Another variation of this question is "Will this art increase in value? Is it a good investment?" I've certainly heard variations of these questions many times from Xanadu clients.
There have been a number of articles in the press and online talking about the incredible premiums collectors are making when selling work at auction through Sotheby's or Christie's. These articles have added to some art buyer's perception that art is an investment.
These can seem like difficult questions to answer because the perception is that if we tell the client that the piece isn't guaranteed to be a good investment, we may lose the sale.
My approach to handling this issue is simple and direct. While it's certainly possible that the artists I'm working with are going to become wildly successful and have the value of their work skyrocket, I don't want my clients to purchase worked based on potential investment value. I would certainly never use an artwork's potential value as a selling point.
In responding to a client who is asking about investment potential, or, as Steve asked, about a work's likelihood of retaining its value, I take a soft, generic approach. I typically answer by saying something like, "I encourage collectors to buy art because they love it. If you buy a piece that you love, it will pay dividends to you every day for the rest of your life!"
If pressed further, I'll add that there is no guarantee of the future value of any piece of artwork. The value can go up, but it's also possible it might go down.
A client's ability to reap the rewards of an increase in an artwork's value will depend on his ability to resell the artwork. If the client tries to sell the work through a gallery, he can expect to pay the gallery a commission, likely around 50%. Auctions charge a lower commission, but are typically most interested in selling the work of blue-chip artists. In other words, buying art with the expectation of making a profit, or even of recovering the initial investment, is very risky. It may take years before a client could hope to sell the work at a price that would cover the initial purchase.
I suppose the prospect of a piece of artwork not being a good investment might dissuade some buyers, but I've found that it isn't a factor for the vast majority of my clients. I would never want to put myself in the position of having a client return to the gallery some years after their purchase to discover that the value of the work hasn't increased dramatically, and then have them blame me for misleading them.
Art can enrich collector's lives in so many ways - it brings beauty into their homes and finding and acquiring art can be a great adventure.
I'm in the business of providing a venue where people can be exposed to exciting artwork and I strive to create a great buying experience. If a client is looking for an investment, I recommend they talk to their stockbroker!
How do you answer the art as an investment question?
How have you responded when clients have asked if your art is a good investment or if it will retain its value? Has this been a factor in past sales?
