[intro] You Can Make Less on the Second Auction—but Still Come Out Ahead [/intro]
I covered this topic before, but people are always bringing it up so I thought I would go through it once again … especially since it is a very important factor when trying to understand the market for a specific artist; or even the art market in general. Many people will consult auction result sites and discover that a particular work has appeared on the market a number of times (over a short period of time). In addition, they find that in certain cases a work brings substantially more, or substantially less, the second or third time around … people are usually puzzled, or concerned, by the fact that a work has appeared many times, so quickly. The typical question asked is: why was the work resold so fast?
At times this happens when the first buyer got a great deal, buying in a less visible market, and decided to reoffer the work in a more visible market … this, in turn, generally results in a sharp increase. Other times the work could be returning because of changes in a family’s situation (death, debt, divorce, etc.); if the work was bought during a very strong period and is being sold during a weak period then it may bring less the second time around. And then there are those times when a work returns because of a change in its condition. It is this last reason I will explore here.
The fundamental problem when consulting a web site, or book, which offers the results from public auctions, is that none of them give you the full picture. Sales take place on a specific day, while the individual works sell at a specific moment and many things can take place that will affect the results … turmoil in the financial markets, war, weather, disrupted telephone lines, bad placement of the work during the viewing (it was hanging in the wrong location and not everyone saw it), etc. In addition to all of these, is the possibility that there may have been a change in the work’s condition and this can cause a change in its value. What needs to be remembered is that none of the factors are revealed in the after-sale prices and they are all tremendously important when trying to determine the trend for an artist’s work.
Getting back to condition — while works of art usually stand up pretty well over time, there are instances when damage does occur. If this happens, and the work was properly insured, you may find that once the claim is settled, the work can come back on the market so that either the insured, or the insurer, can recoup as much money as possible.
The typical comment I hear from someone who sees that a work sold for a lower price the second time around is: “that work was a bad investment”. Now maybe they are right … the work may have been bought in a very heated auction battle and the buyer paid way too much, only to be ‘buried in the picture’ (paying so far above market value that it would take years, or decades, before there was any possibility of recouping their cost); however, the work may have sold for a much lower price because of a change in its condition and in the end, the owner actually made money. Now I am sure you are wondering: “how is that possible?”
Well, here is an example (and this comes from many personal experiences). A painting is purchased for $100,000 and insured for that amount. Soon after, the work sustains a fairly major damage and the insurance company offers the owners a couple of options:
- Take the full insurance value and surrender the painting,
- or Accept a lower payout (let’s say 85% … $85,000) and keep the painting.
For this example, the owners decide to take option 2. They immediately recover 85% of the painting’s value and then have the work restored (some insurance policies even cover the cost of restoration). The owners then decide to sell the work; this time it is offered at a lower price because of it change in condition. As long as it now sells for $15,000, the owners are at a break-even level … and should it make a bit more, they have a profit. And from experience, I will tell you that many times these damaged works will do well since many potential buyers have very little knowledge about condition.
And here is another variation on this story (again from personal experience). A work is bought for $100,000 and the owners obtain a professional appraisal valuing the work at $120,000 and insure it for that amount. Soon after the painting sustains damage and the scenarios above are repeated … only this time when the owners take option 2 they initially receive $102,000 … slightly more than they originally paid for the work (right away they are ahead). After it has been restored they then place it back on the market and no matter what it sells for they are way ahead of the game.
So when looking at the ‘numbers’ on paper, the fact that a work sells for less a few years after it was purchased may not mean that the market for that artist has change, but that the work itself has changed … and those physical changes caused a devaluation; but the owners really did not care because they ended up making money!
I also want to stress that not all damages are equal. There are plenty of times when damage will have little, to no, impact on the value of a work. To read more about this, please see Volume 63.
Holes and Tears
Recently I discussed the issues of cracks in the paint along with the possible causes and the remedies. After that article a few individuals asked me to comment on what they termed were more serious problems with works they own … namely holes or tears in the canvas.
Now before you panic and say “my painting is ruined and worthless because it has a hole in it”, it is important to remember that the degree of the damage and where it is located are really the important factors when trying to determine loss, if any, of value.
Being in the business for more than 25 years, I have seen almost every kind of hole/tear one could imagine … from pinhole size holes, to large tears (70 inches and more), to paintings that were actually cut in two. Some of these works would be considered total write-offs, while others had suffered minor devaluations, and others really had no serious loss in value.
While reading this article it is important to keep in mind that the size of a damage and how it affects the work’s value is all relative. A five inch tear on a 8 x 10 inch canvas is very different from a five inch tear on a 60 x 80 inch canvas.
