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Category: Art Investment

How to collect art (when you know nothing about it)

Blog Posts, Art Investment

Collect art is another art form. Here the balance between aesthetic appreciation and market investment should meet. Therefore, this equilibrium point is not that easy to find.

In order to collect art properly, factors as budget, expenses, market change, hidden costs, and education should always be taken in attention.

Collect Art doesn’t need to be a nightmare, but if you aren’t well informed about it, you will probably have more headaches than pleasure. We prepared for you a essencial guide with all that you need to know about how to collect art, even if you know nothing about it.

Fundamentals of how to collect art

How to collect art
Martin Péchy

Choose your style

Fashion and Art have actually many things in common. I’m sure that you have your own fashion style, something that characterises you, right? Well, the same applies to art. If you are getting interested in this field do your research and decide which style and art movement you prefer. From abstract expressionism to minimalism or from old masters to contemporary art , there are endless styles, periods and movements out there. Consistency is the key. Take my advice and pick one style and movement for start. It will help you to focus, save time in your research and achieve a better and more consistent portfolio.

Research, research, research

Do you go to galleries openings or artist’s studio visits? Do you know the new emerging artists in the market or even the “old” reputed ones? Well, the art industry is a business like any other, do your research and get out there. In any case, get an art advisor if you are serious about art investment. It will save you time and money in the long term. Without a deep understanding of how to value art, it is very difficult to make a profit.

Calculate your budget

What is your budget? That’s actually one of the main points that you might have in consideration before purchase an art piece. If you have a big budget, the best advice would be to purchase an artist who is already established and represented by a known gallery. If your budget is low to medium, connect with local galleries and artists and pick a few to invest in the long term. Trust me, with your help one of them can increase her/his reputation in ways never expected, and give you a better return in the long run.

Educate yourself

According to the Swiss bank UBS, passion is the main driver behind art investment rather than profit. don’t underestimate the knowledge and experience needed to successfully buy and sell art for profit. Educate yourself consistently in order to develop your taste and knowledge. Try online courses in the field from Coursera, Udemy, Sotheby’s or Christie’s. They are as good as more conventional ones with a bonus that you can manage your time in order to study.

The hidden costs

Framing, Storage, shipping, insurance and auction premiums can quickly turn an investment into a billing nightmare. You can avoid some by purchasing pieces from local artists. Also invest in developing relationships with galleries in your area that have a better network and business relationships.

Shipping

Andrea Piacquadio

Transporting a work to a destination for exhibition or sale requires professional crating, shipping and additional insurance costs that can add up to over $1000 easily.

In addition, collectors should be sure to review the insurance coverage for transport, as some shipping companies will only provide a small amount of coverage relative to the valuation of the artwork.

Framing

Framing is one of the most important steps during the whole process. The frame you choose for an artwork can have an insane impact. They complement the art piece style and period, so be careful about what you choose. You must have in mind that an art piece must be well protected and cared for. There is no point in buying art as an investment if you then risk it getting damaged while on display.

Auctions – Buyer Premiums

If you are new in the art world, you probably aren’t aware of the buyer premiums charged by auction houses. The buyer’s premium is usually a percentage of the hammer price that can go from 10 to 30 %. So, if you are buying from an auction house, after buyer premium, tax and perhaps shipping, you already have an extra 50% of the final value of the artwork to spend on extras. My advice, be careful with auction houses for start.

Insurance

An art collection should be insured. Theft, fire, flood can happen and the physical well-being of an art collection. A homeowner’s policy that covers fine art may be a good start, but as a collection grows and important pieces are added, an insurance policy that specializes in fine art may be worth an inquiry to a broker. Just like specialized fine art insurance policies, there are brokers that work only with fine art and other important collectibles. In addition to property insurance, collectors may also want to consider purchasing title insurance to ensure they have clear legal titles to their collection, much like a real estate title policy.

Conservation

How to collect art, russian museum conservation department
Russian museum conservation department

Taking care of the art will ensure that it is in the best condition that a collector can provide when one day preparing to sell, gift or donate it.

