Jusst a quick post on an article in the San Diego Examiner on privately selling art. The article mentions how art sales are strong, but when selling privately as a collector it is much more difficlut. The article lists 5 points of interest when trying to sell art privately, and also mentions the eBay art sales program has not been a success for the amount invested in it. Overall, a very interesting article, and cites many reasons that a collector should visit with a professional for assistance.
The SD Examiner reports
1) Art sold privately without the support of an art sales organization often creates the appearance that no art sales organization will invest in advertising, sales training and inventory finance costs for the work of art. The main reason is usually pretty simple -- and a good reason not to buy the art. That is bad reviews by art critics, calling the work the worst piece ever painted by artist X or the most tasteless insult to the region of Y, etc. The latter just happened again today, when the city of Encinitas voted to remove art some voters considered offensive.
2) It can be difficult or impossible to obtain a bank loan for art purchased in a private sale. The main reason is plain and inflexible. Commercial banks require that collateral meet tests for “liquid assets.” This means that there is certainty that the asset could be sold in less than one year. If there is no track record of the art having been sold by an accredited art sales organization, it is not a liquid asset by definition and a commercial bank simply cannot extend credit. There are few commercial finance companies that do make these loans, but they charge a lot, over 20% annual interest, compared to rates of 6% to 8% offered by commercial banks.
3) Art dealers typically provide buyback clauses, guaranteeing that they will re-purchases the art for 100% of the purchase price for a period of one to three years. These details are well documented in the archives of the Norton Simon Museum in Pasadena, which maintain the actual contracts that Mr. Simon signed when purchasing the works in his world famous collection.
4) Inadequate research regarding an artist or a set of works of art often results in a lower price. The classic case is works by the renowned Italian Renaissance artist, Caravaggio. Very little research about Caravaggio’s work was published before the 1960’s. That is not because of his artistic talent, but because Caravaggio was excommunicated by the Catholic Church. As a result, some paintings by Caravaggio sold for under $1,000 during the 1950’s. Today, all original paintings by Caravaggio are worth millions of dollars.
5) Sales of art by private universities are complicated and sometimes result in the sales contracts being invalidated. Yesterday, the New York State Board of Regents announced a decision that it would not provide financial support to any university which sold art that had been donated to the university. Technically, the universities have the right to opt out and dispose of their art if the trustees decide to do this. The reality is that every university in the state of New York benefits from stipends paid by the New York State Board of Regents.
Click HERE to read the complete article.
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