How to buy a classic piece of art

Determining the value of new art
Art doesn't have an absolute value. Its price is determined solely by how much people are willing to pay for it. When you're trying to evaluate the investment potential of art, you have to look beyond the object itself and think about market forces:

• How many people are interested in this artist's work? Is the artist well known regionally or nationally?

• Is the work rare? Blue-chip artist jasper Johns, for example, makes very few paintings, so collectors have to compete for them.

• Does the artist have an influential dealer, curator, or critic promoting the work?

• Has any of the artist's work sold at auction? If so, for how much? Auction prices set the resale market.

• Has the art been reviewed in important regional or national publications?

• Is the current art market so high-or so low-that it seems destined for a price correction? Reading art magazines or newspapers can keep you informed of market fluctuations.

While you're at it, don't forget to ask: "Do I actually care whether this work goes up or down in value?" Art isn't stocks or bonds. If you fall in love with a piece that's comfortably affordable, and you don't think you'll ever need (or want) to resell it, then its value to you is all that matters.

Resale value
Say you bought a lithograph in a gallery last year for $1,000. Now you see that the gallery is selling the same thing for $2,000. Has your investment doubled in value? Not necessarily. It may even have gone down.

The value of your art isn't based on how much a gallery can sell it for. It's based on what you can sell it for. If you take your picture back to the original gallery, they're not going to pay you $2,000 for it. That's their retail price. The wholesale price (what they pay to buy art) is much lower. Otherwise, how would they make any money?

Auction results are a much better indication of what yor could realistically expect to get for your art. If you're concerned about investment potential, always check to see if your artist's work has been sold at auction, and if so, for how much. (See Resources for details.)

Don't be swayed by slick dealers who tell you an artist's work has doubled in value. That may simply mean that the gallery has doubled its prices. If you find that auction sales are substantially below the gallery's prices, maybe you should consider buying at auction instead.

Show off your new objets d'art by hosting a trés chic wine and cheese party.

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Excerpted from The Intrepid Art Collector by Lisa Hunter Copyright (c) 2006 by Lisa Hunter. Excerpted by permission of Three Rivers Press, a division of Random House of Canada Limited. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

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