Alexandra Exter, The Ace in My Stock for Twelve Years
An investment in art can be traded quickly or kept to appreciate in the future. I bought for trade in 1988 and I expected to cash in a few years later. It took me twelve year to choose the best moment to cash in, in 2000.
29th June 2015
Chapter XXVI Exter: Sale of a lifetime or mistake of a lifetime?
23rd November 2000, Sotheby’s London
The recession of the 1990s was catastrophic. It left a deep mark on my finances. The respite I got from various sales over the decade, including the Ghika, was always temporary and was never ever to change my financial affairs for good. Investment mistakes left huge holes in my finances, which was enlarged by the serious investment in contemporary artists. By the beginning of 2000 I was once again struggling under a mountain of debt. The constant headache of loan renewals and overdrafts, the sleepless nights, the itch to invest in more art led me to take the most serious decision in my art enterprise – sell the trump card I owned, the painting by Alexandra Exter.
The letter from Sotheby’s was unexpected. We are holding a very good Russian Art sale in November and we wonder whether you would be interested in selling the Exter in your possession. I gave it no second thought and picked up the phone. The expert at Sotheby’s who I considered a friend advised me to sell. “The market is strong, the painting will sell. It will sell very well, Peter. Sell, you can never know what’s round the corner.” One bird in the bag is worth ten in the bush my mother and grandmother used to say. So, without any further thought for the long term future, I hastily agreed to sell the Exter and hopefully get rid of all my debts and worries in one brush-stroke.
The thought of Exter remaining unsold second time round never crossed my mind as the Russian market was steaming ahead. I knew the market well – the Russians were coming to London buying art and I hoped that they would buy Exter’s masterpiece at a reasonable price. Looking for £250,000 in 1992 and £100,000 in 1993 had been unrealistic perhaps. But how about in 2000 when the world was on the recovery path and more significantly Russia was creating new millionaires and billionaires by the dozen?
I forgot the research on Exter’s auction sales appreciation, which showed that ‘every ten years Exter’s art had increased fivefold in value since 1970.’ Exter was nearly a million pounds artist in 1989. Would my property be worth at least £100,000 in 2000? Should I ask for £100,000 estimate or lower? Should I put the estimate and reserve lower than one hundred thousand in order to attract the bidders? Should I put a firm reserve at the market value and hope for the best? Unanswered questions were swirling in my head. Conflictings thoughts and arguments were rebounding against each other. However, once I had decided to sell, and that was reluctantly and in anger at myself, I also had to make the hard decisions that needed a cool head and guts!
Consignment day! I ignored all the major auspicious warnings and I am superstitious. My car had a flat tyre, but that did not stop me from borrowing a friend’s car to get to the auction. No sooner had I left the house with the painting loaded in the back than a small car nearly ran into me. Why didn’t the old lady crash into me? Perhaps that would have stopped me from consigning the painting! What possessed me that morning? In spite of all the problems I encountered early on in the short trip, I arrived at Sotheby’s sure enough of the wisdom of my actions, but also depressed that I was selling out of necessity.
Huge smiles welcomed me at Sotheby’s the moment I entered the premises. A high value item consigned with any auctioneer brings smiles and exceptional treatment from the experts in charge. I had a property that would add weight to their catalogue and would make their masters easily ten to twenty thousand pounds in commissions.
Everything I demanded from the two experts in charge was accepted and allowed happily. I had to strike the perfect agreement and the best terms on the sale.
· Location in the catalogue and illustration.
· Description, literature, marketing of the work and exhibition.
· Insurance, costs and unsold terms proviso.
Nothing was left to chance. Exter was perhaps the best investment I had ever made and I needed and expected the best returns. My property was the most desirable piece of Exter on the market at that moment and the experts knew very well that the market was ready for it or wasn’t it?
We discussed every aspect of the sale amicably. All the details were ironed out meticulously, but the thorny issue of reserve was left last. It is always the last and most difficult obstacle in any consignment.
