my first answer, but it would be just as true if you responded “well…. that depends on how famous YOU become” — After all, the best way to ensure that your tangible ‘investments’ become more valuable over time is for you to become famous beyond belief, filthy rich, and/or a household name. When you die, your estate collections will be much more valuable to buyers than if you die in relative obscurity. Am I right? I mean, I’d pay a lot more money to buy a photograph from Sir Elton John’s estate then I’d pay for the same photograph from someone less famous.

  12. In answer to this particular situation:

    “I suppose the prospect of a piece of artwork not being a good investment might dissuade some buyers, but I’ve found that it isn’t a factor for the vast majority of my clients. I would never want to put myself in the position of having a client return to the gallery some years after their purchase to discover that the value of the work hasn’t increased dramatically, and then have them blame me for misleading them.

    My answer to this would be In the year you purchased your piece of art, that was the value & since all products, including art, is susceptible to say how the stock market (in any given year) is performing; anything purchased can either increase or decrase or stay the same value; however, if you love the piece you purchased, to me that is the value.

  13. Great article. The job of the artist is to reinforce the value of his or her work. For me, I think that means I do the work that has the most meaning for me, that is my most authentic work and the work that I love to make and do so in the most technically skillful manner I can. If I do that, my hope is that my marketing efforts, my networking efforts, my relationships with galleries or other institutions are also reinforcing the value of my work. My job is also, then, to work to do and be my best self and when appropriate look to increase the price of my available work. I am always surprised to know that what makes any work valuable starts as a mystery, especially to me about my own work. Over time, though, I learn to recognize those who also love what I’m doing and who are supportive and vocal about it. I do recognize though, that substantial increases in value are due to the unique and desirable qualities of a very limited supply within an accessible venue to those who have the resources to buy.

  14. Great points! I never enjoy the conversation with prospective buyers on the “investment” as they mean monetary…. I prefer to direct the investment idea as I see art purchases…. you buy art as it speaks to your soul, heart, and sensibilities. The investment is in your quality of living environment and it is an investment in the art world in the bigger picture. Supporting local artists, supports the continued ability to see art in our world that speaks to humanity. I never ever sell work to anyone that only looks at buying as a financial investment.

  15. In an age where instant gratification is the norm, the question seems odd. No one asks the value of second hand shoes, ties, cars or the value of a great meal the next morning.

    Truth is there are two are art markets, investment and ornamental. I assume the art in this gallery doesn’t exceed several thousand dollars in price (ornaments), whereas investment art starts in multiple of tens of thousands of dollars. But even in that market there is no guaranty as to future valuations, though scarcity after an artists death does point upward. That, however is not a step I am prepared to take to help improve the value of my works.

  16. If ever there is a subject that will stir the pot, this is it. With respect to Gregory, I think there is no market for art as an investment and another for ornament. A market is generally a place, or a means. You can certainly market something, as in marketing, or you can buy or sell at a market. Like the stock market, or the grocery store. Marketing something as an investment is interesting and may or may not be all that different from marketing an ornament, even in terms of price. A market of one is usually not as productive as a competitive environment, like an auction. When art becomes very expensive, it draws attention and tricky things are inclined to happen. Theft, forgery, market manipulation, money laundering, plain old decadence, or, more profoundly, love, generosity, service. A lot of art is ultimately donated to museums or handed down through families.

    When art has a quantifiable value, there are institutions that will use it as collateral. And, whenever I take my work to a show I have to insure it, which does require me to place a dollar value on it and pay a premium fee. I may not make money from my art on such an occasion, but I know someone is taking a risk in exchange for a price.

    I know to my family, my work is priceless. I was told once by a friend that they saw one of my pieces at the Salvation Army and they bought it. I never thought I’d make the secondary market that way. 🙂 But they are glad to have it (even though it was in inexpensive print). At least it was framed.

    I do love it when people love my work and actually buy it. Compliments are nice, but when somebody buys something I tend not to be judgemental. Jason is right, although, buying low and selling high is the American way.

  17. Very well written. That is pretty much what I say to clients who come into my gallery. Think of how many times a day you will look at a painting and enjoy it over the years. The international art investment market is a very different arena than most people can play in. Buy art because you love it and it affects you.

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