A Look at Art Prices, Rarity and Value

I hope everyone had a great Thanksgiving and holiday weekend.  After a few days off, time to get back to posts. The NY Times ran an interesting article that briefly covers a lot of territory, from price, stores of value, private museums, difficulties in donating, odd items with limited collector interest, and ultimately collecting things because they are beautiful.So it really touches on a lot of divergent collecting areas.

The NY Times reports
LOOKING back on some of the most popular antiques he has sold, Bill Rau, chief executive of M.S. Rau Antiques in New Orleans, said two truly stood out for both their value and scarcity.

The first was an Enigma machine, which was used by the British to decode German military messages during World War II.

“They’re exceptionally rare,” Mr. Rau, a third-generation antiques dealer, said. “Up to 1990 they didn’t exist outside of intelligence circles. Forty-five years after the war, they were declassified. As recently as two years ago, we sold them for $100,000.”

At a Bonhams auction in March, one sold for $269,000. The auction house sold another one in October for $365,000. Mr. Rau said he has bought and sold five Enigma machines over the years, and their rarity has translated into healthy appreciations in value. He had an Enigma machine for sale at the New York Art, Antique & Jewelry Show, which ended on Tuesday, priced at $198,500.

Yet in the annals of memorable, rare and expensive antiques, none stand out as much as the so-called sex chair that Prince Edward had fabricated in the 1880s — while he was waiting to become King Edward VII — to support his weight during his visits to a bordello in France.

“We sold it 14 years ago, and people still come in and talk about it,” Mr. Rau said. “It was one of those things that everyone who was past a certain age was intrigued by it. Even the most conservative people said, ‘Wow.’”

He wouldn’t disclose the price a collector paid for it, but said it was an object that commands whatever someone will pay. “You could ask $100,000, $1 million or $5 million, and no one could tell you that you’re crazy,” he said.

Price is just one of the variables that collectors of art and antiques need to bear in mind as the auction and private-sale markets this fall have been hot and cold. Big prices were paid for top pieces, but overall numbers for the major fall sales, which ended last week, did not always meet expectations.

A rare and exotic object commands more money, but it also has fewer buyers. There are more people able and willing to pay for a code-breaking machine than a crown prince’s bordello throne. The recent purchase of “Nu Couché” by Modigliani for $170.4 million by the Chinese billionaire Liu Yiqian qualifies as one such piece that gets much attention but has few buyers.

“Art has become a separate asset class, but it’s a thinly traded market, particularly at the high end of the market,” said Michael Kosnitzky, a partner at Boies, Schiller & Flexner, who works on tax issues for wealthy families. “And because the market is thin, there is greater risk. Anything that goes up could go down. People have to hold for the long term.”

And if the collection goes up, there are tax considerations as well as insurance and display questions. And then there is the quandary a collection presents to heirs: What exactly do you do with a nine-foot-tall Siberian bear skeleton worth just under $100,000? (In this case, the owner moved from his sprawling Montana ranch and sold it.)

Some collectors see what they amass as a store of value. That may be more true in some cases than in others.

John Carona, who served 24 years in the Texas Senate and House, has collected some 200 canes over the last two decades. Some are distinguished by their carving, like the wooden one with a gold handle that belonged to Daniel Webster, the 19th-century congressman and secretary of state.

Mr. Carona also collects so-called system canes, which contain something else inside them, like a rifle or an entire set of dental tools, including a drill. He said he had one cane that could be reconfigured into a violin.

The canes cost several thousand dollars apiece, with a few reaching into five figures. But he said he saw them as an investment. He tracks the fairly active auction market for canes, and believes canes appreciate as much as 20 percent in some years.

“Being a collector, it never really cost you anything,” Mr. Carona said, who sees his canes as an asset class and not a hobby that consumes money.

Canes are easier to store and transport for sale than one of Mr. Carona’s other collections: wood-carved barber chairs. He has nine of them and admits that their value is probably not increasing at the same clip as his canes. He plans to leave the chairs to his sons.

That was what Andreas Bechtler’s parents did for him and his sister, though their patrimony was a collection of several thousand works of art by artists including Giacometti, Miró, Picasso and Calder.

With his collection worth tens of millions of dollars, Mr. Bechtler took the 1,200 works he inherited from his parents, plus 300 from his own collection, and opened a museum in his adopted hometown, Charlotte, N.C.

“The realization that there was this collection in my hands gave me the feeling of a real caretaker,” he said. “All of a sudden I realized, yes, wouldn’t that be fantastic if we could keep it together.”

Putting a collection in a museum, and reaping the prestige and tax benefit from doing so, is what many collectors dream of. But it is challenging, expensive and often difficult to accomplish.

Mr. Bechtler got the idea for a museum in 2000, but did not open one for a decade. During that time, he said he passed on offers from existing museums to build a wing for his collection. The city of Charlotte eventually agreed to build a separate museum, but it had to pass a tax increase to pay for it.

Wary that the city’s finances could one day take a downturn and put the art at risk, as happened last year in Detroit, Mr. Bechtler has donated the art to a separate nonprofit entity that has, in turn, lent the works permanently to the museum.

In other words, Mr. Bechtler’s donation was a complicated undertaking — and he had world-class art.

Those with smaller collections may have an easier time figuring out what to do with them, though there is an element of luck involved. An institution needs to have a desire for what is being offered.

Andrew Alpern, an architect and lawyer in Manhattan, amassed two seemingly esoteric collections and donated both to Columbia University.

The first was architectural drafting tools, which went to the Avery Architectural & Fine Arts Library at Columbia in 2010. The second, a collection of 750 drawings by Edward Gorey, went to its Rare Book & Manuscript Library in 2013.

“It gives you a really good feeling of satisfaction that something you cared about and that you put together for a long period of time will continue to exist when you’re gone,” said Mr. Alpern, 77. “That’s satisfying. It’s more satisfying than just giving a good sum of money to an organization.”

Mr. Alpern said he also got more than $500,000 in tax deductions.

Mr. Kosnitzky, the lawyer, said the various taxes in selling art or antiques in New York — the federal, state, city and investment income taxes — can approach 45 percent.

Advisers said that few people end up finding places to accept their collections, either major or esoteric, and that needs to be addressed as people get older.

“In my experience, very few clients move from approaching the art as a personal asset to an investment or a collection,” said Lisa R. Featherngill, head of wealth planning at Abbot Downing, the private wealth management division of Wells Fargo. “Quite often, they get kind of stuck in this place where it’s a personal asset, and the kids are going to want it. Hopefully, they talk to them, but they might not.”

And knowing both when and how to dispose of those collections can be a challenge.

Susan Borowitz, a photographer and screenwriter whose credits include the television show “The Fresh Prince of Bel-Air,” thought of selling her collection of Punch and Judy memorabilia when she and Andy Borowitz, the humorist, divorced. It was something they had collected together.

“I talked to my kids about it, and they said, ‘No, this reminds of us of you guys at a happier moment,’” she said. “I’m going to let them decide what to do with it. Hopefully, I won’t be in such a sorry state financially that I’ll have to sell this stuff off.”

She added, “We weren’t collecting them to be an investment to be sold at the right time. It was always just about surrounding yourself with beautiful things that make you smile.”

Short of a collection of world-famous paintings, that may be the best way to approach any art and antiques collection.
Source: The NY Times 

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