1. Why should I buy from a dealer and pay his mark-up when I can find something similar cheaper at auction?
Acquiring a painting at auction is similar to buying a car or a house at auction. It can be a good way to buy but you need to know how to do it or you will make some expensive mistakes. Although it looks easy buying at auction is a complicated business best left to the professionals. Often the staff at auction rooms have little time for research and paintings are sometimes not by the artist listed in the catalogue. Paintings can look attractive to the untrained eye but are in bad condition and have been cleverly repainted by a restorer. If you buy a dud, unless you can prove it is an outright fake, which is difficult, you rights of recourse against the auction house are limited. That’s why the small print is so small. The pitfalls and dangers of buying at auction would take an entire essay to explain. The dealers ‘rings’, chandelier bidding, the estimate, the true level of the reserve, auction room condition reports and so on. It is possible to buy well at auction but buy only with top independent advice behind you. Otherwise it is just gambling. Dealers put their reputation on the line with every picture sold. They will normally buy back or sell on for you a picture when you decide to sell. If you develop a good relationship with one then they are normally generous with their advice. It is the difference between wholesale and retail and both have their place.
2. If I am selling then surely I will receive more for my painting at public auction than from a dealer?
It depends on what you are selling. For a medium quality painting auction is often the best place for it. Dealers probably wouldn’t want it and at auction it will find its own level. With a good painting it is sometimes better to use a dealer. Many of the leading buyers prefer to remain anonymous and keep their buying discrete. The auction rooms give their sale results including buyers and sellers names to the tax authorities and some buyers prefer to keep their affairs private. For something good they prefer to pay a little more to a dealer for the sake of privacy and avoid the big splash a high price always makes at auction. So, for a good picture a dealer can often get more for a painting. A discrete sale also suits some sellers. The deal is conducted at a slow and measured pace and often can be structured in a way beneficial to the seller. Selling at auction is the opposite where everybody has to rush into making decisions in the limited time available before the hammer comes down.
3. I don’t understand how paintings can be worth so much? It doesn’t make sense. Won’t the market crash sometime?
The picture market is like every other free market and prices are set by supply and demand. Prices are set by what someone is prepared to pay. Outsiders always struggle with values but dealers and auction room professionals have a good idea of what paintings are worth. The art market is no different from other markets in this respect. There is always someone making money whether the economy is in a recession or bull market. Whether it was Catherine the Great, Pierre Crozat, Charles 1st, Andrew Mellon, J.P Morgan, Souren Gulbenkian, Burrell or Wallace a few the rich have always and will always chase art. Collecting great art displays power and good taste and human nature is not about to change. Even in times of severe dislocation such as, WW1, WWII and the recent credit crunch recession when property and the stock market suffered the art market held up. Certain areas of the art market are more speculative such as contemporary art, which has spectacular rises and falls. Right now the contemporary market is flying and has been for a while so it is probably time to run for the exits. Old Masters have established their value and quality over a couple of centuries with the greatest masters gradually rising all the time in people’s appreciation. The Russian market is relatively young and has only really developed traction since 1989. However, despite cooling in the depths of the recent recession, it has recovered fast and as long as Russia’s natural resources continue to create fortunes for Russian businessmen the future for Russian art and its prices looks bright.
4. I am a bit nervous of the lack of transparency in the art market and everybody seems so secretive?
As in all businesses where there are large amounts of money traded there is going to be a level of secrecy and plenty of unscrupulous people. And Russian art dealers certainly have a reputation that proceeds them. However, with the arrival of the Internet and subscription available databases the market is much more transparent than it used to be. It is true that it is a market place that does take time to learn to navigate. It doesn’t reveal itself easily and building up a good collection takes more than just having deep pockets. Collectors should either take the time to start reading up on and following the market themselves or use a professional who can help them. Try a few dealers and auction room staff until you find someone you like then stick with them. If you move dealers too often then they will see you as a short-term prospect and just try to extract as much from you as possible before you move on. Take advice and learn from different people but try to find a dealer who you can buy and sell through.
5. I am just starting out and I don’t know what to collect?
Yes, it’s confusing to start with and can be a little overpowering, as there are so many different areas. Some collectors are drawn to one field in particular, others like a selection of everything. It’s best to start visiting museum to see what you like. Even better, get a dealer of curator to accompany you to explain everything. Start modestly and then gradually build up as you become more confident and get used to the pricing. A good way to start with Russian art is to go to the Tretyakov gallery in Moscow (two branches…modern and 19th century in different places) or the Russian Museum in St Petersburg and see what you like. If you take a dealer or curator with you then they can explain what things cost and what is still possible (with some areas of Russian art there is nothing left…it is all already in museums).
