How to Price Art

The New York Times recently published a great article on art investing. While the art market acts differently to more traditional capital markets that doesn’t mean it’s totally irrational.

There is an old adage that says you should buy art based on what you love. In the New York Times article the art advisor B.J. Topol adds to that idea, saying, “If you combine your passion with an informed decision, you’ll have something you love every day and maybe it goes up one day.”

So when you are considering the purchase of a painting what information should you seek out?

Evaluating the price of Fine Art

The greatest challenge when purchasing art is determining fair market value. Sale price of works sold through galleries or private dealers are not made public. The best way to gauge a works value is to look at the public auction record for an artist.

There are several websites that aggregate auction results into a database. I personally use Art Price.

Looking at the long term performance of an artist’s work will give you a sense of how their market is performing. Generally artists in the secondary market will enjoy a period of accelerated growth (usually due to promotion by an important collector or curator). Nothing lasts forever and you can expect a market correction when tastes change. After which artists of historic importance will resume growth but at a slower rate.

Cornelius Krieghoff is a good example of an artist who enjoyed strong growth in the 80s when the prominent collector Ken Thomson was actively collecting his work. In the 2000s he lost his position as the most sought after artist to more modern artists like Lawren Harris. Although he doesn’t make the same kind of headlines now, we still see growth in his market. And he is still considered one of the top 10 Canadian Artists at Auction. Spring 2018, Crossing the Ice with the Royal Mail, by Krieghoff broke his previous auction record with a realised price of $456,000.

Public auction records give a ballpark measure of an artist’s current price. Generally galleries will charge a higher price than auction houses. It’s not unusual to see a 15-20% difference in price between galleries and auction houses.

Period of Production and Price

Different periods of an artists career will be valued differently. For most of the Group of Seven painters the early period when they were working as a group is considered their most important. So works done before 1932 (when the group disbanded) are generally higher in price. 

In determining an artist’s best period the market will generally look to academic scholarship. As an art advisor I have a whole library of academic books on Canadian art. A great place to find book recommendations are auction catalogues (which are also available online). Generally in the blurb on an available works they will site important books that make reference to the work on offer.

Another great resource are the writings of art dealers. For anyone interested in Canadian art, I highly recommend the two autobiographies by G. Blair Laing. Laing is a seminal figure in historic Canadian art. In his books he goes through all of the artist he represented (which includes most of the Group of Seven) and names their most important period of production. More than some of the academic texts Laing understands how the date on a painting is used to price art. 

Condition of the Work a Hidden Cost

It’s important to understand that when dealing with historic works there will always be some imperfection. Given that some of these works can be over a hundred years old, I would be suspicious of any work that have no signs of aging.

For a new collector the easiest way to insure quality is to work with reputable galleries that have been in the market for an extended period. Galleries stake their reputation on selling quality and if they have been around for over 10 years you can generally buy with confidence.

Having said that, as an art advisor, there are a couple questions I will always ask before considering a work for a client.  One issue I do see come up with oil paintings on offer is excessive inpainting. Inpainting is the introduction of new paint into areas of paint loss on a canvas. Again with historic works it is typical to see some amount of inpainting. If it’s just a small amount near the frame (where typically paint loss occurs), I don’t see an issue. Sometimes, unfortunately, a previous owner had big sections of the painting worked over. Generally (unless it’s the Salvator Mundi) the market will penalize excessive inpainting.

A Good Provenance adds value 

Provenance is the history of ownership attached to a painting. In the Canadian art market a lot of fine art doesn’t have a long provenance. Again if we are purchasing from a reputable gallery, a limited provenance is no deterrent.

If a work does come with a good provenance you can expect the work to have a higher market value (taking the other factors into consideration).

 A good example of this is the Tom Thomson painting discovered in an Edmonton basement and sold at Heffel last spring. Thomson gifted the sketch to the son of the Group of Seven’s J.E.H. MacDonald in 1915 and the painting was later acquired by a reverend at Toronto’s Emmanuel College, who in 1937 gave it to a fellow minister, who was the father of the most recent owner. Having records that trace a work back to the artist studio acts as a kind of proof of authenticity. This can ad a great deal of value to the painting. 

Buying Art

Collecting should be fun. That means buying art that speaks to you. Most collectors build collections as an expression of creativity or an interest in history. Working with the facts is simply a way to bring a level of clarity and security to the process. Understanding the actual and potential value of an artwork allows a collector to build a bolder more diverse collection.

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