Acquiring art — whether from a dealer, through an auction house, directly from an artist or through some other method — is at the heart of collecting. Some acquisitions are made after years of searching for an object, while others are purchased on a whim. Either way, or depending upon the stakes, the process can be nerve-wracking or immensely satisfying. Usually, it's both.
Sound art collection management starts at the acquisition stage. Knowing from whom to buy what and at what price is a skill in itself, one that can be developed over time. While most art collectors do not collect solely for investment purposes, the majority will at least want to know how price relates to value and whether they are investing their money wisely. They will want to purchase something that will gain value over time — or at least not lose value.
Today, there are infinite opportunities to buy art. With the globalization of the 1990s and the introduction of the Internet, the art business has become an international, quasi-transitory affair. Not only do many galleries now have multiple branches in other cities (Gagosian Gallery being in the lead with shops and offices in at least 13 locations, from New York and Beverly Hills to Athens and Rome), a huge portion of art transactions are happening at art fairs, temporary gallery trade shows which span five to 12 days and take place in ever more cities around the globe. Auction houses, too, have expanded their reach, with Christie's and Sotheby's, both originally founded in London, now offering sales in far-flung venues such as Beijing and Dubai, and further broadening their businesses through private treaty sales and selling exhibitions. And online possibilities for viewing and buying art continue to grow.
MARKETS, SOURCES, APPROACHES
What to Collect?
Art collecting is deeply personal, a reflection of the self. It is not surprising, then, that individuals take different approaches towards building a collection. Some begin with a particular theme or interest in mind: a certain movement, historical period, medium, geographical area, or a combination thereof which leads to a succession of discoveries and connections. Others seek to chronicle or preserve the production of a specific era or culture. Motivated by an ardent interest in his own Mexican culture, the painter Diego Rivera (1886–1957) amassed some 60,000 examples of pre-Hispanic pieces, now exhibited in Mexico City's Anahuacalli Museum which the artist himself designed. Still others buy work without any intended focus at all, acquiring individual pieces simply on the basis of what appeals to them visually or taps into their desire at a particular moment. As collector Jesse Price said when discussing how her eclectic collection was put together, "We just assume nothing has any relationship to anything."
The American collector Ronald Lauder bought his first work of art, a drawing by Egon Schiele (1890–1918), at the age of 14 with his bar mitzvah money. This was the beginning of a lifelong collecting passion for German and Austrian art and, eventually, the founding of a museum in New York devoted to this genre. At the same time, Mr. Lauder has indulged his rather disparate interests in medieval art and armor, French and Italian design from the 1920s to the 1950s, and works by modern masters such as Paul Cézanne, Pablo Picasso, and Constantin Brancusi, demonstrating how individual collecting often takes different avenues.
Tastes and interests evolve as well. One international couple began acquiring classic paintings of ice-skating scenes from Dutch masters in homage to their adopted home in the Netherlands, but eventually shifted their collecting focus to avant-garde contemporary art.
Some collectors concentrate on blue-chip works while others are inspired by emerging artists — younger artists who are not yet established in their careers and whose prices are usually lowest. In the 1990s, Charles Saatchi famously collected the work of emerging British artists fresh from Goldsmiths art school, almost single-handedly catapulting this edgy group — which would come to be known as the Young British Artists (YBAs) — into bona fide international art stars. Other collections are at least partially defined by budget and other constraints. The storied American collecting pair Herbert and Dorothy Vogel, he a postal clerk and she a librarian, purchased conceptual and minimal art on Herbert's modest salary — and only bought works small enough to take home in a taxi. New collectors often start by purchasing less expensive prints and multiples, enabling even those with lower budgets to own a work by Rembrandt van Rijn (1606–69) or Louise Bourgeois (1911–2010). German Expressionist artists, who at the beginning of the 20th century revived the printmaking tradition of Albrecht Dürer from the 15th and 16th century, recognized that the print medium enabled bourgeois collectors to acquire innovative art of their time at affordable prices.
Collecting one individual artist's work in depth, often from different points in that artist's career, is sometimes referred to as vertical collecting. For a while, the colorful collector Jean Pigozzi liked to select 10 different works each of the emerging artists he collected for his "10 × 10" collection, thereby establishing a "position." He still likes to have multiple examples by each artist he collects, focusing his collection on young artists in order to support them, to buy works cheaply, and to hopefully maximize investment potential. On the other hand, buying individual works from a broad number of different artists is sometimes referred to as horizontal collecting. Crossover collecting is a term used to describe collecting works from across periods from the ancient to the contemporary and may be contrasted with niche collecting.
