Updated on October 2, 5:30 AM EDT
What You Need To Know
Everyone stuck at home is tired of looking at the same stuff.
Online art sales, it turns out, have surged during the pandemic.
Auction house Sotheby’s sold $285 million worth of fine art and
decorative objects this year through July 31 — triple the value
for all of 2019. In that time, 13,000 lots sold compared with 4,000
during the same period the year before. The online portal for art and
furniture dealers, 1stdibs, says that between March 1 and Aug. 31 it
facilitated the sale of a staggering 8,000 artworks, a 65% jump year
Here’s hoping these new art collectors love whatever they bought.
Just how far their money goes comes down to a combination of taste,
financial priorities and personal preference. If they try to resell
their new acquisitions, they’ll soon discover that beauty is in
the eye of the beholder, but value is in the hands of someone else.
By The Numbers
40.5 million - Estimated number of total art transactions
$10,000 - Estimated median price of an artwork sold
by dealers last year.
310,810 - The approximate number of businesses selling
art and antiques worldwide.
Why It Matters
If the value of a piece of art ever goes up, it usually does so through
a small number of traditional, surprisingly predictable channels: art
dealers who persuade their wealthy clients to spend more; auction houses
that entice wealthy collectors to bid higher; wealthy collectors themselves
buying and selling art to each-other; and finally through an ecosystem
of curators, scholars, critics and tastemakers who contribute, in whatever
elliptical way, to perceptions of worth.
The rest of us are left to buy art that will almost certainly lose value
— and never gain it back — the second we hang it on the
In other words, don’t stress out about buying art as an investment,
because it’s generally a bad one. That said, there are approaches
you can take to art buying. You can consider the acquisition as you
would a chair or lamp, something to be used and enjoyed but not resold.
Or you can approach it as a financial decision, after first acknowledging
that even the best-laid plans still don’t guarantee a return on
investment.Either way, you can use the following as a guide. And remember!
If you don’t want to live with it, it’s not worth buying
at any price.
1. There Are Hundreds of Art Markets
Just because one artwork costs less than another doesn’t mean
it’s a good deal. It could be that one work is subject to very
different market forces than the other. The demand for Ming vases, for
instance, is not the same as the market for mid-century sculpture, and
the ways in which value is created in the Old Masters market is worlds
apart from that of French Impressionism. So before you look at an object
and decide it’s a “deal,” make sure you’re basing
that assumption on the sales of other, similar objects.
In general, new collectors tend to gravitate toward paintings, for the
simple reason that they’re the most obvious, accessible choice.
But you shouldn’t overlook excellent photographs, prints, watercolors
and etchings, too. Similarly, galleries tend to focus on 20th and 21st
century artworks. The reality is you can choose from a 7,000-year span
of art history.
2. For Once, Put Faith in Middlemen
Art galleries take a cut of about 50% on each sale. It’s reasonable,
then, to wonder whether you can save money by buying direct from the
artist. But you have to remember that when a gallery adds an artist
to its “stable,” it’s often committing to partner
with that artist, fronting her money to make artworks, investing heavily
to promote her shows, and even helping pay to get her work shown in
museums. The artist, in turn, is often committed to that gallery for
the same reasons. If she has a good relationship with her dealers, she
probably won’t be open to the idea of selling behind her dealer’s
The good news is that if the dealer has an established reputation and
a vested interest in the artist she’s selling — and better
yet, has a proven record of buying and reselling work after she’s
sold it the first time — there’s a much higher likelihood
you’ll be able to eventually resell your own art, too. Small galleries
like James Fuentes on New York’s Lower East Side, to mid-size
galleries like Gallery Hyundai in Seoul, to mega international
galleries like Hauser & Wirth are all, at least in theory,
places where you can go to both buy and sell artworks. In sum, dealers
are an artwork’s ambassador and advocate, and when it comes to
sustaining (or increasing!) value, you’ll often need their clout
to make it happen.
3. Think of the Cost of Labor
When you buy a freshly made artwork, chances are it was created by a
person who’s doing their best to live off the proceeds of their
art. As a result, the cost of that creator’s quality of life (not
to mention cost of materials) is baked into the price, which is why
even paintings on coffee shop walls can have thousand-dollar price tags.
The easy way around it? Buy a painting that has been bought and sold
before, eliminating at least some of the markup. Look at smaller auction
houses, which you can find through sites like Invaluable.com and LiveAuctioneers.com;
you’ll still be paying a buyer’s premium, but the art itself
will often be comparatively cheap.
4. Look for the Blind Spots
The art market has biases that have nothing to do with pure artistic
merit. Paintings by Flemish Baroque artist Peter Paul Rubens can sell
for tens of millions; his drawings often sell for a fraction of that.
A bronze sculpture by 20th century Swiss artist Alberto Giacometti sold
for more than $140 million, whereas his paintings sell for much less.
Last year a portrait of his brother Diego, for contrast, sold for $1.6
million. Chump change!
What’s important to remember is that those biases are not set
in stone and often change as quickly as fashion. So if an artist’s
early work is currently selling at a premium, consider her later work
instead; more broadly, if a certain artistic period is suddenly undesirable
(I wrote that Victorian paintings were out of style three
years ago, and that’s still the case), there’s a good chance
they might come back in vogue in a few years.
Also, just because something is very old doesn’t mean it’s
out of reach. A 2,600-year-old Etruscan figure of a lion sold for 10,000
British pounds ($12,700) at an auction at Sotheby’s last year.
In the same sale, a 2,300-year-old gold torque (a stiff necklace) sold
for 11,250 pounds, or about $1,000 less than a new 18 karat gold “Maker’s”
chain necklace at Tiffany’s. A gold figurine that’s thousands
of years old sometimes costs less than it would if it were melted down
and sold as an ingot.
5. Art Never Comes With A Guarantee
Even art-world insiders strike out just as often as they strike gold.
No artist, whatever their buzz, is a sure thing. Not if their work is
in a prestigious collector’s living room, not if it’s in
all the best museum collections, not if there’s a stack of glowing
Have you heard of Robert Yarber, whose work the late New York Times
critic John Russell called "undeniably compelling," and whose
art is in the permanent collection of the Whitney Museum? Would you
have been able to predict that Fernando Botero — the second most
successful living artist at auction in 1993 — would soon be eclipsed
by Jeff Koons? Or that Jeff Koons’s market would subsequently
stall out too?
6. Then There’s Fractional
Recently, a new way to buy art has emerged in the form of “fractional
investing.” The basic premise is that very expensive artworks
appreciate more (and faster) than cheap artworks, and when a lot of
people pool their money, they can participate in these outsize
returns. Aside from that highly dubious logic (see above) there are
some unavoidable downsides to fractional art investing, the most important
of which is that investors never take physical possession of the art.
That alone obviates the primary draw of art collecting, namely looking
at, and enjoying, the thing you own.