Not too long ago I received the following question from gallery owner Steve Harrison:
I had a visitor in my gallery yesterday [who] 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?” or “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.
“Talk to your stockbroker” LOL that’s a good icebreaker.
I would address their concerns first, there is a good book on selling called TRIGGERS that talks about directly talking about client fears BEFORE they bring them up, and that it’s no good to address their fears after they are brought up.
I talk about the art as an investment only if I’m working my butt off and have the confidence to tell my collectors that the work is an investment.
There is not a single investment vehicle available that does not include disclaimers about future performance being essentially a toss of the coin.
For every vehicle bonds, stocks, venture capital, art- there’s criteria that one uses to maximize upward growth if that’s what one is looking for.
Art poses the hardest problem because it’s personal and emotional from beginning to end.
That’s all we really have. So, yes, your surest way to making a good investment in art is put the brain and greed on hold and fall in love with the art that stopped you in your tracks.
For the most part 1. Of course, if you live long enough.
I found a website the other day that declared categorically that art is an investment, that investing is a good reason to buy it, and to approach them for advice on which artists to invest in. It was really shocking to me. It made me reluctant to apply to ask there for representation, as I am uncomfortable with that sort of exhortation. There is no way to tell which art will increase in value, which artists will become well-known and their work sought after until years down the line, possibly lifetimes ahead! I suppose the best we can say is that some will, but we don’t know which yet.
When I am addressed with the question of if whether a particular work of art will retain its value, or increase in value, I am upfront and honest. A few of my artists are what I consider “investment quality” while others have not acquired that status. That does not necessarily mean that one artist is better than another, it is simply the professional track of each artist.
There are a number of factors which determine if an artist’s work is of investment quality. Some of those factors include what their collector list looks like…Most investment quality artists are in the permanent collections of notable museums and corporate collections. What sort shows have they had in museums, and awards they have won is important as well. Buyers should consider the type and degree of write up artists have received on a national, or international level. The over-riding factor of course will be their sales record, and what their work was selling at five years ago, as compared to today, and how successful their shows were. It is rather easy today with social media to go online and track an artist’s history, and what their work is flipping at auction for today. If a customer walks into a mid-tier gallery and asks the question of the price stability of an artist’s work, it is more than likely that they want to assure themselves that there is value in the artwork which they are considering. I keep graphs of sales history on certain artists to show stability of price and demand for their work. No one can promise a client that artwork will increase in value, however I like to share with them that I have never represented an artist in 37 years in the business who dropped their prices. I always finish by telling them that there is one over-riding reason to purchase a work of art, and that is because you love it, and want to live with it. That’s the sort of investment which will never disappoint you.
Although I have not been asked this particular question I have been asked how did I arrive at the price and why is worth this much? I usually point out that my work is quite affordable compared to the competition, that many factors go into determining its value including what the competition is selling for, but also the size of the work, the materials and the time invested units creation. But ultimately it’s worth what the buyer determines it’s worth and that they should by it if they love it and are comfortable with the price because it will bring them greater joy and stimulation in their lives than really be measured in dollars. — I don’t know if that’s a good or a art answer, it’s just my answer. I want collectors to buy my work because it moves their souls not their bank accounts. Perhaps that naive but I know it’s honest.
I’ve heard Park West sales people tell people about the increased value of their art!
The high prices paid for name artist, picasso, rembrandt, deKooning etc. is generally based on two things. The first being a recognized name and brand and demand. The second is the resale value of a work by a recognized artist. When inflation is devaluing a currency, when the capital gains taxes are too high, and when you feel a need to protect your money then you buy recognized art, put it in your jet and fly it to your home in another country, or wherever. Over time the work appreciates, the currency hopefully has stabilized and your fortune is intact. It is a lot like gold but a lot lighter and easier to transport.
