If you collect antiques then you have a pretty good idea of the feeling
that comes over you when you buy. You desire the object; you are not sure
that you can afford it; you have to have it; you buy it; you are overcome
with doubt; you feel panicked; you seek the advice of experts; the experts
give you contradictory opinions; you commission every kind of authenticity
test at a cost of thousands of dollars; the testing agencies provide you
with fat documents filled with reams of technical data; you resign yourself
to the fact that you will never know the absolute truth, for it does not
exist; you sit down and admire your new acquisition; you find peace and
pleasure at last.
Now contrast this attitude of the collector with that of the dealer. The
dealer scours the world for low-cost antiques. These are increasingly hard
to find, but the dealer is an expert at finding new sources. The dealer
has an eye for quality and is adept at paying less than an object is worth.
The dealer is also a consummate salesperson, skilled at extracting the
highest possible price for his stock; he is quick to assess the buying
power of any new client; he knows how to work each client's psychology in
order to build loyalty and dependency. The dealer is also very quick to
purchase a bargain and very patient in waiting for the right sale that can
assure him a good profit.
In this article I will share with the readers of this magazine some ideas
about how to buy with confidence at the dealers' price. There are a
number of reasons why I would do this. First, I am disgusted by the poor
service of many dealers who see that their first duty to their clients is
to cheat them. Secondly, since I am an agent who works on behalf of
collectors, I have an interest in seeing my clients buy well.
Buying at auction
Many of us buy art at auction. The opportunity to review a large number of
works of art is too good to miss and bidding is an exciting sport.
However, auction houses in China offer no guarantee as to the authenticity
of their consignments and bidding at auctions is sometimes manipulated by
dealers to secure a higher price. What steps can you take to mitigate the
risks of bidding at auction?
Preview
When you attend the preview of an auction, try not using the catalogue.
The catalogue is a pack of lies put together in a great hurry by possibly
talented, but certainly overworked, specialists, some of whom have very
little expertise in what they do. Many collectors like to look at the
catalogue first and then attend the preview to inspect more closely works
that they have already identified in the catalogue. This is a big mistake.
Why allow your judgment to be clouded by people you do not know and whose
opinion may be worth nothing? Instead visit the preview and study it's
contents thoroughly. Seek the advice of any professionals whose view you
respect. Make your own notes regarding the authenticity, quality and
condition of the works you see. Finally check the catalogue only to make
sure that there is nothing you have missed and to record prices achieved at
the auction.
Auction
If you are an active collector, you should only attend auctions to observe
and understand the process. You should see who bids and understand who
they are. You should watch the performance of the auctioneer and judge his
competence. You should keep an eye out for such phenomena as dealers
bidding on their own consignments. If you collect certain specific
objects, try to collect auction data for those objects over a given period
of time in order to understand underlying price movements, so that you can
discount market manipulation. When bidding yourself, either employ an
agent or friend who regularly attends auctions and will be happy to bid on
your behalf or bid on the telephone. Do not leave written bids. If
bidding on the telephone, never tell the auction house employee exactly
which lot you are really interested in bidding on until the last minute.
Express doubt and uncertainty to the auction house employee. Never express
delight at acquiring anything.
Diversify your sources
There are thousands of auctions world-wide. The big dealers cover hundreds
of auctions a year in several countries, either by traveling or by
internet. Obviously it will be difficult for a private collector to cover
as much ground as the dealers, but it is possible to follow auctions of
some of the leading auction houses in your field of collecting. For
example, in the field of Chinese art, it is important not just to follow
the auctions of Sotheby's and Christie's in Hong Kong, but also in other
locations such as New York , London , Amsterdam and Sydney . Christie's has
an excellent search-engine named “Lotfinder” on their website and once
you are registered they will send you e-mails to warn you of up-coming lots
that might fit your collecting requirements. Other auction houses that
specialize in Asian Art include Bonhams (in London and San Francisco ),
Lempertz and Nagel in Germany , Dorotheum in Vienna and Drouot in Paris .
All of these firms and many more now have websites and their sales can be
followed regularly.
Buying from dealers
Despise no dealer. Yes it is true that a dealer's job is to buy low and
sell to you high; but there is much that you can do to make this dynamic
work for you. First, be courteous and helpful to every dealer, big or
small, that you come in contact with. You can learn something from every
one of them. You can also help them with authentication, pricing of
objects you don't want or ideas about how to improve their business.
Secondly, never walk past a dealer's shop without going in. In many
strange places fine objects are to be found. Thirdly, always be fair to
the dealer: he has to make a living and if you respect that fact he will
reward you next time. Dealers are the major source of auction house
consignments and the major buyers at auction and so it stands to reason
that they too can save auction house commissions by selling to you
directly. I visit dealers all over the world, wherever I go. I often
leave empty handed, but never disappointed.
Seize the opportunity
We all know that markets fluctuate. This is especially true of the art
market. The parameters of this market are popular taste, buying power and
rarity. In principle the international art market has been a BUY since
World War II because global economic prosperity has grown steadily since
that time, bringing more and more buyers into the market. Furthermore
great art has become increasingly rare as the growth in the number of
museums has seen more and more art disappear off the market. This
situation will only be changed by global war or cataclysmic disaster. In
the short term, however, buying opportunities will emerge: the 1960s were
a great time to buy Chinese art; the 1990s were a good time to buy Russian
art; recent years have seen buying opportunities emerge in South Africa ,
Argentina , Indonesia and Iraq . Even shorter-term buying opportunities
opened up after 9/11 in New York and after 1999 in Hong Kong . Dealers will
tend to exploit these opportunities, but collectors who ignore the herd
mentality can do the same.
How to beat the market
The transaction costs of investing in art are so large that most investors
would stay away from the whole asset class. Auction houses and dealers
charge transaction costs of 20% to 50% compared to 5% or so for property
and less for stocks and bonds. Furthermore property and financial assets
can yield a dividend, while art assets can be expensive to own, incurring
curatorial and insurance costs. Nonetheless, over time art assets have
performed extremely well and have formed a core element of the possessions
of great families.
The way to deal with this apparent dichotomy is to fight it. Collectors
need to work hard to collect at wholesale prices and sell, if ever, at
retail prices. In this article I have given some ideas about how to beat
the dealers at buying wholesale; but I have not explained how to sell
retail. One way, of course, is to open a shop. Another is to form a
collection that can then be marketed as a single owner sale. A third way
is to donate a collection or group of objects to a museum in order to
obtain a tax deduction that may be equal to or greater than the market
price. The worst choice is to sell to dealers or consign to auction houses
' regular sales that are largely attended by dealers.
Conclusion
A professional collector has a lot of hidden power in the market place. He
brings the essential element of buying power. Most private buyers of art
are amateurs who buy once or twice in their life and never learn the
workings of the art market. This is fine, but they have to accept that
they will almost always pay too much. By using his buying power
intelligently the professional collector can not only harness the expertise
of leading advisors and dealers, but can also acquire superb works of art
at low cost with minimal transaction costs.