Collectors can work with a private conservation center to have objects cleaned or repaired. This may require an initial consultation fee and an hourly fee of $85-$250 which may include travel time, inspection, photography, research and preparing written reports. Some companies have a minimum charge as well. A scientific analysis may also be included in conservation efforts, which include various forms of imaging techniques including ultra-violet fluorescence, infrared reflectography and transmitted infrared.

TAX

How to collect art, taxes
Karolina Grabowska

VAT, selling tax, use tax, resale tax, income tax, capital gain tax, you name it. there are endless taxes out there to everything. if you are starting right now be aware that art is no exception to tax. You will have to prepare yourself to it. My advice, if you want to take art collect seriously get a good art advisor that can help you with this.

Art Advisor

Many people think that they know what they like. Therefore, no one truly know what they like until they learn what is out there. Art collectors actually need curators once they only enrich the experience of collecting art but also enhances the experience of understanding the object, its context, and the story of the artist. In the end, the best art advisors are also teachers to their clients that can help to avoid COSTLY mistakes.

The costs can be considerable. According to the Association of Professional Art Advisors, advisors typically charge a commission of 20% for art works under $100,000 that you purchase under their guidance; that commission might go as low as 5% for works over $1 million. Of course, the more often you return to an advisor, the more bargaining power you’ll have. Those who want advice only should expect to pay 100 to 250 euros per hour.

Be aware of the changing attitudes

More than ever online shopping is booming, and the art business is no different. There are countless apps and websites out there where you can do a great online purchase. Auction houses as Sotheby’s, Christies and Philips strongly invested in online sales. Sometimes the best deals are where we less expect. Also have a look at Aucart app, they have an amazing portfolio of new emerging artists in the UK and US.

Don’t get overexcited about auction results

Art investment isn’t all numbers and projections. It’s important to track an artist’s market beyond a few high prices. Just because a certain artwork was sold for an “insane” number doesn’t mean that will happen soon or even again. Remember the Untitled art piece of Basquiat sold at Sotheby’s auction in 2017 for 85M$? Well, that was a one-off price, it didn’t happen again after.

Network

I’m sure that you want to get the best deals out there but for that, you will need to spend a lot of the time connecting with people in the industry. Visit museums, art fairs, galleries and auctions, not to buy but to educate yourself, look and understand which pieces you like in order to define a strategy. Strategy and network are the key.

Not all art is an investment

Have this in mind, not all your purchases will give you the same return. Don’t misunderstand the market. You really should diversify your portfolio by period, artist, medium region etc., in the long run, will help you to mitigate risk.

Whether you’re looking to enter the contemporary art investment market, or you already have a growing collection, send us a message. We are here to help and guide you to achieve the best returns in the market.

Conclusion

  • Art Collecting is time consuming and requires a full commitment.
  • Not all art is for investment
  • Network in this business is one of the most important factors
  • There are endless hidden costs
  • If you have a medium to high amount of money to collect get professionals to help you
  • If you are starting, be careful with auction houses

Why is (some) Abstract Art So Expensive

Blog Posts, Art Investment

As an art outsider, is normal to think that abstract art gets sold for crazy prices. Auction houses as Christies and Sotheby’s also fuelled that trend.  If an abstract piece of de Kooning sold in 2015 for 300 Million on a private sale can be a surprise for many, for who works is this field it actually isn’t. Abstract art is expensive.

So, why is abstract art so expensive? Abstract art is expensive for a simple reason. There is demand for it! Nowadays people buy art not just because they like it but because it can be a good financial investment. Adding this with the conspicuous consumption trend and the number of billionaires increasing out there, it’s easy to understand why some abstract art is so expensive. 

Willem de Kooning
Untitled XIV, 1976. Oil on canvas (1904-1997) Fisher Collection SFMOMA Picture by: rocor

What makes abstract art so expensive?

When we speak about art pieces that are sold for huge numbers we are speaking about trophy art. Abstract art is sold by high prices due to different factors as conspicuous consumption, art as an investment and market speculation. 

Conspicuous Consumption in the art market 

Conspicuous consumption is the spending of money in acquiring luxury goods and services in order to display economic power. Thorstein Veblen created this term as a reaction to the over-the-top wastefulness of a gilt society. 

