| Home | Fine Art and Crafts | |

The Costs of Reselling Fine Art

Art investment has recently become a hot topic.

Some experts feel that in today's uncertain economic times, investing in fine art may be a better long-term solution than investing in stocks and other unpredictable investments.

However, art should really be considered a slow-growth investment.

It is relatively rare to achieve a significant profit on a quick turnaround.

A large part of the reason for this is the cost involved in reselling art, as well as a fairly limited market.

Commissions

As an individual seller, it can be difficult to connect directly with a buyer who might be interested in your piece.

So, you will likely will have to go through an art gallery or dealer.

However, art retailers or resellers tend to charge large commissions on both sides of the transaction - purchases and sales.

You will probably have to pay a dealer the same percentage that a commissioned artist pays, which is often in the neighborhood of 40%.

Do the math. If you paid $100 for a piece that is now worth $1000, you will not make a $900 profit. Instead, your profit might be closer to $500.

Contemporary Preferences

If the piece that you are hoping to resell was created by a contemporary living artist, you may find it difficult to sell the piece at all. This is due to the unique relationships that develop between artists and their galleries.

Most galleries prefer to work directly with artists. They may commission specific pieces or design a promotional theme around the artist's current phase.

Additionally, the art world tends to be quite social.

Many galleries enjoy the social relationships that they develop with their artists. This helps them to remain a thriving part of the relatively closed art community.

But the real problem is that buying contemporary art is kind of like buying a car. Once you drive off the dealer's lot, half of what you paid is lost. The same is true with an art gallery, so you're already in a deep hole unless the artist is truly someone in high demand.

Also you might run into the problem of a dealer not wanting to add any more works of certain artists' to their inventory.

Supply and Demand

Supply and demand is the consistent determining factor in whether any product will sell.

The problem with non-liquid assets like art is the supply and demand is hard to judge and may be entirely non-existent.

In troubled economic times, there may be no buyers for art at any price.

Recently (fall 2011) a major auction house withdrew a Degas sculpture when no bids were received.

It value was estimated in the millions.

So, while quality art may retain or grow in value, at least on paper, it may do little for you if you need your money in a hurry.

Solutions and Alternatives

Certainly it is not impossible to resell fine art, crafts and handmade jewelry.

If the artist is no longer actively working, then you will not need to contend with the artist's personal relationship with galleries and dealers.

Some houses like to build relationships with independent collectors and will cater to customers who either know what they're doing or are high rollers.

Sometimes the value of an artist's work will jump on news of his death - just be careful he didn't leave warehouses of unsold works behind.

The internet has also become a boon to individual buyers and sellers of fine art.

Joining online forums and communities of art collectors can help you to find those who may be interested in purchasing your item.

Most collectors today are aware of the dangers of purchasing high dollar items online.

If you plan to independently sell your fine art, it is important to produce documentation.

A professional appraisal should be performed.

You can also have a professional search run on the item's history, in order to prove that it was not stolen or altered.

Finally, you may want to provide potential buyers a copy of your purchase receipt, to help assure them that you are not selling stolen art.

The Bottom Line

Reselling art can carry a high price tag. Galleries and dealers may charge a significant commission.

Individual buyers may request paperwork that is relatively expensive to obtain.

If you are interested in reselling a piece of fine art, it is important to research the costs of various options in order to find the solution that is best for you.

  | Top | Fine Art and Crafts | Home |