“What reserve, Mr Constant?” was the burning question of both experts.
I had thought of all the possibilities and decided that a low estimate would bring in more buyers. The lowest estimate for me was £80,000, but then after all the discussions, the assurances and the market interest, I suggested, I suggested it, £60,000-80,000 estimate and reserve at sixty. No issues there. No problems with such a low reserve. They were beaming with satisfaction. I made it too easy for them. Exter was a sure winner!
Auctions beg owners of such paintings to sell and that was the case with the Exter. With multiple financial pressures mounting I could not wait another five years to sell. I reasoned that, if I paid all my loans and overfdraft, I would be left with about £20,000 pounds as surplus cash to invest and make more money from the sale. Keeping the Exter for another ten years in the hope that her work would appreciate fivefold again was rather risky and too optimistic, I reasoned. Was I right or did I make the mistake of a lifetime?
Before I even realised it, November was upon us and the Russian Sale was a matter of weeks away. Killing myself with anxiety, I could not wait for the post and the catalogue to arrive. Flicking the pages of the impressive catalogue of the Russian Sale, I came to the Exter entry – superb illustration, and great cataloguing on two pages. There was a full right-hand page illustration, a sea of blue inviting the buyers, and the description, literature and exhibition for the work were all there assisting to the sale. I was very happy with the work Sotheby’s had done.
The first hurdle was passed and the magnificent cataloguing gave me plenty to hope for. I was justifiably optimistic! The sale promised a lot, the times promised more and my imagination had no boundaries. Russians were on the map of rich millionaires and billionaires albeit at the beginning of it, which was an unknown then. Could two Russians bidding against each other change my life after twelve years of holding and keeping the painting safe as the apple of my eye? Could the cost of the painting (conservation, framing, exhibitions, bank interests) totalling fifteen thousand pounds pay off?
The reality of auctions
The cataloguing was excellent. Would the exhibition in the rooms equal that? On entering the downstairs rooms of Sotheby’s that Sunday I expected to see the Exter straight in front of me. Feeling slightly disappointed, I turned around and there, taking up the whole wall, was the magnificent work of the female master from Russia and the Ukraine.
Imposing over the rooms and sparkling under the spotlights the Exter overshadowed everything else there. It was a gem and I could not have asked for anything better. The boat with the cross mast stood out on the futuristic waves of the blue sea, while the two huge fisherwomen gave the painting its Egyptian looks and archaic feel. The size was substantial and the frame complemented the beautiful composition wonderfully – it was a museum piece.
The second hurdle was passed in flying colours. The final and most important one would not be known until the moment of the sale. Have Sotheby’s managed to attract the buyers? Have they managed to market the painting worldwide? Will there be a bidding war to give me the financial security I needed? I called the Russian department to inquire whether there was any interest in the piece. “No worries Mr Constant. We have three interested buyers.” Great, that was great. I needed only two of them to drive the price to one hundred thousand pounds.
Lady Luck, help me out!
November 23rd 2000
The day of the sale arrived and I was up really early. Nerves and sleepless nights, grand plans, sweet dreams, horrible nightmares, desperation had all taken their toll. Although I had been through the same process for over seventeen years, that day was the most important day in my art venture and I had never felt so stressed. I felt so low and such sadness. Once again I was selling out of need and necessity. I had regretted selling the Jongkind, the Lebasque, the Hoffman, the Ralli, the Ghika, and so many other important paintings. This was more than anything I had parted with before! I felt sick, but at the same time hopeful that something dramatic would happen to change the course of my finances and my life. Could the new millennium bring a fresh, brighter beginning? What beginning? I had no idea!
I rushed to Sotheby’s early, just before ten. Many people were going about their business, but there were only a couple in the auction saleroom. I registered every minute detail, from audience to paintings still on the walls, from assistants to porters getting ready for the major Russian sale.
