Art Prices – What Collectors Need To Know

by A. Richard Langley

Collecting art, like creating it, is also an art in itself. It is a continually evolving process and the more time you spend doing it, the more experienced and knowledgeable you become of your own interests. As your collection grows, you gain expertise in acquiring works that reflect your taste and passion.

Whether you’re a serious or a casual collector, investing your time and money is an important part of building a collection. Although a great commodity in terms of investment, original art does not come cheap. Therefore, it is always a good idea to have some prior knowledge of the market as well as the art that you are purchasing. That mixed with your experience as a collector can help you put the correct number on an artwork. In order to determine the approximate value of a particular piece, you have to be nimble to navigate the volatile market, the always-changing trends, and shifting personal tastes.

The art business is unregulated and unpredictable. It is important that you are aware of some guidelines to help you determine fair market values and art prices using the most accurate, up-to-date information. Here is a comprehensive guide to the things that can affect the price of an artwork and how.

Identify and Authenticate

No matter from whom or where you buy a piece – artist, gallery, or online – the most important thing is to make sure it is authentic.

How To Assess Authenticity

• Artist’s Signature – The artist’s signature helps to prove that the work is by them, and it can add caché. You should compare the signature to signatures by the artist on other pieces, and have it verified by an expert.
• Certificate Of Authenticity – You should always obtain the Certificate Of Authenticity first. It is the best proof that the piece is authentic. Any reputable seller should be able to provide it – especially for contemporary artists.

Condition and Quality of the Art

The condition and quality of a piece should properly reflect its age and status. Newer pieces should be in pristine condition, while older works, much like a piece of antique furniture, should show signs of normal wear and tear – with no changes in appearance or structure.

Any kind of damage to an artwork usually depreciates its value or can even completely take it off the market. In 2006, Las Vegas magnate Steve Wynn accidentally poked his elbow through his prized piece, Picasso’s Le Rêve, voiding a contract for its lucrative sale. However, sometimes damage can actually be a good thing, too! For instance, when actor/director Dennis Hopper accidentally shot his Warhol portrait of Mao Zedong twice, the work sold for more than 10 times its high estimate after Hopper died. Therefore, in such situations, it is always better to consult a professional.

What If The Work Has Been Restored In The Past?

It is not uncommon for works of art, especially old works, to go under restoration once in a while. This does not make them a bad investment. As long as they are in a good condition and no permanent damage has been done, the work will continue to appreciate in value as time passes. If you plan to purchase a restored or repaired work, you should address the key items below.

• Did the artist approve the changes, or did they do them?
• Do the changes affect the structure of the piece?
• Do the changes affect the visual quality of the piece?

Provenance and Art Prices

Provenance is the sales and acquisition history of a piece. It may not always affect the piece’s price but could contain valuable, interesting information. You may learn an anecdote about the artist or that the piece once belonged to an important, influential person. Mainly, however, provenance is used to establish authenticity and lawful ownership.

Interest in an artist and their works can vary greatly across the periods, subjects, volume, and market trends. Pieces from established, in-demand artists – dead or alive – like Andy Warhol and Damien Hirst, generally hold their value and public interest. Some rising stars occasionally make a lasting and high-priced first impression. There are also times when an average artist’s work may hike up due to a renewed interest. For example, in 1988 Jasper John’s False Start was sold for a record-breaking $17 million because of an engaging bidding contest at a Sotheby’s auction.

No matter your finances or interests, it is crucial that you follow the market to stay current on the works and sales of artists you collect.

Visual Elements

Size is one of the key factors in pricing art. Generally, the bigger the piece, the more expensive it is—especially for established artists (e.g., Jeff Koons’ Orange Balloon Dog). For pieces that have been sold before, whether at a gallery or at an auction, use price databases (and, if necessary, consult an appraiser or advisor) to compare recent prices of similarly sized works and for similar works by the same artist.

Other factors that can affect demand and price of an artwork include whether the work is a painting or a drawing, an original, or an edition, and its subject, medium, and movement. Even the material used in the creation of the artwork, for example, Damien Hirst’s For The Love Of Gold (a skull covered with diamonds), can make a huge difference to its final value.

How Do Demand and Rarity Affect Art Prices?

It’s human nature to want to own a unique piece, which is probably why original art holds so much value. The rarity of an artwork – the only few works left after a particular artist’s death, or the last few limited edition pieces – can drive up its price. This, along with the added market value of the artist can also cause the price of an artwork to significantly appreciate in value. For example, a limited edition print by a noted artist of the past may be worth more than some originals by noted contemporary artists.

Market Demand

The art market, like the stock market, is fickle and unpredictable. There are several factors – financial as well as social – that can impact it and shift the balance. Consider the following elements to help you through the process. Remember to consult with your appraiser or advisor if you aren’t confident in self-appraising.

• Review comparable sales. You need reliable, recent sales data to determine the value of a piece. A proven way is to examine the market for similar items and artists who create similar works to those you collect.
• Track artist volume. Check public sales records for the volume of public sales records for an artist. The greater the volume, the higher the demand. It is also critical to find comparable sales of pieces within the same criteria.
• Monitor prices. Regularly attend auctions, visit galleries and art fairs and consult pricing resources for current, accurate information.
• Recognize the influence of power players. Always consider the influence of prominent art dealers, artists, and collectors on the market. They usually set the tone and direction for the types of pieces created and their prices.

Period-Particular Works

You may like an artist’s works during a certain period, but be sure the piece you want is a good investment. It should be unique for the artist’s output during the period and should stand out from their works in other periods.

Below are some elements that can adversely affect the price of period-particular works:

• Style or genre is passé. This causes less demand and subsequently creates lower prices.
• It has a longtime no-sale status. No matter the period, when a particular piece has not been sold (sale or auction) for a long period, the value will go down.
• Newer, similar works supplant it. If they have never been for sale or at auction, these works by other artists may influence the price of the piece you want.

Verifying Value

Find an Appraiser

The right appraiser or advisor will give you an objective opinion on the piece you want and have no conflict of interest. They should belong to recognized art market expert associations, and be versed in the art, periods, or artists that you collect.

Do’s and Don’ts

• Avoid free appraisals. Free doesn’t always mean good. It will probably cost you more money than the original cost to repair the damage from bad advice.
• Get an objective appraisal. Don’t get an appraisal from the seller. They aren’t on your side and may inflate the price.
• Confirm online information. Online data (e.g., artist, works, and pricing) may not always be accurate. An experienced appraiser or advisor knows how to validate and interpret the data.

Appraise the Work

Even if you’re a confident self-appraiser, you should consult with a professional to address the following items.

• Know how to use pricing resources. While there are many art-pricing resources (e.g., print and online guides, sales records, and databases), you need to know how to analyze and extrapolate the data.
• Know the seller’s history. This is critical when buying a work from an unfamiliar gallery for the first time. If you’re buying a work online or at auction sites, you may not know the identity of the real seller.
• Know the artist and their market history. Similar to the sales history, it is critical to know works and market histories of artists with whom you are not familiar.

You may be passionate about art, but always remember that it’s a business too. Regardless of whether you keep or sell the art you collect, you need to keep current and have an objective opinion on the art market specifics about the artists and works that interest you.

Have more questions? Ask us in the comments section or email us at [email protected].