Private Art Sales

Carol Vogel of the NY Times recently published an interesting article on private art sales. She states as collectors have financial issues and wish to sell all or portions of a collection they are now looking more and more and private sales. The sales typically generate less income for the seller, but allows much more privacy. Sometimes selling a collection in a public auction may have the effect of letting the world know the owner is having financial difficulties. The art world loves to gossip, so private sales are an alternative, but even then word of the sale typically leaks out. Both Christie's and Sotheby's are actively involved in private sales in addition to their traditional auctions.

Vogel states For many sellers, the driving factor is fear. Fear that their friends will discover they need money. Fear that if a Picasso or Warhol, Monet or Modigliani does not sell at auction, it will be considered yesterday’s goods.

If they do not have to, fewer collectors are putting their holdings up for auction at Sotheby’s and Christie’s, where prices and profits have plummeted. But executives at both houses say business in their private-sale departments has more than doubled in recent months.

Even institutions like the Museum of Modern Art are avoiding auctions. This season it has decided to sell two early classic 1960s paintings by Wayne Thiebaud through Haunch of Venison, a gallery owned by Christie’s. In 2005, when the market was nearing its peak, it sold a variety of works at auction at Christie’s for strong prices.

Vogel contiunes So secret are private transactions that confidentiality agreements bind the dealers and auction-house executives. Still, the art world loves to talk, and in recent months among the expensive paintings that have quietly changed hands are a 1970s de Kooning abstract canvas sold for around $30 million; a Cy Twombly “Blackboard” painting for $12 million; one of Gerhard Richter’s “Color Charts” for $18 million; and Jeff Koons’s “Hanging Heart Violet” sculpture for $11 million.

There are exceptions, of course. Estates continue to go to auction because executors have a fiduciary responsibility and prices are rarely challenged after public sales.

For the auction houses, private sales are lucrative and inexpensive. Generally Sotheby’s and Christie’s charge 5 to 10 percent of the purchase price of an artwork, depending on its value and the agreement with the seller. (If a work goes to auction the houses charge sellers 25 percent of the first $50,000, 20 percent of the next $50,000 to $1 million and 12 percent of the rest.) Money earned from private transactions comes cheap, without expenses like advertising, insurance and shipping associated with auctions.

To read the full article, click HERE.