The Art of Collecting Art

 

 

BUSINESSWEEK ONLINE  - PERSONAL BUSINESS 
By Joan Oleck  
EDITED BY AMY DUNKIN

 

It was an intimate chat between a man and a woman in a bedroom that turned Rob Orley into an art collector five years ago. ''I felt I could feel the conversation,'' says Orley of the Christian Vincent painting that inflamed his passion for American-modern figurative art--a representational genre that seeks to depict humanity with an overlay of fantasy. 

Orley, a partner in a private investment firm, took his $6,000 painting home to Bloomfield Hills, Mich., from New York's Forum Gallery. Then he came back for more--an $8,000 still life by Scott Prior, followed by a $20,000 streetscape watercolor by Frederick Brosen. Today, Rob and Marcie Orley own 12 major pieces of American figurative art, priced $6,000 to $75,000 each.

BIG AUCTIONS. Of course collecting art is about a lot more than money. Forming relationships with dealers, keeping up with your chosen genre, checking on what ''your'' artists are creating--these are the hallmarks of the true collector. And that's what Orley says he has become. No longer does he purchase this or that artist or genre, with no connection between the works, no concept of the artists' intent. ''I've gone from buying art to collecting art,'' he says.

For those who want to follow his lead and start collecting seriously, now's a good time. A few genres, like modern European painting, have shown recent gains, but prices in most sectors are below their highs of the late 1980s. In full swing this month are the big spring auctions at Christie's and Sotheby's (BID) in New York. Galleries are also going into their final active period before summer closings and the big fall art fairs. And Christie's, Sotheby's, and established Internet players are taking art auctions online, potentially broadening the market for fine art.

Probably the first advice for novices is understanding the investment involved. It can be heavy, with no guarantee of a profit. Sure, Orley can boast that his Brosen canvas has appreciated in value since New York's Metropolitan Museum of Art acquired a work by the artist. And the art world does have its rags-to-riches stories, like the Jasper Johns and Roy Lichtenstein works that sold for $4,000 to $5,000 in the 1960s and now fetch millions. But to most dealers, the idea of art as an investment is anathema. As Manhattan gallery owner Nohra Haime put it, buying art is ''the same thing as falling in love.''

Before you fall head over heels for that abstract canvas, however, you should analyze your intentions. Ask yourself if you want to focus on a particular genre. Most collectors specialize in order to gain solid expertise in one category. Also, determine how much money you can spend. If it's no more than $30,000, you'll get better results shopping in the contemporary category (art of the past 20 to 30 years) than for Old Masters. At $5,000 or less, prints and drawings, instead of paintings, are your best bets.

You also need a grasp of basic art concepts. Gilbert Edelson, administrative vice-president of the Art Dealers Association of America, recommends a classic, The Story of Art, by Ernest Gombrich (Phaidon Press, $49.95). You can buy Art & Antiques and other magazines for lists of exhibitions. Many museums and auction houses run collectors' seminars, too. And high-end art fairs allow you to browse multiple styles and artists at one time.

Once you understand the lay of the land, you'll be ready to browse galleries. Each summer, Art in America's annual guide lists galleries by genre. A recent visit to the Haime Gallery in the Fuller Building at 41 E. 57th Street--an address that is ground zero of the Manhattan art world--revealed exhibits by figurative painter Hugo Bastidas and abstractionist Julie Hedrick. Although the atmosphere was hushed, owner Haime moved to dispel any feelings of awe. ''Galleries are displaying a product. They're not museums,'' she said. ''People shouldn't feel intimidated.''

On the other hand, galleries aren't so casual that you can expect to bargain. Prices are set. But if you're already a collector, you can trade up. Jon Weaver, a business partner of Orley's and one of Art & Antiques magazine's top-100 collectors of 1996, purchased a contemporary drawing for $1,000 in 1993. Last year, he traded it for a wall sculpture priced at $25,000. En route, Weaver also avoided capital-gains taxes on the drawing by trading it for the fair market value of a ''like'' piece.

There are other gallery rules: A red dot stuck on a painting's label means the work has been sold. A green or half-red dot indicates another buyer has reserved the work or has a right of first refusal. More art lingo to remember: ''Primary'' market means a work's first sale, usually through a dealer. ''Secondary'' means a resale of a major work, via a gallery or auction. 

Many gallery owners, meanwhile, let trusted clients try out a work at home. And many permit time payments without interest. State consumer laws also protect you, like the New York statute that requires printed price lists at galleries, to prevent dealers from suddenly hiking pricetags when an obviously flush client walks in.

If you can't make it to New York, you might want to try an online auction. Internet auctioneer eBay recently purchased Butterfield Auctioneers (EBAY), the San Francisco auction house. The move was seen as eBay's bid to take on the art world's elite, Christie's and Sotheby's, which will launch their own auction Web sites this fall (for more about Internet art auctions, see accompanying story, ''A Treasure Chest of Art Online?'').

While the expansion of the Internet into Picasso and Monet may shake things up, serious collectors still rely on the human touch to help them make their moves. By far the most critical relationship is the one with your dealer. A good dealer will advise you, bid for you at auctions, and let you know when good stuff is available. Says the ADAA's Edelson: ''No great collection was ever formed without a dealer.'' Not that this is charity work: The typical commission is 50% of the work's selling price. Art ''advisers'' generally take 10%. 

But collectors can't emphasize their value enough. ''It's hard to collect art,'' says Weaver in Michigan. ''If you don't know it, you'll get burned.'' Case in point: Weaver's purchase 12 years ago--before he began collecting--of a Salvador Dali print. It turned out to be a fake. He found that out only after learning of a class action lawsuit against the gallery and reading in a catalog about the many Dali fakes. 

Weaver has held on to that catalog ever since, ''to remind myself that when you think you know everything, you don't.'' Clearly, when collecting art, you can never know too much. And though it's a gamble whether that knowledge will pay off in the form of increased net worth, you can be assured that it will broaden your horizons and beautify your surroundings. 

Source: http://www.businessweek.com/1999/99_20/b36...