Above: Example Investment Art: This painting by Herman Herzog (1832-1932) is representative of "Investment Art." Herman Herzog (American/German) is a painter of considerable accomplishment, and any oil painting by him, in good to excellent condition, is highly sought after, and will always increase in value. This painting, "Cows in a Pennsylvania Landscape," might fetch $10,000 at auction. A painting by Herman Herzog in a "Mountain Landscape," for which he is best known, could be worth $20,000, and one of his rare Florida landscape could even be worth $50,000. Herman Herzog meets our criteria for "Investment Art."
by: Ron Davis
As seen in Antiques & Art Around Florida, Winter/Spring
2006
Investing in art is not a get-rich quick scheme. But for many
people, buying and selling art is more lucrative than other investments, and
many have built a solid, growing, and rewarding business in art.
THE THREE BUYERS OF ART
First, decide what roll you want to play, whether you want to
be an Art Collector, Investor, or Dealer, because each has a different
motivation, buying and selling strategy, and outcome objective. The collector
buys what he likes, the investor what he needs, and the dealer
what he can sell for the highest price in the shortest amount of time.
Each needs to follow the strict buying criteria outlined below.
The Collector
has a love for art but not a compelling
schedule to buy it. He buys only what pleases him, without regard for "what’s
hot," possibly buying only one painting a year. The collector has no exit
strategy or financial objective in mind when he buys art. He well might keep a
painting all his life, willing it to his children or a museum. The art he buys,
however, should create future wealth for his family. The collector also needs to
acquire art knowledge and competent buying skills so he is not taken advantage
of. Serious collectors usually have a focus and narrow interest in a particular
School. Always studying art they like, collectors often become "subject experts"
in their specialty.
The Investor
definitely has an exit strategy and outcome
objective in mind when he buys art. Developing a financial plan, the Investor
buys art strategically, according to the strict criteria listed below, doing
extensive research to eliminate risks associated with buying art. The Investor’s
time frame is five to seven years out. A weak economy will peak again in five to
seven years. Even an unfresh painting (recently bought at public auction, or one
"shopped around") will be fresh again in five to seven years. The investor buys
what collectors desire, insuring him of a quick sale when it’s time to cash in.
The Investor expects 25% ROI, but even higher returns can be made with art.
The Dealer’s
business is buying and selling paintings, and
brokering art transactions. Like any business owner, the dealer is on the
telephone every day talking with customer and suppliers: collectors, investors,
galleries, auction rooms, and other dealers. When an exceptional painting comes
to market, the dealer pursues it relentlessly. The dealer’s time frame is
measured in days or weeks, rarely months, generally selling at the highest price
in the shortest amount of time. Because he buys only "investment art," there is
always a demand for his paintings. If you’re a "seller," on the other
hand, selling art to a dealer can be an expensive proposition, because he’ll
only resell your painting right away, to a collector, investor, or gallery, for
a handsome profit, exactly what you could have done, if you only knew what the
dealer knows. So it behooves the collector to learn the parallel skills of an
art dealer.
 Example Decorative Art: This painting by J.K. Butler, dated 1939, is an excellent example of decorative art. J.K. Butler is an "unlisted artist" -- a virtual nobody, but his work is excellent, and very reminiscent of John F. Carlson’s work: "Snow Scenes in an Interior Forest." If this painting were indeed by John F. Carlson, it could easily be worth $10,000; however, since the painting is by J.K. Butler, it might be worth $500; $1,000 at the most. Decorative art is not a wise investment choice. If you like it, fine, keep it; but it will never grow in value like investment art. |
THREE KINDS OF ART AVAILABLE TO BUY
Decorative Art
is known as "furnishing pictures," and is
often used for decorating purposes. This classification of art is generally
thematic: "nautical," "country," "sporting" look, etc. Little intrinsic value
exists in decorative art, and rarely is it painted by a "listed" artist. But
distinctive decorative art can be expensive, especially if it’s antique.
Decorative art will not increase in value. Therefore, it is not a wise
investment choice. If you buy, for example, 100 $200-paintings, you could
have $20,000 invested in "garage sale" merchandise. Avoid that mistake. Limit
your "training paintings" to ten or fewer. Better yet, buy Investment
Art.