People in general don’t know the difference between a purchase and an investment. Investments increase in value; purchases do not. People call expensive items “investments” in order to feel good about spending a giant whack of money. (Sorry, Bubba, but your car went down in value the minute you drove it off the lot!) Remember when “everyone” was buying reproduction prints by Bev Doolittle and Thomas Kinkaide? The return on those “investments” was time spent enjoying the beautiful scenes. And let’s not forget Beanie Babies! Buy what you love when you can afford it, and put your investment money in a mutual fund and wait for it to grow.
Ditto on most comments. As an artist, I am asked this a lot also. I tell them, buy it if you like it. There is no such thing as “monetary value increase guaranteed”, stocks go up and down everyday and like art it is a matter of estimating how long tom hold for a profit return.
The second thing I say is, like a stock some companies are solid others vary. Look for artwork that is innovative
in it’s time, whether that is process, perspective or the first artist to create that work.
Bingo Andre! This is simpe and rings clear when considering a purchase:
1) Do you like it?
2) Is it of quality?
3) Can you afford it?
The plan is to resell most of my purchases, in due time. My selection checks the 3 boxes and most always something I could hold on to and enjoy.
There is tendency among high end collectors to want assurances of value when they know full well there can never be such. even among the top tier of art values the reality is that very few of the artworks that are owned by such investors were bought for the express purpose of flipping them. the values were realised in status, prestige and intangible social benefits not really monetary gain. Art at the level of 10 million and up are pawn chips for investors among the 1% economic class. most galleries will never see an investor like that enter their premises. the 1-10 million category is for corporate persona management and museum collections based on what it does for their prestige. its a case of guess what we have! they never admit most of what they buy never realises economic gain. 100,000 to 1 million is a viable category for speculative investment only if one has a extreme tolerance for risk. it is best still bought for its intangible benefits.
everything of the lower economic values represents the most viable investment as the cost and risk are low. the best thing is to buy quality art and do your own research.
to speculate in art is a recipe for disaster unless one buys what they like first and monetary benefits a distant 2nd.
the best investment is in the artist and the art you enjoy which will never lose value.
George Boutwell
I have made my living selling my Art for 50 Years and occasionally get asked this question. Being Honest is the only way to respond, If I miss a sale I will eventually make more. I tell them that considering the amount of Art done across the board from hobbyists to professionals that Art is a horrible Investment and the only reason to buy art is because you love it and can afford it! Generally Men ask this Question and I follow up with a Question ” Do you buy Jewelry and Clothing for your Wife as an investment? Do you buy Cars and Furniture for that reason? What you buy for your Wife is an investment in your relationship but not in your net worth. I then tell them that if they ever want to trade for a painting that they like more than the one they are purchasing that they will receive current value in the trade. I have backed this up many times over the years and the offer to trade seems to relieve most of the doubts. I believe this Quote is from Lyndon Johnson. ” If someone tells me something is a great investment, I put my hand on my wallet and run”
I was advised by a lawyer to say –I’m not a financial advisor or investment counselor, but I really hope my art increases in value for you as time goes by. Buy it because you love it and certainly it will increase in your happiness. The story behind this work is also valuable, unlike any other art. So, if you ever want to sell it you will have gained much in caring about it and owning it. If you get more money for it also, then you have a double payback. —
I used to work in a small gallery which sold a lot of limited edition Gorman lithographs…a long time ago. Gorman’s work was HOT back then, selling between $800 and $1,200, unframed.
Did a quick online survey of what they are selling for now and the prices are all over the place. The range is from just less than $600 to just less than $8,000, framed. So, that begs the question of if they were “good investments”. Some were, some were not, on the face of it. But, is the $8,000 of today more than than that $1,200 of 45 years ago?
I just tell clients that it will give you joy but not make you rich and maybe your heirs will love it as much as you do which is a fulfillment of my hopes for the work’
.
When I sometimes get into a discussion with someone about why art can cost so much, especially by someone who isn’t that much into art, the question about pricey art often comes up.
Why and how can it justifiably cost that much, what makes it so costly (I don’t like to use the term expensive in these cases) and so on? The short answer to this would be because there has been a value put onto it, a desire for it and there are people capable of paying for the art. Obviously, there are other reasons to pricey art, I am sure.
