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Buying and Selling Art

The Costs Associated with Buying and Selling Art and Fine Crafts

Understanding Dealer and Gallery Markups

If you are interested in buying or selling fine art, crafts or handmade jewelry items, it is important to understand the supply chain.

Only rarely do artists sell their own works directly. Most artists are affiliated with dealers, auction houses and/or galleries.

Of course, each of these retail outlets is in business to make money, so each marks up the price of the item. Here is a brief overview of the costs involved with the three major types of art and craft sellers.

Galleries

At one time, art galleries were snooty and intimidating places. Aging men studied paintings with monocles, while well-dressed salespeople cast an evil eye at anyone who was not judged to be of proper caliber.

Prices were not printed or posted, allowing the sales staff to set a price based on the perceived wealth of the buyer.

Sellers did not fare much better, as the silver-tongued staff was skilled at making them feel that their pieces were worthless. They often sold high-dollar pieces for far below their actual value, only to see them prominently displayed in the gallery’s window.

Today, the general public has much freer access to information regarding art values. The internet has become an invaluable resource, and most people no longer buy or sell blindly.

Consequently, most galleries have changed with the times.

Markups still tend to be quite high, sometimes in excess of 100%, but prices are more readily available.

Sellers are also being given a reasonably fair price.

Although a gallery markup is high, most galleries are supportive of their artists.

They tend to work with up and coming artists to promote their work and may commission pieces for a reasonable split of profits.

(If you see a piece you like, but can't quite afford, see if the gallery will allow you to make an offer that it can transmit to the artist. You might find that the gallery price is negotiable.)

Galleries also provide a safe place for new art buyers to purchase in relative safety from experts in the art world.

Dealers

Art dealers run the gamut from market stalls to gallery-like storefronts. Some customers are skeptical of smaller dealers, particularly those without a permanent storefront, fearing that they may traffic in stolen or forged or worthless works.

However, some smaller dealers are actually a boon to the art community, charging only minimal markups to cover significantly lower overhead expenses.

Smaller dealers may charge only 15% to 20% markups.

However, the onus is generally on the artist and the buyer to research the dealer’s credentials and reputation, and ensure that the art is genuine. If you are comfortable performing your own research or the dealer has a solid reputation in your community, this may be the best choice for you.

Auction Houses

Auction houses are similar to other dealers. They range in size and reputation from online auctioneers to corner houses to such legends as Christie’s and Sotheby’s.

An art auction is generally exciting and extremely fast paced. In fact, many experts suggest that you visit a few auctions without making purchases in order to familiarize yourself with the experience.

It is easy to get caught up in bidding and spend way more money than you had intended.

Iron Work

It is also important to understand the premiums associated with such auction houses.

A buyer’s premium is assessed on every sale. It is a sort of handling fee, generally averaging between 10% and 20% of the sales price.

The more prestigious auction houses, such as Christie’s and Sotheby’s charge a higher premium, which may be as high as 25% on lower value items.

Seller’s premiums vary by auction house.

The seller’s premium is generally around 10%, and covers the costs associated with holding the auction.

Some auction houses, particularly Sotheby’s and Christie’s, retain the option not to charge a seller’s premium at all for more prestigious lots.

In fact, a few very high profile clients are actually guaranteed a certain sum regardless of the auction results.

The Bottom Line

Buying and selling art is in many ways its own art form.

It is important to educate yourself on the approximate value of the pieces in question before buying or selling. It is equally important to learn the various retail options in your area and develop an understanding of the costs and benefits of each outlet.

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