Collectable Art
suggests that someone else also collects
the same artworks. Therefore, a market already exists for your painting, albeit
small. Collectable art can either be signed or unsigned, "listed" or "unlisted"
(recorded in auction price guides). But generally it is of modest quality, not
superior work, and not a good investment choice. For example, Florida
Highwaymen Art, painted by itinerant Afro-American artists in the 1960s,
is "hot" merchandise in Florida, and many local dealers buy and sell this art
for a profit. Its appeal, however, is limited to Florida. Therefore it’s
Regional Art, and would not sell well in the art capitals of the world. The
quality of this art generally is "student work," not academic or professional.
If a Highwaymen painting is accidentally left on a park bench, for
example, in Paris, London, or Cincinnati, it probably will still be there three
weeks later. Discerning art collectors and investors would not show interest in
this art. Don’t hold onto collectable art thinking it will one day grow into
"investment art." It won’t! Sell it. Move on. If you like the picture, however,
and it’s affordable, fine, keep it for whatever is charming about it. But it
will not be a wise long-term investment.
Investment Art
will always increase in value. High
caliber, well-listed artists generally create investment quality paintings.
Sought by collectors, investors, and dealers, investment art appeals to buyers
beyond the state or local region, meeting national and international demand.
Connoisseurs, experts, and art historians determine the quality standards for
investment art. Therefore, if you own investment art, it can easily be sold for
a profit. If investment art is ever lost, the finder essentially holds a bearer
instrument—the equivalent of cash. A metropolitan radio station once reported a
Picasso artwork was lost—accidentally left on a New York City subway. Can
you imagine? The radio station asked the finder of the artwork to call the
police. Hello. Leaving a painting by Picasso on a New York City train is
like leaving a bag with a million dollars cash in it on a park bench. Forget it!
WHY IS ART VALUABLE?
Investment art is valuable for three reasons: (1) superior
quality, (2) rarity, and (3) scarcity. Some people who deem
scarcity as prize-worthy, are willing to pay an exorbitant price for the last
anything on earth that someone else wants, needs, or admires. You might have
heard, they stopped making 19th century art more than one hundred
years ago. It’s like waterfront property, it isn’t made any more, which is why
it cost 10 times more than rural farmland. If you’re lucky enough to own a rare
painting, say one of a kind, well, that artwork can be near priceless.
There is more money in the world than great paintings
, so a
competition will always exist for superior artworks. Quality in art has absolute
standards. Exceptional art has a master’s touch. It’s a gift. Few artists
possess or develop such extraordinary skill and talent. Hence, the expression,
"a stroke of genius," could well refer to the brushwork and technique of a great
artist.
Recognizing quality in art takes time. It’s best learned with
the help of an expert or mentor. Unless you understand "value" in art (or
anything else), it’s impossible to understand opportunity. And to
understand value, you have looked at hundreds, even thousands of paintings.
Learning about art is lifelong. When you arrive at the threshold of
connoisseurship, and can see art at a gut-level, you’re ready to begin buying
and selling art for a profit.
WHICH SUBJECTS ARE BEST?
Notwithstanding the exception to every rule: horizontal
pictures are better than vertical ones. Paintings of girls are more desirable
than pictures of boys. Landscapes are more valuable than seascapes.
Life-pictures are more valuable than death scenes. Domestic animals are more
appealing than wild animals. Organic still lifes are more valuable than
inanimate pictures. More is better than less, with fruit, flowers, and fish etc.
Thick paint (impasto) is better than thin paint (dry brush). Bright colors are
better than soft tones. Remember, religious pictures are hard to sell, unless an
Old Master, or executed by well-known artists. Full size paintings (24" X 36")
are better than small or medium size pictures. Experimental themes are not as
valuable as paintings from an artist’s main body of work (oeuvre). For
example, Thomas Moran’s paintings of Yellowstone and the Grand Teton Mountains
are more valuable than his paintings of India and Venice. A masculine face on a
woman dressed in satin and lace will have little chance of fetching a good price
at auction. Cheerful subjects, such as kittens pawing a ball of string, goldfish
swimming in a bowl, or children chasing fireflies on a summer evening are highly
desired subjects, and form a generally safe buying guide.
 Example Collectable Art: This painting by C. Gordon Harris (b 1891- ) is an example of Collectable Art. C. Gordon Harris is mostly known as a New England artist, and his work has regional interest, but not much "national" interest, and no "international" demand. C. Gordon Harris is a "listed artist," but of minor stature. Generally, his oil paintings, in good condition, sell from $1,000 to $3,000. This one, titled on the reverse: "Summer Morning, Lincoln, Rhode Island," might fetch $5,000, because it can be traced to a specific location in Rhode Island, and a collector there might pay top dollar: $5,000. While local and regional art is considered "Collectable Art," it is not a wise investment choice, and Collectable Art will never grow in value like Investment Art. |
WHO SUPPLIES ART?
