"Now you’re ready to raise your paddle."
According to Thomas Hoving, former Director of New York’s Metropolitan Museum of Art, “Art is sexy! Art is money-sexy! Art is money-sexy-social-climbing-fantastic!”
Understanding the art market’s money-sexy and fantastic world is essential for making the right collecting decisions. Between the artist creating the work and the collector buying it, there are a number of key players.
The art market is essentially divided into two—the primary and secondary market.
The first sale of new works by an artist is broadly known as the primary art market. This is where the price of an artwork is first established.
Most primary market sales are made through an art gallery or dealer—from solo or group exhibitions, the gallery’s stock room, or art fairs like Art Fair Philippines or Art Basel Hong Kong where the gallery or dealer exhibits their key artists to a larger, international audience.
Art consultants don’t generally have an exhibition space or exhibition program but may curate exhibitions. They work closely with galleries and usually work with their clients on a retainer or fee basis.
Some artists operate more directly with the market, via their websites and social media. While this can work very well for artists in the short term, the reality is that it is difficult for the artist to develop their profile without the collaboration of a gallery.
Art galleries invest many resources in building the artist’s brand and this partnership allows artists to concentrate on creating their best art.
The secondary art market generally refers to second and subsequent sales of an artwork.
The auction house is the major seller in the secondary market. It’s essentially an open market and very competitive, both in the sourcing and selling of the works. Anyone who registers can buy the work at auction.
The auctions tend to grab the headlines in the press and operate as a barometer for the art market in general. Auction houses can participate at the ultra-high end of the market to the low end where they act as an artwork clearing facilitator.
Auction results are public and prices realized are published online through the auction houses’ websites or independent online databases.
Many collectors opt for the more discrete nature of private treaty sales through art galleries and dealers. In this way, works are not publicly exposed and the sale price is not published for general reference. The artwork remains “fresh” giving clients the opportunity to approach an auction house at a later date.
Generally speaking, successful secondary market sales tend to be mid-career or established “blue chip” artists. Auction headline results are very often by artists who are no longer alive as there is a finite supply of work.
There are a number of auction houses operating in the Philippines, the most prominent being Leon Gallery, Salcedo Auctions, and Finale Auctions.
They often run a tiered system of auctions from headline grabbing “blue chip” sales through to periodic estate auctions.
Auctions can present great buying opportunities but can also be a minefield if you don’t do your due diligence. Using your head ahead of your heart is a wise approach to this method of art buying.
It’s essential to know what you’re buying—do your research and get sound advice from professionals. An artwork by a big name may seem cheap but there is always a reason for this. To help you avoid the pitfalls, check the provenance—the history of ownership; review the authentication—exhibition catalogs, certificates of authenticity; request a condition report on the artwork; attend the preview to see the work in the flesh; and, check prices achieved for works by the artist from similar series and periods.
Make sure you understand the way the auction process works and know the bidding increments.
Remember too, auction houses charge fees. The buyer’s premium is generally around 15 percent on the hammer price plus 12-percent VAT on the premium. So, if you successfully bid P100,000 on a work, expect to pay around P16,800.
In the secondary market, auction houses determine the formal trading market price point. This is usually based on precedent.
Some artists can do extremely well in the primary market but not perform as well at auction. This can partly be due to the amount of work available to the auction and/or how the work is received by a broader audience.
An estimate is given to indicate the expected lowest and highest value that a work could be expected to sell for in the current market. Remember, this is only a guide and the final price might be higher, lower, or the work may not sell.
Generally speaking, it takes time for an artist to build a secondary market presence and pricing. Don’t expect to buy a work in the primary market by an emerging or mid-career artist then sell at auction within a short timeframe.
Pricing of artwork on the secondary market can also be impacted by condition and provenance (where it came from) as the work may have passed through several owners.
Now that you’re armed with tips on how to buy at auction and the key elements to look for, you’re ready to raise your paddle, or immerse yourself in the heat of the art market’s money-sexy and fantastic world at Finale Auctions’ art, watches, and jewelry auctions on Oct. 13 and 14, at 2 pm, at Warehouse 17, La Fuerza Compound, 2241 Chino Roces Avenue, Makati. E-mail firstname.lastname@example.org; call 8132310; or visit facebook.com/FinaleAuctions.