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 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

28 Comments

  1. I would ask the client if he could clarify what he means by losing value. Every thing has the potential of loosing value. Gold has lost value in the last few week. Sometimes the most expensive purchase you make in your life – a house or a car – looses value. However, like beauty, value is in the eye of beholder – and from this the currency is joy. One man’s junk is another man’s treasure. If Mr. Client wants to purchase something for an investment, and doesn’t want it to loose value, he should check into fix rate bonds.

  2. Agreed Jason. My Artworks are rocketing in value but that has never been my sales strategy. My Artworks are increasing in value because of my marketing efforts. Does anyone ask the sales staff if the value of the sofa they are considering buying will increase in value in ten years time?

  3. I would say . .
    “If you’re concerned about the future value of art, then look at the stock market. Stocks that have the highest chance of increasing in value tend to cost the most to begin with. A cheap stock could be worthless, or simply undiscovered by the investors. Like any collectible, art is a more volatile market than stocks. Unlike stocks, you have the daily enjoyment of art as long as you care to have it in your home. And only you can decide how much value there is in that.”

  4. P.S. I also like Gerry’s comparison to a car. How many people buy new cars with an eye to their value in 30 years? And quality art with a modicum of basic care doesn’t become “used”–no matter what eBay says.

  5. Buying Art is an investment in joy for the artist and purchaser. I’ve heard it said that when the work is “Rare and Fair” it’ holds value that collectors may be willing to pay large amounts for. However, I understand that most sales and increase in value of works is not guaranteed and based more on simply “loving” the piece or the artist that made it.

  6. I think people ask that question as part of trying to justify the purchase in their own mind. They already know that stocks, real estate, 401k, etc. are much more likely to yield a good return. They also aren’t really purchasing with the intention to resell at a profit later. They are just trying to reassure themselves that they are making a good decision in making the purchase.

  7. Having managed a financial planning office in my past corporate life my answer is, “I am not qualified to give investment advice. While I certainly hope my original paintings will gain in value, I cannot guarantee that they will.” People appreciate my honesty and are quite often curious about my having had a wildly different career. ‘Helps in relationship building.

  8. Several years ago I was interested (sadly) in selling my beautiful baby grand piano. I was contacted by a man who didn’t offer the cash I was selling it for, but want to exchange it for a full set of sterling silver flatware that was worth about the same amount. I was counseled by a wise colleague with a good knowledge of investments that I should never acquire or invest in something that I didn’t love. “You never know what the future will bring in terms of monetary value. If you don’t love it, don’t buy it.”
    A buyer who loves your work will give it a happy home and enjoy it every day. A buyer who wants it for investment is just as likely to put it in a closet and wait for the market to go up.
    I know which I’d prefer.

  9. Obviously, there are no guarantees in life, including the value of a piece of art… but, I think the artist plays a role in the value… although some acts may be involuntary (like dying)…

    Jason, like so many of your blogs have focused on… consistent work, consistent or increased quality, and consistent pricing that should gradually increase … etc…
    I have to believe that when an artist cuts their prices it has a long term affect on the reputation of the artist and the value of past and future work…

  10. Investors hunt for a sure thing outside the stock market and there is no such thing. They’ve seen too many news releases about record breaking prices for stellar art, acquired for relative pennies. They’re hunting a similar bargain that will pay more than they’re getting from their investment portfolio. Jason, you gave the best answer to an awkward, uninformed question.
    When asked similar questions I encourage a patron to only buy originals verses reproductions … I tell them not to expect giclees to increase in value. Buy my work because you love it. I offer reproductions for those people who can’t invest in an original. I try to keep the conversation lighthearted by repeating this story ….
    We stopped at a Mexican food restaurant for lunch. I walked around to admire some very nice paintings. The owner explained they were by a painter friend. I complimented his artist friend and shared that I also painted and gave him my card. He immediately got his iPad to look at my website. He got serious quickly, and we had an involved conversation about commissions. The punchline … (I’m way on the other side of middle age). He agreed, “Yes, my friend is very good but we must be honest, everyone knows when an artist dies the value of their work increases. That is why I only buy original art from older artists.” He looked me in the eye and shrugged his shoulder almost in apology. I laughed. 😀
    Nothing whatsoever came from that conversation.

  11. I have been asked about art as an investment- both about my work and fine art in general. My answer has always been “ Yes if it a Picasso, Gauguin or other famous artists that sell at auction, then most likely it will be a good financial investment. Even if purchasing this type of art, one should love the piece of work. No matter whether you pay $5 or $50,000 – the art should give you joy every time you look at it. And receiving joy on a daily basis is the investment you made for your life and that is priceless.

  12. The only thing I can add to what has been said above is that even if you buy work that increases in monetary value, it will not have been an investment unless you sell it.
    Also, there is no bad reason to buy original art, especially from a living artist.

  13. When asked that question, I tell people that there are no guarantees about that, but art is historically the best investment IF you both get lucky and buy wisely. I continue on to encourage them to purchase a piece because they love it and want to enjoy it in their home or office environment.

