Fundamentals at Auction Are Important
The age of internet has made search and research easy and immediate. At the touch of a button and with a little money all is revealed to the serious investor. All apart from the fundamentals which one should know inside out. Provenance and freshness on the market.
Provenance is very important when it comes to art priced in millions or hundreds of thousands or tens of thousands. However, when a piece of art is priced at a few thousand, or hundreds of pounds, provenance is not so important for most of us. It has been lost somewhere, where owners did not know the importance of provenance and buyers do not care that much.
Freshness on the market is another important fundamental. That makes investors and dealers run to acquire a piece of art just coming onto the market. However, when such piece of art fails to sell of one reason or another, then the next time it comes onto the market, especially when soon after the first attempt, it sells for nothing.
This is my story today. A painting worth £2-4,000 is not worth £300 all of a sudden because it failed to sell a month earlier. I have so many stories where the opposite has happened.
An unsold painting is not a lost cause!
6th April 2013, Sotheby’s Hong Kong
I have discussed unsold art at auction on several occasions. I have narrated stories of investments in unsold paintings that returned significant profits but they were closer to home than Hong Kong. In addition, they were not so small. Regardless of major issues with unsold art the fundamentals do not change. Keep faith in them as they are worth as much as they originally failed to sell at and perhaps a lot more.
Time flies and it is already 2013. The expert at Sotheby’s insists the Mai Thu painting is great and estimates it at 55,000 HKD. This is in complete contrast to cases I mentioned earlier and further down where the estimate is slashed to a fraction when offered for sale a second time. Everything is professionally done very quickly and my hopes rise once again. The cataloguing is great; the group of Vietnamese paintings is substantial; prices of Vietnamese art are still on the up. My hopes are well founded.
I have a few sleepless nights and many worries. Experience tells me that unsold art struggles second time round but not when a market is hot and improving fast. The sale happens and I leave it alone – I am too apprehensive to watch on the live stream! At about 6.30 in the evening I check the result. Sold at 55,000 HKD. What a relief! The second Mai Thu sold for £4500, but now I am expecting a cheque of £4,200, not £3500. Why is that?
· There are no illustration charges. My demand for this was met, as this is a policy second time round.
· No insurance is paid as that has already been paid earlier in 2011.
· The exchange rate has worked in my favour by a few hundred pounds.
It has been six years since the investment took place in 2007. The return is not great, but I am happy with a solid, net return of 40%. My target of 50% was missed but a 6% average return is very pleasing. Can any bank give a 4% return on any cash these days?
(English, [1911-2005] Marine artist of the top draw with investors on both sides of the Atlantic. Auction price range £1000-15000)
26th June 2013, Bellmans, West Sussex
There were about half a dozen bargains begging for bidding in England, France, the USA and Canada. Which one shall I go for – the Hirst in Dallas, the Bentham-Dinsdale in Vancouver, the Tsingos in France or the Henry Scott in Billinghurst, England? The percentages were important, the possible returns crucial and the money available for investment not too much. I deliberated, I calculated and I concluded that the Scott was the best possible investment and the best chance of a purchase. Why was that?
· The mean price warranted for the artist was much higher than the low £300-500 advertised estimate, which I assume was because the painting had remained unsold at Christie’s just a few weeks earlier.
· It was a small auction and the possibility of a bargain was higher.
· No headaches of shippers, import duty and taxes etc
The phone call is expected at around three o’clock and it is already 3:15. I am wondering whether I have been forgotten. Surely the auction wants more bidding and higher prices for whatever they sell. Who are these new auctioneers I am trying to do business with? Ring the bell Bellmans, ring, please! Ring! Another ten minutes go by and I am sitting on the edge of the chair worried.
Finally the phone rings loudly. Here we go! “Six lots before the sale Mr Constant.” I can hear the auctioneer calling the numbers and I hope that not too much competition is lined up against me. My wish is granted and the painting is knocked down to me at £220! Quick sale, no time to fret and moan! It’s a great bargain, but I am disappointed! Why only £220? What is wrong? Why has an artist whose auction sales average in the thousands of pounds sold for only £220? Is the painting a fake? I won’t know till I collect the painting and examine it well.
The painting is home now and I am reassured it is a genuine, quality painting by the artist. I still wonder how on earth a painting with a value of around £3000 at Christie’s ends up at Bellman’s Billinghurst selling for £220? But then again, I know why – the unsold factor at Christie’s in my view was over exaggerated in the sale at Bellmans! An unsold painting never loses 500% of its real value because it did not attract an investor in an earlier sale a month earlier! So in my eyes the painting was a great bargain and investment for the future.
Who worries about unsold items in ten years’ time? My policy is crystal clear. Invest when the average warrants it and worry not about the circumstances of unsold, fresh on the market and other such details. The Scott is a mega bargain, no ifs and no buts!