A few years ago, a seller walked into New York City art dealer Jill Newhouse’s gallery with an 18th-century Italian painting “that he had inherited and just didn’t want. He was looking for a quick sale.” She obliged, taking the painting off his hands for what she described as a modest price and quickly reselling it to a London gallery that more often deals in works of that type. Newhouse didn’t make a huge profit on the deal, but the young man got some money and so did she. Win-win.
Those looking to sell artworks usually consign pieces to an art gallery or auction house, and staff at both institutions are aware that the higher the final price, the more money they will earn as a commission, which tends to be 30 percent of the sale price. However, as frequent consignors of art to galleries and auctioneers are well aware, it can take quite a while for an object to sell—“sometimes, the market may be sleepier for a certain artist or type of work,” Newhouse told Observer—and the piece just might not sell at all. The percentage of objects that go unsold (“bought-in,” in auction house parlance) is between 20 and 30 percent, and sometimes more. If you need money in a hurry, that’s not good news.
Plus, what you consigned to a dealer may sit in inventory for months or longer, while an auction house will have you retrieve the unsold piece, minus the costs of photography, handling, cataloging and whatever other fees it tacks on. The London gallery owner may end up selling that 18th-century Italian painting for much more than the young man was paid by Newhouse, but there’s no denying the seller avoided a lot of headaches.
“I would say that 30 percent of our inventory is owned and 70 percent consigned,” Newhouse said, which suggests that there is a three in ten chance that someone looking to sell something he or she owns might have it purchased outright by the gallery. By contrast, auction houses sometimes offer guarantees to a select group of consignors of highly sought-after pieces, meaning that they will be assured of being paid a certain price, but auctioneers do not purchase pieces outright.
Perhaps that young man was just lucky to have found the right dealer who knew the right person to sell the painting to. Most art gallery owners and dealers “don’t want to put out a lot of money,” New York art advisor Todd Levin told Observer. “Certainly, they can’t buy outright on a consistent basis.”
However, some do. Susan Sheehan, a SoHo gallery owner specializing in postwar American prints on the secondary market, told Observer she owns “95 percent of my inventory. I seldom take things on consignment.” Her decision whether or not to purchase a piece is based on the following: “If I love the work and believe in it, I will make every effort to buy it outright.”
Art advisors regularly discuss with their clients not only what to buy but also what from their collections should be sold, as well as how and where pieces might be sold. “Depending on their needs and the specific works of art, we have made decisions for selling art directly to dealers, consigning to dealers and consigning at auction,” one advisor said. “The seller’s needs must be assessed—the timing of liquidity vs. maximum return—but the characteristics of the work also need to be assessed within the context of the current market.”
Dealers of older material, such as Old Masters to 19th-century art, and galleries focusing on the secondary (resale) market, are more apt to purchase works, rather than take them on consignment, than galleries of contemporary art. With contemporary art, tastes change and what’s popular now may not be in a few years, so dealers don’t want to have too much money tied up in it. With older art, on the other hand, prices fluctuate, but people a century from now will still be interested in buying works by Corot, Homer, Rembrandt and Whistler.
“That isn’t to say that primary market galleries never purchase artwork outright or take work on consignment from outside sources, but this happens to a lesser degree overall,” said New York art advisor Irene C. Papanestor.
Lawrence Steigrad, a New York City dealer in Old Master paintings and drawings, and David Tunick, a Manhattan dealer of largely Old Master works on paper, have purchased the majority of artworks in their inventories. It is the rare gallery of contemporary art that purchases anywhere near that amount. “I also take things on consignment,” Steigrad told Observer, “but more than 60 percent of what I have was purchased,” adding that “I always buy privately rather than at auction so that people don’t know what I paid for things.” He noted he will “purchase things at a price where I know I can make money off it.” Determining what that price will be is based on a variety of factors, such as the work’s rarity, condition, quality and “how quickly I can get rid of it.”
Tunick, who said that he has an inventory of between 2,000 and 3,000 artworks, stated that owners of artworks who come to him are well aware that they will receive less money by selling to him outright than by consigning the pieces to him. Based on his sense of an artwork’s fair market value, he will offer the owner between 50 and 60 percent of that, sometimes even going higher if he knows the piece will sell quickly. “We talk about both options,” he said. “I tell them, ‘If you consign you can make more money, but it will take longer. If you sell to me, you’ll make less but you’ll be done with it and can move on to the next thing.’”
Fifty to sixty percent tends to be the going rate. “I will offer a price where I can try to double my money,” American art dealer Debra Force told Observer. “I like to treat people as fairly as I can, and taking advantage is not my style.” She explains to owners of artworks looking to sell that “they would do better through consignment,” but consignment does involve waiting, and in some cases, owners really are desperate to sell.