No matter where the specific interests lie and whether or not a collection will ultimately become a heterogeneous one, collectors can, and should, hone their eye by looking at art from all different periods and media as often as possible. The greatest collectors can evolve into connoisseurs in their own right, becoming just as knowledgeable and skilled as the dealers, curators, or other experts they work with — if not more so.
Buying from Art Dealers
Most collectors start buying art from an art dealer (or gallerist), who is in the business of selling art and usually specializes in certain artists or types of art. Dealers typically have a space in which they keep inventory of art and stage exhibitions which are presented to the public. Up until recently, the majority of the art trade took place locally in bricks-and-mortar galleries, and it would be possible for a collector to be familiar with all of the art galleries in one geographical area. An individual would visit the gallery, look at the art, talk to the dealer, and sometimes purchase a work. Now, major art hubs such as London, New York, and Berlin each have hundreds and hundreds of galleries with many coming and going as markets boom and bust. And more and more, art is also being sold online.
Given this landscape, how can a new collector find a reputable dealer? To start, one can consult professional organizations for member listings such as, in the US, the Art Dealers Association of America (ADAA) or the New Art Dealers Alliance (NADA) — though by no means all countries have equivalents to these. The gallery roster of respected art fairs such as Art Basel, The Armory Show and Frieze whose participants are usually vetted, in some cases rigorously, is another good place to find galleries with interesting works to offer. Most cities with a critical mass of galleries also organize monthly or yearly open-house events where openings are held concurrently such as Gallery Weekend in Berlin in late spring or the Second Saturday Gallery Nights in the Wynwood Art District in Miami. After such initiations, the process is about engaging with dealers, following artists, and building relationships over time.
The Primary Market
When a dealer sells work that is on the market for the first time, work that is usually consigned to the dealer directly from an artist, he is operating in the primary market. In such situations, the artist and the dealer usually split the retail price paid by the buyer 50–50, but this percentage tends to shift in favor of the artist as prices rise. A collector sometimes has the opportunity to buy a work directly from an artist. If the artist is represented by a gallery, however, the collector should think twice about making such overtures. A reputable artist, if already associated with a gallery, will usually not make a direct sale which omits the dealer (but may arrange a discount through the dealer, see p. 23).
All of this presupposes that a gallery is willing to sell to a buyer in the first place. Traditionally, and from a business perspective, it is the dealer's job to build the reputation and hence the market for an artist's work. This means that good dealers will be very knowledgeable about the artists, their history, the entire body of work and where to find it (e.g., whether the works are in private collections, public collections, and whether they are for sale). Good dealers strive to ensure that work is spread around; they do not simply sell work, but rather place it in the right hands. Selling to the wrong party can result in a dealer losing control of an artist's market. The dealer will thus generally not sell to just anyone who happens to have the cash, and will most certainly not sell to a suspected speculator — someone who is perceived to be only out to make money by buying a work and flipping it at auction. Art buyers known to engage in such practices can quickly be blacklisted by a gallery, if not an entire gallery community. However global the art world is, it is in practice quite small; information about the particular interests and habits of collectors gets around.
Right of First Refusal
More and more frequently, as a condition to having access to the most desirable artists, top galleries are requiring collectors to sign a right of first refusal at the time of purchase, meaning that if a collector wants to sell a work sometime in the future to a third party, he or she must offer it back to the original gallery at the same price before consigning or selling it. The right of first refusal is thus a method dealers use to control markets of work by sought-after artists or as a safety net when dealing with new buyers who have not yet won the dealer's trust. This pre-emptive right is also imposed to prevent art buyers from selling works for a prescribed time period or even from ever selling the works at all. If such an agreement is signed by the buyer, it will most likely be enforceable, although there are still few court cases to substantiate this. (Most such claims settle out of court.) Regardless, any collector who wants to continue to buy art from dealers and wishes to avoid legal headaches, fees, and other disruptions such as being assigned to a blacklist, should take such agreements seriously. Collectors should also be aware that the right of first refusal is a condition that it is not always negotiated or discussed; it may be buried in the terms of the purchase invoice — or it may simply be assumed (see p. 183).