6. How much should I negotiate with dealers?
Negotiate a little but not too much. As Nathan Rothschild said ‘Always leave a little in there for the other guy’. If you let the dealers make a profit then they will look after you and continue to find you paintings. If you are too tough then after a little while they will only show you the items they cannot get rid of elsewhere. For many traders and business people who pride themselves on their tough negotiating skills this can be a hard lesson to learn. Collectors who are too tough end up with second-rate collections.
7. How do I learn about all those issues that go with collecting such as restoration, insurance, framing, shipping, and tax?
The Essays section of this website deals with some of these issues. Dealers and auction room staff work with all these issues and more on a daily basis and are normally happy to advise so just ask. Try to build some good relationships and don’t be afraid to ask. Try and do everything correctly without cutting corners will save you time, effort and money in the long run. Import and export to and from Russia requires specific knowledge as the law is constantly changing.
8. Is art a good investment?
If investment is your primary motive then it is better to avoid art and stick to more normal asset classes such as property, stocks and bonds. Art works well as an investment when investment is the secondary as opposed to primary motive. Certain areas of art such as contemporary have spectacular rises and falls. Other areas, such as Old Masters and most Russian art, go up quietly with inflation through good times and bad. With art, you get to enjoy it on the wall and it normally gently rises in value. If you can afford the best paintings, and you are well advised, then you can make some excellent returns. The highest returns are normally made by either buying the best of the best or buying an area before it has become fashionable. There are still a couple of areas in Russian art that are currently underappreciated because the market is so young and has only been functioning properly since 1989. However, art is illiquid and takes a while to sell. It has to be viewed as a long-term investment and you always need to be able to sell from a position of strength. Buying a few decorative paintings is one thing but buying expensive paintings only should be considered if you have a plentiful amount of all the more normal liquid assets such as stocks and bonds. Trying to view art as a normal asset and quantify it in terms more usually associated with the stock market doesn’t work. More and more funds are trying to persuade investors that art can be viewed in the same way as a bond or stock. However, because it does not have an income stream like a bond, property or dividend from a stock it is not well understood or liked by the banks. It is our view that art is a good investment but only for people who can afford to buy the right paintings and sell them at the right moment. It should be looked at primarily as a source of enjoyment and secondly as an excellent way of diversification and storing value for the future.
9. I don’t know much about Russian art but I know what I like and buy it. What more do I need to know?
That is fine up to a point if you are buying decorative items for your home. If you graduate to buying expensive paintings then it would be prudent to take some advice. Then, as well as buying what you like you would be buying paintings that are good examples of their type and good value at that price.
10. Should I spread my resources thinly over a quantity of paintings or concentrate on a few major pieces?
It is better to concentrate on a few major pieces. A couple of good paintings give more enjoyment to their owner, are easier to sell if necessary and are better investments. If you are lucky enough to have the resources, and you also have the interest, you should buy some great paintings. To know the difference between very good and great takes years of experience and requires taking advice.
11. Are fakes a major problem in the Russian market?
There are plenty of fakes in the Russian market and if a painting seems cheap it is normally for a reason. Good paintings always cost a lot of money. There are fakes in all parts of the art market including Impressionists and Old Masters. In fact there are fakes in all markets nowadays…it is just they seem to get more publicity in the art market. Go to a trade fair in China and you will see fake cars, engines, watches, clothes, scent, furniture, accessories, handbags, food etc. That’s why taking advice is crucial. Experience weeds out the fakes…after a while they just get to feel wrong….little things set off alarm bells. We have an extensive library and consult with our team of art historians, restorers and museum curators for a second opinion and third opinion on every piece of art we handle.
12. What are your fees?
We do not have fixed charges and agree each situation with the client depending on the circumstances. However, a very rough guide is as follows: – when representing a seller we either agree a fixed sum to be returned to the seller in the event of a sale and keep any profit we can make on top of such a sum or act for a 10% commission on the eventual sale price. When representing a buyer we charge a 10% commission if we bring the painting to the buyer’s attention and 5% if we act on behalf of the buyer to buy a painting they have been offered by someone else. For advice and buying at auction we charge 5% of the hammer price.
13. Where are you based and where and how do you operate?
We are based in London and have offices in Switzerland and the US. We are private dealers and operate without having a walk-in gallery. Meetings are arranged by appointment. Painting viewings are arranged worldwide at the client’s home, at a museum or at a location mutually convenient to all parties. We receive catalogues from most of the major and minor auction rooms and have bought and sold paintings and sculpture all over the world.
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