Veblen had plenty to say about the arts and the reasoning behind their support. For him, our ideas of beauty were inextricably tied to rarity and expense. He compared art to diamonds. While similar in many ways to common glass, diamonds are rare in the earth’s crust and difficult to dig out. Seen under these contexts, they become beautiful. Further, while a Willem de Kooning oil might be worth big bucks, it’s also big bucks that make De Kooning worthy. Veblen noted that frivolities and false values came about due to the human need to demonstrate wealth and to establish status.

Art assets are appealing both for their ability to transfer consumption over time and for their use as signals of wealth. Adding art value to utility, returns also reflect this “conspicuous consumption” dividend.

If we look for the profile of the usual art buyer that is willing to give huge amounts of money in order to obtain art we can see a pattern. 

a) They have at least over 5 million in their bank accounts 

b) They have already a considerable amount of properties

c) They have at least one luxury car 

So how can they now show to the world that they have money? Simple, buying art. 

Abstract Art is a Good Investment 

Buying art only to make properties looking aesthetically more pleasant is in the past. Nowadays art is bought also as an investment. And as an investment modern and contemporary art where we have the abstract one are the more profitable ones. Not only abstract paintings showed to mantain their price overtime, they also increase value between 4 to 8% year. 

Art is a significant investment class, which is highly uncorrelated to other asset classes. Such uncorrelated categories in an investment portfolio can offset potential losses and generate good returns. As indicated by the performance of the art market in 2018. During the same period, other conventional markets floundered. To safeguard their portfolio in the long run, savvy investors are turning towards art to amplify their returns. 

Art investment is becoming more critical than ever before since it is a viable choice for diversification. To maintain the financial strength of an investment during times of economic uncertainty. It is crucial to have asset classes at hand, which move independently of one another.

The Wall Street Journal declared art to be the best investment class in 2018. The art market performed far better than other markets during 2018, as evidenced by the numbers. Blue-chip artwork posted an average gain of 10.6%, whereas the S&P 500 securities fell by 5.1% during the same period. What makes this feat remarkable is that 2018 was an exceedingly difficult year during which several markets declined, including gold.

Market speculation 

For starters, let’s take a crash course in the fundamentals of speculating. A speculator is someone who buys (invests) based not on current value and demand, but rather on predictions. The objective here is to resell at a higher price at that future, basically a vehicle to grow wealth. 

That buyer, in turn, continues the speculation. Hoping to resell at a later date for a higher price to a subsequent speculator, who will in turn continue the speculation.

An aggravating factor, specific to speculating on art, is that art has no tangible value. Artists sit in their studios and manipulate various mediums into various forms. Then their galleries, dealers, or agents declare to be art, declare to be worth certain dollar amounts.

Most art buyers, that go to auctions at Sothebys and Christies , are art collectors or resellers that have something in common. Experience, knowlege and money. Imagine a collector who has some 10 works by Pollock. He certainly knows that if he buys a piece of the same artist for a higher value all his other 10 pieces of Pollock will increase value. The same applies to art dealers, who have some pieces by certain artists in their portfolio at a lower price than auction houses but by increasing the value of the artists on auction houses can resale his portfolio for a bigger price. 

Conclusion 

Art market never been so in fashion as nowadays. If before auctions at Sotheby’s and Christies were only for art professionals , nowadays contemporary auctions are more like a fashion week event. Therefore, opposite to the clothes value that decreases overtime, artworks tend to always increase, making it a safer investment that majority of the financial products out there. In the end as I said in the beginning there is only one major reason why abstract art sells for high prices. There is demand for it. 

If you want to know more about how to invest in art have a look a our previous articles. 

5 Reasons to invest in art: https://marianacustodio.com/5-reasons-to-invest-in-art/

Is art a good investment? 11 tips for new art collectors: https://marianacustodio.com/is-art-good-investment-11-tips-new-art-collectors/

Top collectors reveal the secrets of how to invest in art: https://www.bloomberg.com/news/features/2018-05-07/top-collectors-reveal-the-secrets-of-how-to-invest-in-art

DO ART COLLECTORS ACTUALLY NEED CURATORS?