Art buyers known to sell works quickly for profit may be blacklisted by certain galleries. Although almost never openly discussed in the guarded art world, artists, too, may have a say in how an artwork purchased through a gallery will be placed and may thus dictate who may not buy their work. In at least one rather sensational case, the well-known South African artist Marlene Dumas (1953–) allegedly blacklisted Miami collector Craig Robins after finding out he had sold one of her earlier works. When Robins attempted to buy a newer work, the dealer refused to sell it to him, supposedly per the wishes of the artist.
The Secondary Market
Art dealers also engage in the secondary market, selling works that have already been sold before. While some dealers specialize in the secondary market, others sell such works as a back business to support the exhibitions and publications of their principal primary-market operations. (It can take years to make a profit when representing a new artist on the primary market.) Dealers are also active secondary-market buyers, investing in inventory and controlling the markets of the artists they represent. Some secondary-market dealers deal privately; they do not have a physical showroom or exhibition space, but rather sell from their own inventory and broker deals from a non-public space, usually a home or office.
Works on Approval
Established collectors are sometimes allowed to borrow a work they are considering purchasing from a dealer, receiving the artwork on approval (or "on spec") for a temporary period in order to make a decision. In such cases, the dealer sometimes organizes the transport or even the installation of the work in the potential buyer's home, providing the collector with the opportunity to seriously consider the piece in situ. This, by the way, was a successful tactic of the legendary art dealer Joseph Duveen, who would dispatch works that had never even been requested to clients' homes. Duveen knew that having a work hanging on one's wall makes it harder to part with, and that the subsequent invoices sent would eventually get paid. Sometimes consignment agreements dictate the terms of such an arrangement, but — as is still common in the art world — often there is nothing more than a phone call. In either case, misunderstandings can, and do, arise. The collector should therefore make sure that all details are clear. For example, the dealer's art insurance should cover the work for the duration of the loan as the collector does not yet own the piece.
Where a dealer has an existing relationship with a collector (or would like to build one) or when demand is low, he or she may offer a buyer a discount off the retail price, usually 10 percent but sometimes 15 percent. But in certain situations or in the case of special relationships, the artist and dealer may agree to offer a deeper discount to select parties including friends of the artist. They almost always do so for museums or well-known collectors whose very purchase may enhance the general value of the artist's body of work. In such cases, a discount of 20 percent is more the norm. Discounts do, however, very much depend on market climate or individual dealer practices. Low-priced work may be priced to sell with a discount already built in. Or, at the end of an art fair, discounts might also be extended to regular buyers. In most situations, it is appropriate to ask if there might be any room on the price, but this is less advisable in the case of works by artists currently in great demand.
The terms of all gallery sales are included in the purchase invoice, or the bill of sale, which, for legal purposes, is the controlling document in such transactions. The collector should read the invoice carefully and always include a copy in the collection management system (see Chapter 2, "Collection Management Systems"). In addition to price and applicable sales tax, the invoice should include a detailed description of the artwork specifying medium, signatures, dimensions, and any edition numbers. Other details of the transaction, such as payment instructions and which party will be responsible for crating, shipping, and insurance, should also be clear in the document.
Invoices routinely stipulate that title to the artwork does not pass until the buyer has paid in full. However, in the US, the Uniform Commercial Code provides that title passes upon physical delivery of the goods, irrespective of when or even whether payment has been made. At that point, unless otherwise agreed, the buyer will be responsible for all costs associated with the artwork.
While dealers are in the business of building relationships with collectors, it behooves the collector, too, to take pains to build a relationship with the dealer. This usually begins by the collector asking questions about art and demonstrating genuine curiosity, knowledge, and a degree of seriousness. Making payments on time — whether that be paying cash immediately or never missing a deadline if paying in installments — is another way to become a valued client. After a strong relationship develops, a dealer may give the collector first dibs on an artist's new body of work or prime secondary-market material coming onto the market, hold a piece on reserve, or place a collector on a wait list for yet-to-be-created works by a desirable artist. Collectors sometimes even buy works of emerging artists who are just being introduced to a favored gallery's roster, a pledge of support for the gallery often pinned to the hope of being given priority when the most coveted works of more established artists later become available.