Collectors, investors and dealers

THE THREE BUYERS OF ART
This is an excerpt from the Ron Davis' article "How to buy and sell Art for the profit?"
as seen in Antiques & Art Around Florida, Winter/Spring 2006

THREE KINDS OF ART AVAILABLE TO BUY

---------------------------------
Decorative Art
---------------------------------
Decorative Art is known as "furnishing pictures," and is often used for decorating purposes. This classification of art is generally thematic: "nautical," "country," "sporting" look, etc. Little intrinsic value exists in decorative art, and rarely is it painted by a "listed" artist. But distinctive decorative art can be expensive, especially if it’s antique. Decorative art will not increase in value. Therefore, it is not a wise investment choice. If you buy, for example, 100 $200-paintings, you could have $20,000 invested in "garage sale" merchandise. Avoid that mistake. Limit your "training paintings" to ten or fewer. Better yet, buy Investment Art. Decorative art is not a wise investment choice. If you like it, fine, keep it; but it will never grow in value like investment art.

---------------------------------
Collectable Art
---------------------------------
Collectable Art suggests that someone else also collects the same artworks. Therefore, a market already exists for your painting, albeit small. Collectable art can either be signed or unsigned, "listed" or "unlisted" (recorded in auction price guides). But generally it is of modest quality, not superior work, and not a good investment choice. For example, Florida Highwaymen Art, painted by itinerant Afro-American artists in the 1960s, is "hot" merchandise in Florida, and many local dealers buy and sell this art for a profit. Its appeal, however, is limited to Florida. Therefore it’s Regional Art, and would not sell well in the art capitals of the world. The quality of this art generally is "student work," not academic or professional. If a Highwaymen painting is accidentally left on a park bench, for example, in Paris, London, or Cincinnati, it probably will still be there three weeks later. Discerning art collectors and investors would not show interest in this art. Don’t hold onto collectable art thinking it will one day grow into "investment art." It won’t! Sell it. Move on. If you like the picture, however, and it’s affordable, fine, keep it for whatever is charming about it. But it will not be a wise long-term investment.

---------------------------------
Investment Art
---------------------------------
Investment Art will always increase in value. High caliber, well-listed artists generally create investment quality paintings. Sought by collectors, investors, and dealers, investment art appeals to buyers beyond the state or local region, meeting national and international demand. Connoisseurs, experts, and art historians determine the quality standards for investment art. Therefore, if you own investment art, it can easily be sold for a profit. If investment art is ever lost, the finder essentially holds a bearer instrument—the equivalent of cash. A metropolitan radio station once reported a Picasso artwork was lost—accidentally left on a New York City subway. Can you imagine? The radio station asked the finder of the artwork to call the police. Hello. Leaving a painting by Picasso on a New York City train is like leaving a bag with a million dollars cash in it on a park bench. Forget it!


THE THREE BUYERS OF ART
The collector buys what he likes, the investor what he considers good investment, and the dealer what he can sell for the highest price in the shortest amount of time. Each role needs to follow the strict buying criteria outlined below.
----------------------------
Art Collector
----------------------------
The Collector has a love for art but not a compelling schedule to buy it. He buys only what pleases him, without regard for "what’s hot," possibly buying only one painting a year. The collector has no exit strategy or financial objective in mind when he buys art. He well might keep a painting all his life, willing it to his children or a museum. The art he buys, however, should create future wealth for his family. The collector also needs to acquire art knowledge and competent buying skills so he is not taken advantage of. Serious collectors usually have a focus and narrow interest in a particular School. Always studying art they like, collectors often become "subject experts" in their specialty.

----------------------------
Art Investor
----------------------------
The Investor definitely has an exit strategy and outcome objective in mind when he buys art. Developing a financial plan, the Investor buys art strategically, according to the strict criteria listed below, doing extensive research to eliminate risks associated with buying art. The Investor’s time frame is five to seven years out. A weak economy will peak again in five to seven years. Even an unfresh painting (recently bought at public auction, or one "shopped around") will be fresh again in five to seven years. The investor buys what collectors desire, insuring him of a quick sale when it’s time to cash in. The Investor expects 25% ROI, but even higher returns can be made with art.


----------------------------
Art Dealer
----------------------------
The Dealer’s business is buying and selling paintings, and brokering art transactions. Like any business owner, the dealer is on the telephone every day talking with customer and suppliers: collectors, investors, galleries, auction rooms, and other dealers. When an exceptional painting comes to market, the dealer pursues it relentlessly. The dealer’s time frame is measured in days or weeks, rarely months, generally selling at the highest price in the shortest amount of time. Because he buys only "investment art," there is always a demand for his paintings. If you’re a "seller," on the other hand, selling art to a dealer can be an expensive proposition, because he’ll only resell your painting right away, to a collector, investor, or gallery, for a handsome profit, exactly what you could have done, if you only knew what the dealer knows. So it behooves the collector to learn the parallel skills of an art dealer.



-------------------------------------------------------------------------------------
Bibliography:
How to buy and sell Art for the profit?
by: Ron Davis
As seen in Antiques & Art Around Florida, Winter/Spring 2006