It seems that the price for fine art continues to soar, with even relatively minor works by lesser-known names fetching ridiculously (“eye-watering” is the phrase du jour) prices. Buying a work of art now seems like a solid investment for the future – prices can only go up, can’t they?
When it comes to the bigger names in the art world, the prices get even more insane. I’ve just been looking at the catalogue of a Christie’s sale of contemporary art (not that I have any intention of buying any of this, but just to see what’s going on).
There’s a rather nice Hockney chalk drawing dating from the 1970s (I’m not reproducing it here for copyright reasons). It’s 65 x 50 cm – decent size, on good paper. Estimate at £300,000 to £500,000. It’s pleasant, I could certainly live with it on my wall, but not at that price (even if I had that sort of money to spare). But why is it so expensive?
I think that the clue lies in the details of the provenance supplied by the auction house:
M. Knoedler & Co, New York.
Anon. sale, Sotheby’s New York, 5 May 1987, lot 227A.
Private Collection, Los Angeles.
Private Collection, Los Angeles.
Private Collection, London.
Paul Kasmin Gallery, New York.
Private Collection (acquired from the above in 2017).
Acquired from the above by the present owner.
Every time that the painting changes hands, it will go up in price (not necessarily in value, though, as I try to explain below). One reason is the commission that you pay as a seller, and another is the commission (and taxes) that you pay as a seller. For example, if I were to go mad, and spend £400,000 on this rather nice drawing, the estimated buyer’s premium (according to Christie’s) would be £104,000. That means a cool half-million for this little beauty.
Now, if I fall on hard times and decide that I want to recoup my costs, this thing has got to sell for the same amount (plus seller’s commission). Seller’s and buyer’s commission? Indeed so:
…a single Seller’s Commission rate for the services we provide. The commission is calculated on each item as a fixed percentage based on the eventual hammer price at auction. This rate includes marketing costs and insurance cover (except for Wine sales, where marketing and insurance are charged separately). If your item sells for over the high estimate we agree with you, there will also be an additional 2% Performance Commission fee.
You may also be charged for other external services such as shipping, restoration and framing, but these will be discussed and agreed with you beforehand. VAT (value-added tax) or applicable duties or taxes may be due on such fees based on the jurisdiction of the auction site.
and the poor soul who next falls in love with Hockney’s Celia is going to have to spend considerably more than the £500,000 I spent if I am to recoup my costs.
Does this mean that the Hockney in five years’ time will be worth more than I paid for it? Hardly – what it means is that Christie’s/Sotheby’s/Bonham’s/whoever are doing very nicely, thank you. And when you do this kind of calculation, and couple it to the greed and pride of the art collection world, you can quite understand how a rather small Lucian Freud oil (50 x 70 cm) can attract an estimate of between £3.5m and £5m.
What’s the answer? It would seem that avoiding the big names and the big auction houses is the first step for those of us who enjoy original art but can’t afford these prices (that is, 99% of art lovers). Of course, there are always the museums.