Some Russians arrived, but none appeared to be billionaires or millionaires! I expected a packed room, but too many chairs remained empty. It didn’t look good. The Russians seemed to have stayed away deliberately, boycotting the sale and the Exter. Rich bidders stay at work and bid on the phone, I whispered to myself, trying to calm down, but I also knew that a full auction room means plenty of bidding wars and strong interest on what was on offer.
I sat uncomfortably in the half-full saleroom noting anxiously how things went for other Russian paintings. The vibes were not great. The prices achieved were close to the low estimates and the phones mostly remained silent. Halfway through the paintings section I realised that my dreams would be dashed. I realised that my expectations were too high and that bad news was on the way. I sensed disaster.
My fears, my calculations and permutations were abruptly interrupted by the name Exter.
“Alexandra Exter,” announced the auctioneer. The painting was in focus inviting the audience to bidding.
No movement in the room, not a whisper; silence, absolute silence and a similar scenario as at Christie’s in 1993! No bidder, no hand up let alone hands. Breathing deeply and with great difficulty I sat frozen and absolutely terrified of another unsold situation. Would my dreams come crashing down on me once again?
A phone was engaged and active. The auctioneer was aware of the bidding prospect and was expecting it looking anxiously to her left.
“Fifty thousand pounds I have,” announced the auctioneer. I am praying and crossing myself. Please sell, please sell, and very quickly I hear “Fifty-five thousand I have, against you on the phone,” smiled the auctioneer turning to the phone assistant. “Sixty on the phone,” the auctioneer continued expectantly.
My heartbeat raced momentarily, my hopes raised for a split second, but that was that.
“Sixty thousand, sixty thousand I have, sixty thousand I have and I am selling. Sixty thousand I have, sold, sixty thousand,” was the final announcement.
The gavel crashed down and with that my dreams. I collapsed in my chair sweating rivers. I could not move, I could not think. I had destroyed the dream of a lifetime with the worst decision of my life. I was sure of that there and then. I was the unlucky seller of Exter. I had sold at rock-bottom price the best painting I had ever had in my possession. I had sold at the worst time of the Russian revival and at the same time started the new millenium in the worst possible way! That was a very bad omen! My timing in selling the Exter could not have been worse, could it?
One more Russian painting in the same sale by Richard Sommer did fine at £3500, even though below expectations. Once again that painting today is worth about £20,000-30,000, not just the £3000 net I collected back in 2000. A couple more thousand pounds profit was welcome, but honestly I couldn’t have cared less about two or three thousand on that day.
The mistake of a lifetime
I remained paralysed in that chair for minutes, numb, motionless. I could not accept reality, even though many would have loved to be in my position; £55,000 net proceeds from a purchase of £5,000 twelve years earlier! No use crying over spilled milk! No use regretting the sale. It was over. It was done! I was devastated and once again I had proved to myself that I was absolutely hopeless in timing my sales.
Need dictated Exter’s sale rather than meticulous planning. Holding any investment between ten and twenty years is wise but I rarely managed to do that with important pieces of art. The best sale in money terms I have ever had, taught me serious lessons, which in a nutshell were:
· Think seriously before you sell anything very important.
· Get the time right by weighing up all the information and considering the future.
· The Russians were coming, but it was only the beginning of the surge in Russian art prices.
· Keeping an investment for twenty years is better than ten.
I sold the Exter at the worst possible time of the Russian art revival. I undersold it and worst of all of my own volition. Great! My timing was disastrous and my reserve catastrophic. Ten years on and Exter continues to be one of the most sought after artists by Russian and Ukranian collectors. She is an artist that sold for over one million pounds in 2009; furthermore in 2011 a small gouache of hers sold for £75,000, something that would have sold for maximum twenty thousand in 2000.
Being wise in hindsight is not the best attribute. Timing a sale, any sale, to perfection is the most difficult thing in the world and I admit that I had made the worst mistake in selling the Exter in 2000. But could I invest the proceeds wisely and compensate for that untimely decision and sale?
The Exter sale was surrender in spite of the great returns. Would that surrender lead to other victories?