The New Collector’s Guide to Reselling Art
Contemporary art dealers in the multibillion-dollar art market get most of their supply directly from artists, but a fair amount of what comes up for sale is pre-owned, sent back into circulation for one reason or another. Often this is due to one of the “three Ds” (death, divorce, or debt), but resales can also result from the evolution of a collector’s taste or an opportune moment.
In 2016, dealers in contemporary art received about 69% of their inventory from the artists themselves, according to a survey of roughly 1,100 dealers conducted for The Art Market | 2017, a report commissioned by Art Basel and UBS. The second-largest channel was from private collectors, who accounted for 15% of supply. For other sectors of the market featuring long-dead artists, that share is of course much higher, ranging from 31% for Modern art to 46% for Old Masters and Impressionist works.
When it comes time to sell, there are good and bad ways to go about it, and a seller should keep a few things in mind in preparing to part with an object.
What’s the best sales channel?
Traditionally, art bought through a gallery should go back through that gallery, for a variety of reasons. The first is out of courtesy, says Leon Benrimon, director of Modern and Contemporary Art at Heritage Auctions. Galleries work hard to modulate the price trajectory for their artists, and bringing a coveted work to auction can send prices soaring and instigate a rush of opportunistic selling. This obligation—in the form of a resale agreement—is sometimes even a condition of purchase, notes Adam Biesk, a Los Angeles-based art advisor.
But a gallery’s main advantage is its familiarity with their artists’ collector bases, as well as the institutions that may be interested in an artist’s work.
“The dealer should be the person who has the most understanding on who is interested in buying, should have most experience in selling that artist’s work, and should have the most expertise in relation to that artist’s career,” says Jasmin Tsou, founder of JTT, a gallery on Manhattan’s Lower East Side. She also notes that the dealer will be in the best position to know when to bring the artist into the conversation, since artists typically wind up hearing whether one of their works has been resold.
If a gallery owner seems reluctant to help resell it, has conveyed that demand for the work for sale is thin, or for any other reason declines to take on the consignment, an auction house—one of the larger brick-and-mortar operations such as Sotheby’s or Christie’s, or a smaller or online-only outlet—may be a better bet, since they offer wider exposure than to the dealer’s immediate circle of collectors. Biesk recently advised a client to bring four works by an artist, who happens to be out of favor right now and whose private market was nearly nonexistent, to an auction house.
Auction houses are, by definition, agents for the seller. They aim to get the highest price possible, meaning there’s a lot more upside potential, says Benrimon, but also more risk if for some reason the work doesn’t sell, since sellers pay the auction houses a commission for their work.
“Auction houses are very straightforward,” says Benrimon. They’ll take a work they believe they can profit from, and if they can’t, “They’ll say, ‘I can’t sell the work, there’s not a broad base of collectors’” for it, he says.
A dealer may not want to say they can’t sell it, in order to avoid making the original buyer feel conned, so the dealer may take it back for a year or two but not be able to find a buyer for it, Benrimon adds.
Advice and research
Benrimon suggests starting with a little independent research, going on art websites for auction results and gallery price listings, for example. It also helps to know where the overall market stands. In 2014, for example, emerging artists were selling for high prices at auction, but a cooler and more conservative market in 2016 shifted sales activity to the private market.
He also counsels seeking advice from several sources—checking with the gallery first, then perhaps a second gallery (if that artist is represented by more than one gallery), an art advisor, or an auction-house specialist—and then making an educated guess.
“It’s like going to the doctor,” Benrimon says. “You want to get a second opinion.”
Tsou says dealers need to get more comfortable providing those opinions, especially in a climate when gallery models are precarious. That, for her, means putting aside the negative stereotype of collectors who sell, and do their best to offer the resale service in a way that works for the dealer, the collector and the career of the artist.
“A wise dealer should be able to listen to their client’s needs and see how to work with them,” says Tsou. “We need to be really welcoming and adaptable.”
She also advises collectors to be sensitive to where the dealer stands.
“This is a very emotional and very personal business, and a lot of these dealers are very stressed financially,” Tsou says. “Put thought into how you talk to them about this artwork no longer being what you want.”
Pricing and patience
A seller is, unsurprisingly, hoping to earn money from a sale. The first thing clients ask when selling, says Biesk, is “What is this thing worth?”
What a seller will ultimately receive for a work depends on several criteria: how strong demand is, how long a client is willing to wait to sell it, and whether the advisor or dealer works with other dealers, which could possibly entail a higher commission or fee since the two would then be sharing it. But Biesk says sellers can expect to pay around 10% of the price to whoever sells their piece.
Auction houses may vary the seller’s commission they charge depending on the work and how badly they’re competing for it, but a typical commission will be 10% of the “hammer price,” or the price bid at auction, before the buyer’s fees are tacked on.
Biesk will typically take about two months to explore private channels for placing an artwork, either through his own collector network or by reaching out to other dealers or art advisors who work with collectors he thinks may be interested. After a few months, if nothing’s materialized, he’ll typically sit down again with the client to consider other options.
If neither a private nor public auction sales channel makes sense for a particular work, Benrimon often advises clients to consider donating a work, either to a museum if one is interested, or to another institution in their community. For example, a Chicago-based collector donated a large painting to an Illinois community college, instead of shipping it at great cost (because of its size) to an auction house where it may only have fetched a few thousand dollars. Donations enable collectors to receive a tax write-off for at least the purchase price of the work, or potentially more, depending on the valuation.
Tsou counsels patience for collectors who are interested in seeing their work wind up in a museum. Even with strong relationships to institutions, she says, “These are very long conversations.”
But, she says, “You can have your name on an object in an institution forever, if you’re willing to have patience.”
Speaking of patience, Biesk says it’s a quality he’s noticed is getting scarcer. Many of his clients browse new artwork regularly on Instagram, and are always itching to buy something fresh.
“The problem with people now is so many new things come along that they forget about the new thing they just bought last week,” he says. “The speed at which they flip through Instagram is the speed they want to flip through their art collection.”