Art Investment

If you are or want to become an art collector unless you are already in the industry you will probably make a lot of mistakes building up your collection. So, do art collectors actually need curators ? Mistakes in the art world can be really expensive, actually much more expensive than getting an art advisor/curator.

There are some situations where an art collector doesn’t need anybody! Therefore, majority of them do. We’re going to be reviewing what are curators, art advisors, how much they cost and how make them worth for you. 

do art collectors actually need curators
Buy Now – Daniele Sigalot
https://annalaudel.gallery/

What are Art Curators ? 

Art curators are responsible for selecting, cataloguing, managing and present artworks in a museum or art gallery. They are responsible for selecting artists and artworks according with the DNA of a gallery / museum. All of these tasks require curators to work in other areas such as conservation, education, design and marketing. 

What are Art Advisors ? 

Art advisors (or art consultants) are basically curators of an art collector. She/he, is responsible for developing the client’s art collection according with the goal of its client. While some collectors buy artworks just because they like it, others buy art as an investment. 

Making Art Advisors Worth It 

Art advisors offer a range of services, from simply educating new collectors and suggesting art for a new apartment. Fundamentally, an advisor uses her or his expertise to help a client make better, more informed purchases that will stand the test of time. So what should one expect when hiring an art advisor?

What to Expect

Many people think that they know what they like. Therefore, no one truly know what they like until they learn what is out there. Art collectors actually need curators once they only enrich the experience of collecting art but also enhances the experience of understanding the object, its context, and the story of the artist. In the end, the best art advisors are also teachers to their clients. 

Art advisors are very familiar with the nitty-gritty details of owning an art collection. They are a great resource when managing facets like taxes and estate planning. Here are 5 art collection details where your consultant can advise:

1 – Insurance: An art advisor should be well-versed in how to secure the proper insurance for your collection. 

2 – Shipping & Shipping Insurance: Special attention and care should be given to the packaging and shipping insurance. In some cases, it is inadvisable to ship certain works and you need to know when these situations arise. Your art advisor can handle this for you once it’s a complicated process. You can find more about shipping here: https://marianacustodio.com/shipping-art-internationally-a-small-guide-to-avoid-customs-problems/

3 – Conservation – Art advisors will have the tools and network to research the different conservationists in your area. They can find a candidate with the experience needed as well as manage the art repairs and restorations.

4 – Sales Tax: When purchasing art out of state or filing taxes, advisors are experienced in the best way to handle your payments as

5 – Selling Artwork: If you are interested in getting art as investment be aware that buying and selling can be similar to the stock market. Always ask a professional before to avoid some bad decisions. 

The fees 

The costs can be considerable. According to the Association of Professional Art Advisors, advisors typically charge a commission of 20% for art works under $100,000 that you purchase under their guidance; that commission might go as low as 5% for works over $1 million. Of course, the more often you return to an advisor, the more bargaining power you’ll have. Those who want advice only should expect to pay 100 to 250 euros per hour.

When getting an art advisor for develop and take care of your art collection be aware that is best to pay an art advisor a retainer to do their job—that way everyone has skin in the game—and they are not basing their advice on what the commission would be. Rather, they are basing their advice on what would be the best thing for the collection. 

You may pay a bit more with a retainer, but you’re getting an art advisor that will go from galleries to auctions on your behalf looking for the thing that pulls your collection together. It’s worth it.

The Possible Name Recognition & Networking Opportunities

Art collectors actually need curators who can help them culturally, commercially and socially expand your network. They create social and cultural opportunities that their clients can participate in, like a private viewing at a museum or gallery, or a meeting at an art fair. Also, with so many wealthy collectors competing for the work of a few dozen international art stars, top galleries are in a position to handpick their clientele these days, keeping long and closely guarded waiting lists ( some of them more than 3 years) for new work. As a result, many insiders say, today’s art consultants are valued as much for their entree as for their advice on choice acquisitions.

Additionally, good art advisors prefer enduring relationships and not one-off purchases.They are there to help you build strong relationships in the art market whether it be their own relationship with you or relationships with other artists and art professionals.

Conclusion

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