Art Market Tips for Consigning Art
Q: I inherited several paintings that I'd like to sell, but I know little about the art market. I was thinking about maybe selling them to a gallery for cash, but a friend suggested that I could make more money by consigning them. He said that if I consign them, I don't get paid until they sell, but I get more money when they do. Will I make more money by consigning the paintings and, if so, what do I need to know about consigning?
A: The major advantage to consigning art is that you almost always make more money when it sells than you do by selling it outright. The major disadvantage to consigning art is that you only make money when it sells. When it fails to sell, you make nothing. This means that if you choose to consign your paintings, you have to be reasonably sure that they'll sell within a reasonable period of time. In other words, you have to figure out how strong the market for each individual artist is. The stronger the market, the better the chances the art will sell and the more viable consignment becomes.
Since galleries don't invest operating capital in consigned art, they can afford to offer it at higher prices and wait for the right buyers to come along. They don't have to try and buy it for as little as possible or be forced to turn it at prices somewhat below retail in order to recoup what they paid for it. In dollars and cents terms, when you sell outright to a dealer, you rarely net more than 50 percent of retail. When you consign to a dealer, you can net as much as 80 percent or more of retail (assuming the market for the arist is strong and the art is highly desirable and easy to sell), but usually more like 60 to 70 percent under normal circumstances.
The downside of consigning is that a gallery is under no pressure to sell your art since they have no money invested in it. And a weak artist market doesn't help matters any. At worst, they may keep the art for months or even years with no results, and end up returning it to you overexposed and even less salable than it was to begin with. You'll be forced to start selling all over again, often for substantially less money than you had originally hoped to sell for. Your job is to find a dealer who will sell your paintings and pay you the full amount agreed upon, all in a timely fashion. The following pointers will help assure successful outcomes when selling art on consignment:
* The more collectible your art, the more you should consider the consignment option. Highly collectible art sells fast, galleries will want to sell it for you and they'll make attractive offers in order to represent it. Under optimal circumstances, galleries can net you more for your art than other popular options like selling at auction (either online or bricks & mortar establishments) or online at fixed-price secondary market websites.
* Work with a gallery that has experience selling art and artists similar to yours. Ask to see similar art currently in stock or sales records of similar pieces that they've already sold, including selling prices.
* Look for indications that the gallery has a high probability of selling your paintings within a set period of time, and that you'll get paid in full within thirty to sixty days after that sale takes place. The closer this approaches a guarantee, the better.
* Make your consignment agreement for a reasonable period of time, usually six months to a year. Some galleries may ask for as long as two years, but this is uncommon and they should present good reasons for needing the extra time.
* Make sure your paintings are offered at fair prices, you know what those prices are, and that the gallery posts those prices for all to see. Have the gallery explain why the agreed upon prices are fair and reasonable.
* Occasionally, a gallery will offer, as part of a consignment agreement, to buy your art for cash if it fails to sell after a certain period of time. Be careful here because the gallery may be using attractive consignment offers to gain control of your art, put little or no effort into selling it, and then buy it cheaply at a later date because they're "having difficulty" selling it.
* Avoid working with galleries that lack experience selling art similar to yours, no matter what terms they offer. Some galleries appeal to the greed instinct by offering to take consignments at ridiculously high prices and netting you more than any competing galleries. They rarely sell the art, but they don't care. All they want is good looking art hanging on their walls absolutely free of charge (at your expense). It makes their galleries as well as their other art look better. Or they want to experiment with your art to see whether they can sell it or attract new clients. They know they're under no obligation and that they can always return your art if they can't sell it. You're the big loser here.
A caution regarding certain of the more commercial galleries and the art by "household name" artists that they often sell: Some galleries try to sell you art with the promise that all you have to do if you ever want to sell is bring it back to the gallery and they'll sell it for you on consignment, giving the impression that the art is liquid and convertible into cash at any time. This is particularly true with higher profile galleries selling art by name artists like Dali, Chagall, Boulanger, Miro, Kinkade, Neiman, and Max. Avoid doing business with any galleries that present their art as commodities that can be returned and/or resold at any time, supposedly at a profit. This is not the way the art market works.
Commercial galleries that offer to take your art back at later dates if you buy it now make those offers knowing full well that they make no cash outlay if you ever decide to take them at their words. They also know they're under no pressure or obligation to sell it, and they frequently make little or no effort to sell it, especially if the artist has faded from popularity or the market is flooded with that artist's art. If the galleries do take it back, they often keep it indefinitely or until you ask to have it back, and then tell you that they tried to sell it, but could find no willing buyers. The bottom line here-- if it sounds too good to be true, it usually is.
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