by William Addison

Created on: November 21, 2010

Collecting and enjoying art may be different from the act of actually investing in it.  To “invest” presumes that an appreciation in value is anticipated.  As with any investment such as real estate, or the stock market, there is risk involved.  If an investment is made in artwork with the hopes of enjoying a profit later on, it is wise to educate yourself on the type of artwork you plan to buy and the artists that create it.

To view art as an investment is to view it as a commodity.  This presumes that there is monetary value attached to a piece of artwork, and that there is a market for the item that will be valued in accordance to the basic laws of supply and demand.  The supply part of the equation is dependent on the production output of an individual artist and the demand piece is dependent on several sometimes arbitrary and subjective factors such as like aesthetics and rarity.

There are scams in the art sales business that buyers should be aware of.  Auction prices can be artificially inflated, sales can occur without clear title/ownership, and fakes are produced and sold quite often.  The reality is that the art sales industry is not as well regulated as other investment opportunities such as real estate.  The opportunities for fraud are prevalent so the best practices dictate due diligence and careful research before investing.

So how will research benefit you, and how should that research be conducted?  The first step is to identify an art segment, and then identify an artist of interest.  Determining the worth of an artist is a difficult process, but some benchmark information should be obtained.  First, identify the artist’s agent.  If there is no agent, that may speak volumes about value.  It is also important to find out where the artist’s work first appeared.  There may be a prestige factor as time passed.  Reviews are a great way to get a feel for the value of an artist’s work as well.  Finally, and most importantly, find out what past works have sold for.

The best way to find an artist that will suit your interests is to simply get out and visit galleries.  Identify the medium you are interested in and frequent the places that specialize in showing works of that type.  Private curators are a great resource because they tend to have a passion for their work and they love to show their artwork to those who have an interest.

Once you find an artist, or a group of artists that suits your style, learn as much as you can about them.  Learn about their education, the shows they have been in and any awards or accolades they have achieved.  Finding out this information will position you to identify a value range that is most appropriate.

You may find an artist of interest in a magazine or on the Internet.  If so, find out where this artist is showing and go out and see the works and find out the price point for the artist’s work. 

Finally, make an effort to be seen at shows and galleries and introduce yourself to people as an investor.  If you make yourself known to owners and managers, chances are you will be contacted when a good opportunity arises.

With any investment there is risk so it pays to do some homework and be passionate about the art you are interested in.  Also, communicate with the people that can facilitate a transaction like art curators, and gallery owners and managers.  A truly educated and knowledgeable collector will stand a far greater chance of avoiding a loss on your next art investment.

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