Tips For Selling Art
During our “Collectors Rendezvous on the Clark Fork” we hosted a seminar to help collectors liquidate pieces in their collection or in some cases a whole collection.
There are 4 main reasons collectors will choose to liquidate. The first is downsizing or a remodel. We are seeing a trend of collectors downsizing to a smaller home and they simply don’t have room for their collection. The second reason to sell art is that a collector is fine tuning their collection. Maybe some of the early work they purchased doesn’t fit with the direction they want their collection to go. The third reason is a forced liquidation – death, divorce, or capital needs. The fourth and final reason is that people’s taste change over the years.
Here are 9 tips to help guide you through the process of selling your art.
- Know Your Options - There are four main ways to liquidate artwork. They are gifting or donating, selling it yourself, ask a gallery or dealer for help, and using an auction.
- Tax Implications - When gifting or donating a piece of art know the tax implications. The cost basis is calculated differently if you donate a gift a piece versus having a piece go through an estate. If you have a Charlie Russell piece that has been in the family for many years the difference can be tens of thousands of dollars. Make sure to keep your accountant in the loop.
- Appraisal Costs - If you are donating a piece to your favorite charity the IRS will require an appraisal for anything valued over $5000. Take into consideration the price of the appraisal (which can be pricey depending on the piece) before you make your decision.
- Appraisal Differences - Be VERY careful using insurance appraisals. We have seen some appraisals that have been over 5 times the value of the paintings. These insurance appraisals can be confusing to trustees as well as heirs by inflating the actual market value of the artwork.
- Shipping - If you decide to use a DIY method make sure you check on the price of shipping and the insurance in shipping. It’s expensive and a pain in the rear. Art galleries can be a great resource to ship artwork, because of their experience.
- Private Sale - When considering a private sale through a gallery make sure you are on the same page in regards to marketing the piece and the commission that will be charged. Everything should be in writing so there is no confusion. Remember, if you are in a time crunch the gallery method can take time, but you as the seller are in control of the price.
- Auction Sale - In choosing the auction route you should be aware that all auctions are very different and each has their own strengths and weaknesses. It’s important that you choose wisely.
- Auction Estimates - Remember, your goal in using an auction house is to get the highest price, not the highest estimate. We recommend to be strategic with your estimates and reserves. Consider the following example – Let’s say you are considering selling a smaller O.C. Seltzer so you can upgrade to a larger one. You want a reserve of $25,000 on the piece. If you twist the auction house's arm for a $50k - $75k estimate, the effect of the high estimate is to have some of the Seltzer collectors who might have had an interest in the piece to mentally “check out” of the painting. They won’t pay much attention to the piece in the catalog or the preview because they will think the reserve is to high. If the estimate was $25k - $50k, the same collectors will mark their catalog and spend some time checking the piece out and may start to bid. And we all know that once you start bidding all kinds of good things can happen to you, the seller.
- Don't Burn A Painting - Avoid passes at all costs. Studies have shown that a piece that passes at auction will have a 30% loss in value. As a gallery it is very tough to sell a piece after it has passed at auction.