Serious buyers of art develop "relationships" with Knockers,
Pickers, Dealers, Galleries, and Auction Rooms. 80 % of all art moves from
dealer to dealer, each tagging on a profit. Eventually most art winds up on a
collector’s wall, usually at the highest price. You can feed off the bottom or
fish at the top, but you want to buy at the beginning of the art chain,
or as close to it as possible. Knockers "knock" on house doors. Taking
off their hat, they ask, "Do you have any art or antiques to sell?" It’s a dying
trade, but when practiced can produce sterling results. Pickers buy an
old chair for $10 in an antique shop, then drive five miles down the turnpike
and sell it for $15. Picking up another item, down the highway they go. In a
week’s time, an experienced Picker will comb an entire region, often finding
valuable works of art for select customers. Make sure he knows what you’re
looking for. Pickers know which dealers to sell to. Low-end dealers generally
sell to high-end dealers, usually at a low price. More experienced dealers "sell
up," to collectors, investors, galleries, even museums, usually for top dollar.
Galleries have traditionally sold the best of art, at the highest prices, to
wealthy patrons. Such art generally comes with a documented provenance, bells
and whistles, and free viewing rooms, but it’s very expensive. Today, smart
dealers working off their kitchen table can compete with renowned galleries for
the same customers and the same valuable artworks. Remember, auction rooms offer
great opportunities to buy and sell art. You must learn which Rooms to buy from
and which to sell to, and how to find "winners" in trade papers, such as The
Maine Antique Digest, or The Newtown Bee, available in most chain
bookstores. From these papers and select art magazines you can harvest names and
telephone numbers of serious art collectors and dealers who will become your
future customers and suppliers. To buy and sell art successfully, you must
develop contacts and build relationships.
25/25/50 Rule
Remember this rule, because it applies whether you’re an
engineer, teacher, or art dealer: 25% of your success will come from your
knowledge. 25% of your success will come from your skills. And 50%
of your success will come from your relationships. Develop these
attributes.
BUYING ART STRATEGICALLY
The below buying criteria will help establish standards for
buying investment quality art, thereby assuring you of a profitable outcome.
Buy
·
only original paintings; signed and dated by the
artist.
·
only listed artists with multiple auction
records.
·
paintings by artists who produced a prodigious body of
work in their lifetime, e.g., more than 200 paintings.
·
works by artists who had major exhibitions and shows
in their lifetime, e.g., The British Royal Academy, The Paris Salon, The
National Academy of Design.
·
artworks by artists whose School of art remains highly
collected and in demand, e.g., Hudson River School, Brandywine School,
California Impressionist School.
·
representative examples of an artist’s central theme
paintings (oeuvre); for example, Thomas Moran’s Grand Canyon scenes, not
his Venice or India pictures.
·
subjects that other people collect and invest in,
e.g., children at play, women under parasols, genre pictures, mountain and vista
landscapes.
·
examples that are fresh and new to the market (have
not recently been at auction, or "shopped around").
·
representative paintings of an artist’s highest
quality.
·
large size paintings, 24" X 36", but generally not
larger than 60 inches on any side.
·
examples that are in good to excellent
condition.
·
paintings with an authenticated well-documented
provenance.
·
art works that come with a free title, bill of sale,
and a guarantee.
·
unsigned paintings that are outstanding (if
reasonably priced), especially if accompanied by firm attribution from a
renowned specialty scholar.
Make a Deal, Don’t Be Shy
If you’ve found a painting you like, in good to excellent
condition, in a School of art that is appreciating, fairly priced, you’ve done
your research and due diligence, and it’s affordable, buy it! Enjoy your
painting for its beauty and financially for its profit appreciation for years to
come.
About the author:For more information
on Buying and Selling Art, including workshops on this subject, see Ron Davis’
new book, Art Dealer’s Field Guide: How to Profit in Art, Buying and
Selling Valuable Paintings. Available for $19.95 in most bookstores, or by
calling: 1-888-401-2844. ISBN: 0-9755031-0-3. Check out Ron’s Web site at www.CircaArt.com
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