Coming to the question here, I have also been asked a few times whether a painting they themselves have bought is ‘worth it’. Well, I am not an expert and try my best to answer it as a painter myself and help them reason it out on their own to get a little sense about it.
I answer similar to your quote :-
‘ “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!”
My questions to them would go on the line of why they bought it, how do they relate to it and the first question normally is ”Do you like it, since it is for you?”. I also tell them that just because the painting is old, does not make it special, if the case is that.
Another way I try to justify the value is through the level and how much work has been put into it.
Nevertheless, we all know we can be undervalued or be paid reasonably, but sometimes be appreciated a lot more.
You just need that one person who can give you your due and make it a personal thing a give that increment.
As for the speculators, if it is money they are after, it is not necessarily the spirit of the piece they are after, but could make it worth taking the chance it.
Like I mentioned, they should like it first and if it goes up in value, that would be their bonus.
While Xanadu and others have done a great job of eliminating the old high brow attitude to art collecting, the line that you should “buy what you love” is really just a cute little dance.
In truth, there is a serious need for mainstream access to a second hand art channel. Very few galleries will even offer a trade up.
My wife and I have managed to collect much more art than we can display at this point, and our tastes have changed over time. Every single piece was bought because it spoke to one of us at the time.
But now, it would be great to resell some pieces so someone else can love them, not to realize a profit but to sustain the relative value they originally had. Gifting doesn’t do that, and auctions are highly obscure to most of us.
That’s a great idea to have a “second had art channel” where you could sell what you may have owned for years, get a reasonable amount back, and let others enjoy the work too. Remember, we can’t take any paintings with us when we die.
Original art is very often one of a kind. If you love it you should buy it before someone else does.
If someone wants to invest their money they should be speaking to a financial advisor.
Almost all wealthy people own original art. Make your own decision about it.
I certainly think the “buy what you love” is the most important part of anything we should say. However, I think the one concept form the investment world that is relevant is that of high-risk/high potential gain vs. low-risk/low potential gain. Investment counselors, investment sites, etc. alway make the distinction that the investments guaranteed to go up modestly and not potentially lose value are the ones that also aren’t possibly going to shoot up dramatically. They are mostly bonds with guaranteed, low-percentage interest and to some extent, “blue-chip” stocks in very established, conventional, non-risk-taking companies. Investments in new start-up companies, IPO’s, etc, are the opposite: they can shoot up many-fold but also could crash in value. Different people based on age, total savings, and comfort with risks are advised to have different proportions of these two types of holdings. Art is generally classified as high-risk/high potential gain. +”but of course I’m not an investment advisor.”
Well, my answer to that question would be, if you purchased a brand new car today and drive your car out of the dealership you lose value right away. However, with art the price does not. At least I have not experienced any drop down in price. Actually, I was able to send my children to Universities because I invested in art. So no I did not invest in the stock market, I took a chance and invested in art. But, my warning would be you must know what you’re buying.
Hii , as an artist doing many paintings and unique
Pieces. Each one is different to another..
My satisfaction is when someone like my paintings and see many meanings in one ..
And to see the joy on the faces, how they talk about the art , what they discover in each point of my 🎨 paint … this is the value of what I did as a beautiful piece..
I paint with my soul with my thoughts with my feelings.. this is the value of my art..
I put many pieces rehabilitate the art to complete
That puzzle 🧩 piece of art…
This is the value of every single painting 🖼️
Thank you all for Charing your thoughts about…
Regards with the respect and love…
I am an artist. I also collect the work of other artists.
I buy their work because something in that piece “speaks” to me. I love seeing it on my wall and it gives me joy. It makes me smile when others admire it as well. Do I find out more about each artist? Yes, I do. If the information is available, I also keep track of the market value of either the piece I have or a similar piece. I am morbid enough to have a list of each artwork, artist, and a bit of a bio for each, so that when I shuffle off this mortal coil, someone has an idea of what and why I collected what I did.