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What Determines Value?

Guidelines for acquiring artwork as an investment

by Henry S.H. Young

In the past, most collectors acquired artwork for its beauty, not as an investment.  Because of inflation and the cost of money, collectors have discovered that art, well chosen, has increased in value like other financial investments.

 

As in any other speculative venture, no one can guarantee that any art investment will increase in value.  We advise collectors that they must be willing to wait at least 10 to 20 years before attempting to realize a profit.  To obtain the best value for your artwork, time and patience on the part of the collector/seller will realize the highest profits over time. 

 

I personally recommend that you keep the art in your family collection for generations.  Your family and future generations will be pleased and simply impressed with the appreciation over that length of time.

 

Many qualities contribute to the value of a specific piece of art in addition to simple supply and demand.  The major qualities are as follows:

 

Reputation:  The artistís reputation is a primary consideration.  Factors influencing this quality are the number of better works available and the number of collectors, museums and universities interested in acquiring the artists work.

 

Artistic Quality:  The quality of the particular work in relation to the artistís entire body of work is very important.  Question:  Is it from an important period in the artistís life or is it a minor work?

 

Rarity:  If most of the artistís better works of art are already in museums or unavailable for purchase or collecting, his remaining works will realize higher prices and will be expected to rise in value.  In regards to prints of similar quality, condition and importance by an artist, a print from a small edition will most likely fetch a higher price than one from a larger edition.

 

Condition:  Among the most fragile of investments, artwork can be hurt (both literally and monetarily) by negligence, particularly works of art from centuries past.  Stains, tears or discoloration can reduce value.

 

Authenticity:  High art prices have attracted art forgers, with pitfalls ranging from out-and-out fakes to fraudulently signed prints or paintings.  There are times where appraisers, dealers or museum curators may not agree on the genuineness of a particular work of art.  Warning: Make sure you receive a certificate of authenticity upon purchase from a gallery or dealer who will guarantee your money back if the work is not authentic.

 

Historical Importance:  If a painting or print marks the turning point in the development or style of an important artist, or if the painting or print is pivotal in establishing a school or movement, it will most likely be worth much more than usual.  Innovative use of a particular medium can also add significant value.

 

Provenance (Ownership History):  The workís value may be affected not only by the reputation of the person who produced the work of art, but also by the status of those who have owned it.  If the artwork has been part of a famous collection by a notable collector, or if a previous owner was a friend or family of the artist, or if the artwork is from the agent or publisher of the artist, that information will have a positive effect on the value of the artwork.

 

Fashion:  What is of high demand is worth considerably more.  For example, Renoir and Toulouse-Lautrec art is in high demand now because of museum exhibitions and newly published art books.  Works by some of the most collected and museumed artists of the past may now bring only a fraction of values of what was the demand a generation ago.

 

Whatever your strategy, I strongly believe that you should acquire only what you like or love.  If while you own the work of art the value increases, you have obviously then made a very wise investment; if it does not go up in value, you still own a work of art that provides esthetic pleasure, energy, intellectual and emotional inspiration.

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