Serious art collectors have long learnt that their passion can be lucrative, as diversifying their portfolios can result in profits if they cash in on their investments at the right time.
Just last month Irish billionaire John Magnier sold his 1917 painting Nu couche (sur le cote gauche) by Italian artist Amedeo Modigliani on auction for $157.2-million in New York. Sotheby’s closed the deal and it was the fourth-most expensive artwork sold at any auction house. Magnier’s investment certainly paid off, as he had initially bought the Modigliani for $26.9-million in 2003.
While collectors usually prefer to remain under the radar when it comes to their wealth and acquisitions, local auction houses have been willing to share insider tips for the newbie interested in auction hunting.
Ruarc Peffers, managing director and senior art specialist at Aspire Art Auctions, offers the wisest, simplest tip: “Sit on your hands if needs be!”
“If you have never attended an auction, go to a few to get a feel for how they operate, before you start bidding. Have a clear limit on something you’re interested in, and stop when you reach it,” Peffers says.
The process of bidding and buying art at auctions should ideally start way before you enter the room. “Acquire knowledge about the things you’re interested in, particularly regarding artists,” Peffers says. “There’s a lot of literature, or a simple Google search can tell you a lot about a prospective acquisition. Always feel comfortable to approach the auction house specialists: they are usually very knowledgeable and willing to share their expertise and experience.
Auctioneer Anton Welz, of Stephan Welz & Co, offers cautious advice to the new investor. “Do not get drawn into a bidding war. Set your limit and stick to it: nothing is worse than buyer’s remorse,” he says. “Do your homework on the piece you are considering buying. View it in person if possible; if not, ask for a condition report from the specialist concerned.”
Buy the best you can afford, and love what you buy, as there is nothing worse than owning something you don’t like
Susie Goodman, executive director of Strauss & Co, says first-time buyers should familiarise themselves with the auction process. “It is important to buy art from a reputable auction house. Buy artworks that you love, but also learn as much you can about the artist and artwork,” she says.
Goodman advises potential buyers to frequent viewing days ahead of an auction. Strauss puts its auction items on show for three days ahead of the sale day. All items are also shown on its website. Goodman says Strauss has “walkabouts and lectures and specialists are on hand to advise clients” ahead of its five live auctions a year.
The investor’s challenge is finding out whether an artwork’s value would increase with time. Welz says this comes down to research. “If you are considering buying a painting, have a look at the auction house websites to get an idea of prices achieved by the artist over the past few years,” he says. “Pay attention to the size, subject, and medium as a guideline to compare with the work you are considering buying. Get to know the difference between a good and bad painting or print.”
Peffers agrees: “Investigate the bona fides of the specialists that you intend to deal with. Always pursue advice from the best specialists. Take the time to familiarise yourself with the items on which you intend to bid. Request condition reports and view the lots (artwork) in person.”
Another important factor when collecting art for investment purposes is having a clear strategy, Peffers says. “Take the time to develop a clear collecting strategy. This will produce a collection that is interesting and unique, and focuses your spending with a clear plan, which increases the chances of a better return in future,” he says. “Be selective about what you want. If it is something that is suitable — a high-quality addition to your collection — pursue it with fervency. If it is not, limit your bidding to within a reasonable price range.
“If you want art that is great, that will enhance in value over time, be prepared to pay for it. Don’t buy something because it seems fashionable,” he advises. “Think of art in generational terms, pursue things that will transcend and outlive short-term trends.”
Goodman says the fine-art collector can choose a trajectory by following either “young upcoming artists, established artists, or artists who have historically made a name for themselves”.
“Some collections comprise art on paper, such as drawings, watercolours, and mixed-media artworks, or prints and multiples, and then, of course, there are original one-off paintings and sculpture,” she says. “There is a wide variety of artworks for every taste and collector.”
Welz says collectors should spend time visiting art galleries as well, taking direction from their walls and understanding where the market is heading. “In art, there are a number of really good young artists to watch. Educate yourself as much as possible about the artist and his or her work.” Ultimately, adds Welz: “Buy the best you can afford, and love what you buy, as there is nothing worse than owning something you don’t like.”
And then, of course, there’s the legal stuff the new collector should be aware of too. Peffers says: “A bid is legally binding. Don’t bid on something then renege on payment. Auction houses do not take this lightly.”
Goodman adds that live auctions can be tense, but are not nearly as frightening as one might imagine. “The auction room is in no way intimidating and unlike what is generally dramatically portrayed in the movies,” she says.“Raising your hand to adjust your spectacles, or to cover your mouth to cough is not going to result in you leaving the auction room with an artwork you neither wanted nor could afford.”
Bidders can usually also protect themselves from overspending by letting the auction houses know ahead of time what the maximum amount is they are prepared to spend. “This is a particularly useful tool towards the closing out of an online auction when bidding is often very brisk,” Goodman notes.