    I also will talk to them about success any given artist has in terms of national and international shows and competitions they have been accepted into, grants they may have received, collections their work is a part of, where they studied, etc. Discussing this type of thing helps calm fears that they are purchasing work from an unknown. Most of the artists we carry have decent art resumes and that helps justify the cost of their work. Many have been artists for many years.

    I still am very clear though, about no guarantees about investment potential.

  14. A while ago I went to an artist friend’s opening reception. A 6’6″, 250 pound man walked through the crowd towards me (I recognized him as he had bought 3 of my paintings a few years ago). As he was getting closer he said very loudly so everyone could hear “Ah, Kramer, you’re still alive…I can’t wait to go to your funeral, so your artwork will gain in value”…Everybody stopped talking or drinking, and stared at him, stunned and shocked,
    before they realized that he was kidding!!! I let him kiss me on the cheek although I didn’t
    think that was funny at all. Two weeks later he purchased another one of my works!!!

  15. I have bought several pieces of artwork, and have found, when talking to gallery owners that they are probably worth a lot more now. It’s all very nice, but I love them and they make me happy. The only reason you should buy art is because it speaks to you. Buying art as solely an investment I think is a hollow activity.

  16. My take on the “investment” in art issue is to KISS. Keep It Simple Sunshine.
    I have a bumper sticker on my car that says “Invest in Joy and Inspiration: Buy Art U Love”

  17. I think it is a matter of the amount an artist is asking for their works. The more expensive it is the more likely a buyer may be thinking about future value. I have found that someone buying my works that cost up to a few hundred dollars will never ask about it being an investment. They seem to assume that the art they are purchasing is for their personal enjoyment and not for an investment.

  18. A friend of mine whose brother had an original Grandma Moses commented one day that the appraisal of the piece indicated it had dropped in value. This friend also has an extensive collection of Aaron Bohrod pieces (more valued works of trompe le oeil) and those too dropped in value according to appraisal. None of the pieces were purchased for investment value. He was wondering what my explanation would be. So I told him that from my observation, the art market can be fairly fickle. What’s in vogue today may not be “in” tomorrow but may come roaring back in 5 years, thus making even more of a case to buy what you connect with emotionally. Some art speaks to you and some does not.
    Remember the words…Fairly Fickle …when it comes to valuation.

  19. I haven’t had this question asked, but a vivid analogy comes to mind from watching “Antiques Road Show” on PBS. Every episode has at least one appraiser saying, ‘the market for this item was hot 20 years ago, but it’s cooled off lately.’ Tastes change, and art values follow suit, except for untouchable artists at the top of the pyramid. People should buy art they love, with discretionary money, for the experiential value – similar to taking a wonderful trip that enriches and changes your life. My husband and I attended an auction of contemporary art about 5 years ago. We were somewhat discouraged that a number of works from the 1980s by well-respected artists had very little interest. On the other hand, we bought a print that day by an artist we love that we would never have been able to afford at the gallery. Right now, we are selling some of the things we picked up over the years, and the best sellers are anything from the ’50s and ’60s, mid-century modern is still very desirable, where I live! It might not be what most people want in some other city. So Jason you’re right, as usual, don’t advise people to buy for investment. Just for love.

  20. I do not sell much of my fine art analogue photography as many do not understand the 19th century processes I employ to make a truly unique print . My response is; I would rather sell or donate if the person is truly loving it. I will not buy anything of beauty unless I can look at it with a smile on my face knowing it makes me happy. I have dissuaded many from buying because it may escalate in value. Would I consider selling my antiques in my home for money when they make my home beautifully loved? I think not.

    1. Also told my painer friend that I have his painting on my wall from the early 90s, he said, “ that old thing…” I told him that old painting brings happiness every day I get out of bed imagining the sea depicted in his small gorgeous abstract painting.

  21. I am an artist, and hope peopke buy art for the pure pleasure it brings them. When my own painting does not makes me smile after I finished it. I start over. It travels with me from room to room when I eat, when I do dishes, even when I go to sleep it sits in the bedroom this way I see it from all angles under different light sourses, When done its like I gave birth. In other words I put my heart and soul in it. If it does not make my client happy I rather not sell it.

  22. It depends greatly upon the artist. If they are great at marketing, the work will indeed increase in value, at least over the short term. In fact, they may become over inflated and crash at the end. If the artist is great at design, technique, work ethic AND marketing, the pieces probably will increase in value over the long term. If the artist is great at his craft but poor in marketing, his pieces may only hold their value or decrease, depending upon how his estate handles things.

  23. My art makes me joyful it is bold in color & strength of message conveyed. It speaks to my heart. how we relate to others’ art by personal life experiences, images in our minds, ideas, upbringing, what’s important to us and how we respond to nature itself.
    Why art is important: Like color it brightens up our walls and our life, becomes a conversation piece among socialites’ society, vogue, harper’s bazaar, etc.
    What’s uniquely breath taking about beauty? It’s in the eyes of the beholder just as super models appeal to diverse peoples not one and the same. As actresses/actors, movies cinema taste buds appeal differently too.
    Who prefers certain significant others to associate with by that criteria? What their interests are as a common denominator of connection as vital to a long-term common interests whether it’s career or not. Sometimes, a mentor, other times we are equally able to teach one another that which we’ve learned ourselves by passing it on in the Great Marathon of Life!

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