Art is one of the most personally gratifying forms of investment and one of the most perplexing — newcomers to art investing face practices and issues unique to the art world. Rarely does one buy pharmaceutical stocks because of their aesthetic merit, but that’s a huge consideration with art.
Whether you’re looking into art investment with the help of a gallery, auction house, independent artist or investment program like Yieldstreet’s art equity platform, here are then practical tips for getting started.
Dos & Don’ts to know before Investing in Art
Do Research
You can never have too much information when it comes to investing in art. Take time to learn as much as you can about art history, emerging styles and schools, galleries and auction houses, how art value appreciates, and what trends might be around the corner.
Don’t Believe the Hype
Although you should know what trends are around the corner, don’t invest in artwork just because it’s trendy. When you’re looking at a piece of art, consider its intrinsic value as much as its price. Artwork that endures through the years will mean something to far-off generations, making it more financially valuable.
Do Form Relationships
The benefits of a relationship with the art community go beyond financial gain and are often just as rewarding. The more serious you are about collecting art, the more you’ll have to rely on others. It’s always worth getting to know art dealers, gallery directors, artist collectives, experts, and any other professionals whose work revolves around art.
Don’t Directly Negotiate With an Artist Affiliated With a Gallery
If you see the artwork in a gallery that you’re interested in buying, talk to the gallery staff (even if you know the artist personally). It’s bad form to circumvent the parties the artist is working with to sell their art. The gallery makes a commission from the sale, so cutting it out of the negotiation would take away the money they’ve worked for. Make sure an artist is truly independent before negotiating with them directly.
Do Seek Out Young, Emerging Artists
People of any age can make great art. But works from young or new artists on the scene often have the best potential for value appreciation. That’s because their work is often much less expensive than known, big names. Supporting developing artists is simply a fine thing to do, and on top of that, it can also be more profitable.
Don’t Take Authenticity for Granted
Not all artists sign their work. Doing so may not be practical for the piece, or it may not be the artist’s style. Unsigned works may pose problems if you’re planning to resell them later.
If the work you want is unsigned, ask the artist for a Certificate Of Authenticity or a signature label you can stick on the back of the work. Whichever form of verification you use should include the artwork title, year of creation, mediums used, and size and dimensions.
Do Buy What You Love
A common guideline in stock investing is “buy what you know.” With art investing, it’s “buy what you love.” Every piece of art has an emotional component and style and aesthetic value. When you’re buying artwork, select something that brings you personal pleasure and that you’ll enjoy seeing every day, even if you don’t plan to keep it long.
Don’t Rule Out the Unfamiliar
At the same time, it’s essential to keep an open mind for new things. That’s vital for personal growth, but it’s also a wise investment strategy. As with any investment, success in collecting art is about seeing opportunities. Don’t rule out pieces or styles that don’t connect immediately. Learn more about them, ask questions, and conduct research. You may grow to love them in time.
Do Set a Budget
Before you start down the path of art investment, set a budget that you can afford to live with. Consider that art investment can incur expenses beyond the value of the art itself. Shipping and insurance can be expensive, especially if the artwork is heavy. Some works, like outdoor statues, may need regular maintenance. Figure out an amount you’re willing to spend and be prepared for the possibility that you might have to exceed it.
Don’t Ask for an Unreasonable Discount
Be fair and discreet about your price negotiations. The art world whispers among itself. If a buyer is circulating the rounds who over-negotiates or asks for insultingly significant discounts, those whispers may say, “Don’t sell to that person.” Discounts of 20% or more are usually only suitable for museums and major collections, seldom for individual collectors.
