The Art of the Deal - Private Sales

Katya Kazakina of Bloomberg has a good article on private art sale transactions. Kazakina reports in the past dealers would assist or act as a middle man in private sales. Now, the dealer must make an offer and buy the art outright. If the dealer wants a bargain, he has to be ready with an offer and a check to back it up. Some dealers try to flip the newly acquired artwork quickly, showing invoices to potential clients and marking up what might be closer to a small commission instead of

Kazakina states Such sales are on the rise since the economic crisis chased speculators and other buyers out of the public art market and scared sellers with the risk of costly artworks flopping at auction.

Publicly traded Sotheby’s has lost about half its market value in the past year. Worldwide sales for Christie’s International declined 35 percent in the first half of 2009, the company said.

With prices in flux, many collectors prefer the discretion and flexibility of a private sale over the auction room’s risk and visibility.

“If it doesn’t sell, it’s not a public event,” said Michael Findlay, director at Acquavella Galleries Inc. in New York. “However, if your painting is on the cover of an auction catalog and it’s been marketed globally and then doesn’t sell -- ouch!”

Kazakina continues Private sales compose the most opaque segment of the largely unregulated art market. The secrecy that makes these deals appealing to clients also precludes most participants from revealing any specifics about the transactions.

Such deals also allow collectors to have control over prices “at the time when price points are very difficult to determine,” Dolman said. “People are happy to negotiate and walk away from a transaction” if the agreement isn’t reached, he added.

Serious and seasoned collectors, who understand the advantages of buying in a depressed market, have filled the gap left by fleeing speculators.

The article has some very good information on the state of the market and how galleries are fulfilling the needs of buyers and sellers. Keep in mind that Sotheby's and Christies both have private sales divisions, and they have been active.

To read the Bloomberg piece, click HERE.