Article Selling Art in Brief 2007 - Law Firm Krigel & Krigel, P.C. Attorneys Kansas City, Missouri

Article Selling Art in Brief 2007

Selling Art - A Brief Guide

Private Sale by Owner

(A) Control over terms. Avoid expense and “downside” potential of auction.
(A) If piece is not sold, not “burned” as badly as failing to sell at auction
(A) Fewer warranties, usually just warranty of title. Less documentation of sale.
(A) Buyers more likely to be collectors, willing to pay “full retail.”
(P) Owner must either research market or pay for independent appraisal.
(P) Lack of access to buyers.
(P) Owner may be tempted to make representations beyond actual expertise or knowledge, which could be enforceable if made recklessly or knowing they are not true.
(P) Cost of shipping, insuring and storing work to be viewed by potential buyers

Broker

(A) A broker is an individual not in the business of selling art, who assists in locating works of art or finding buyers. May provide important independent advice.
(A) May have access to important collectors.
(A) May be an expert and help authenticate and price the work. This is not the same as an independent appraisal.
(P) The agreement between owner and broker is frequently not written, leading to disputes. If no written agreement, also unclear who broker represents.
(P) Problems if the potential buyer does not know she is dealing with a broker.
(P) Terms of a broker agreement may create conflicts of interest with the owner. For example, an agreement that the broker will retain any amount over a specific price is an incentive for a broker to “overprice” and “overhype” the work.
(P) The broker may make representations or promises beyond his authority which are binding on the owner.
(P) Cost of shipping, insuring and storing work to be viewed by potential buyers
(P) The owner’s broker may not be in contact with the potential buyer, but with another broker. If there is more than one broker involved, each may increase the purchase price as the work is “shopped around.” In some cases, the owner may be approached to buy her own piece. The reputation of a work can be damaged if offered by too many individuals in the “chain.”

Warning Signs: Broker takes a long time to obtain offers or get responses to Owner’s counter-offers. All potential buyers wish to remain anonymous. Broker requests large number of copies of photographs or slides of work. There are many viewings.

Dealer

(A) Dealer should be able to offer assistance with authenticating and valuing piece.
(A) May be specialist in a type or style of art, with established customers and a regional or national reputation.
(A) A dealer’s warranty or certificate of authenticity can enhance the value of a piece.
(A) Dealers usually do not pass on cost of doing business to owner, or charge costs to owner if the work is not sold.
(A) A dealer may be more flexible in resolving disputes with buyers after the sale, try to shield owner from disputes.
(P) Dealer may have conflict of interest or lack information on your piece, making an independent valuation useful.
(P) If work is on consignment, the consignment agreement should be in writing, and should be reviewed by an attorney. Owner should insist on recording a security interest or otherwise protecting art from dealer’s creditors. A good consignment agreement can be very complicated.
(P) If work is sold to the dealer outright, dealer is buying it as inventory and will only pay “wholesale” price.
If there is a dispute as to authenticity after the sale, a dealer’s warranty to the buyer may not protect the owner as much as the independent warranty of an auction house.

Auction

(A) Major auction house has a wide range of “in-house” experts. They can authenticate and value nearly any type of art or object. The “auction estimate” may be offered at no cost, but this is not the same as an appraisal.
(A) Sales by auction houses subject to more regulation than dealers in certain states and cities such as New York and New York City.
(A) Auctions can attract and reach a wider range of potential buyers and specialized collectors. Even regional auction houses publish catalogs on-line and accept on-line bids.
(A) A warranty of authenticity by a national or international auction house can enhance the value of a work and protect the owner if a dispute arises after the sale.
(A) Auctions can attract unexpected buying interest, establish a new, higher market value.
(P) Auction house controls all terms of consignment, unlikely to negotiate terms unless a piece is extremely valuable.
(P) Owner pays for expenses of sale, such as catalog preparation, insurance, shipping both ways, even if piece does not sell. A substantial number of items do not sell at auctions.
(P) Owner pays commission if work does sell, may pay service charge if item does not sell.
(P) The value of a work of art may be diminished if it does not sell at auction.
(P) Buyers at auction more likely to be dealers, who will bid only “wholesale” price.
(P) Risk that sale is adversely affected by extraneous factors such as the other pieces being offered that day, the position of a work in the sale, a small number of bidders or the absence one particular collector.