Let’s start with the smallest of the damages – obviously those are the small holes and tears. It is widely known that the artist Edouard Cortes made a small pinhole in his canvas in order to create the vanishing point – the spot where all the lines of perspective meet. When you take one of his paintings and hold it towards a light you will see this hole (please keep in mind that it is not something he did in every painting and should not be used, in and of itself, to determine the works authenticity). Over the years we have acquired paintings by Cortes that have had a small patch on the back … and usually that patch corresponds to the location where the pinhole would be located. It appears that some restorer decided to fix this ‘damage’. It is funny because this shows that the restorer had very little knowledge about the artist’s work and that the ‘hole’ was actually created by the artist and should have been left alone. However, there are times when a work does have a small hole or tear that was not created by the artist. These small damages are usually easy to repair … often times a tiny amount of BEVA glue can be placed on the back of the canvas and once dried the front can be filled and inpainted. In certain instances a small patch will be used to reinforce the damage; however many times the glue is more than enough to support the repair. Once completed the work should look as good as new and if the damage was in a minor location (background area) it will have little, if any, effect on the painting’s value.
Next there are those works which have larger tears or holes … and once again, depending on the location of the damage the value may or may not be affected. As most of our readers will be familiar with the works of Daniel Ridgway Knight I will use his work to illustrate this. Imagine one of the artist’s paintings that feature a single figure standing in a landscape … in case you are having trouble, here is a link to one on our web site: The Flower Girl (26 x 21 inches). Please note that this particular work was in excellent condition when we sold it and I am only using it for illustration purposes.
Now imagine a long tear, razor thin, in the upper left corner (sky) that measured 6 inches. Due to the fact that the damage was in a very minor area of the painting and that once restored it would be almost imperceptible to the naked eye, the loss of value would be minimal at most. If that same damage took place through the face and body of the figure, then you might begin to see a bit more depreciation in value. But again, this all depends on how the work was restored and how much inpainting was required to fix it. I have seen instances where a painting sustained a tear, and once the opening was closed, the two sides fit perfectly together and no inpainting was necessary … unless you knew the work had been torn, you would never be able to tell … so, was the value altered? That will all depend on who you ask.
Now let’s imagine a 6 inch hole in the same locations and the piece is missing. While this type of damage will have a greater impact on the work’s value, I am sure you can guess that the decrease in value with a large loss in the sky (background) will be less than the painting with a similar loss in the central figure. In fact, the painting with the loss in the central area will, more than likely, have a huge decrease in value … and depending on which parts of the main area were affected, might actually be considered a total write-off. Remember, that people are buying a Ridgway Knight not only for the beauty of the whole image, but his technical ability to paint the human figure … if a large part of the figure is no longer the work of Ridgway Knight, where is the value?
What about a 6 inch hole and the piece is still attached? If most of the original paint is still intact and the restorer can successfully repair the work, then loss of value will be less. Once the work has been completely repaired a more accurate assessment of value can be made.
Finally, what about works that sustained severe tears or were actually cut in two? Years ago I went to view an auction in London and in a small glass case were two paintings by the American marine artist James E. Buttersworth. They looked like an interesting ‘pair’ of paintings … the initial problem in my mind was that only one was signed. After I opened the case and carefully examined the works I noticed that they were not a pair of paintings, but in fact one painting that was cut in half! When looking at the tacking edges of both works (the sides of a canvas that are used to hold the painting on its stretcher and are usually left blank) you could not only see paint, but there was a boat that was cut in half … and when I put the two works back to back, they lined up perfectly. We bought the works and gave them to our conservator. While it took months to repair the piece, when they were finished, the fact that the painting had once been cut in two was imperceptible. The painting was acquired by a major collector of maritime paintings … one of the determining factors for its purchase, was the story behind the restoration of a fairly important painting by Buttersworth.
Now I am sure you are wondering: did that kind of damage affect the work’s value? Yes, the painting was sold for far less than a similar work in perfect condition … but the painting was not worthless. The two main ships in the painting were in great condition and the ship that was visible on the tacking edges was a very small paddle-wheeler in the distance. It is important to note that all potential buyers were informed about the works condition and the story behind it. In fact, it was the story of the restoration that sold the painting.
Remember, there are many paintings by artists that have been damaged over the years and while one of the main factors used to determine a painting’s value is condition, just because a work has had a tear or hole, does not mean it is a lost cause and should be tossed in the garbage. There are many instances when works of art need to be restored/ conserved for art’s sake and they are often worth something to someone.