17 Dec 2007

Selling an artwork

Once art forms a part of an investor’s portfolio, at some point in time he may want to sell it. One sells an artwork to obtain liquidity either because funds are needed to buy another artwork, or to reinvest, or simply because it is a good time to sell and maximise the profits.

When should you sell a painting? Although this would vary from person to person, as a general rule you should sell when there is an increased demand for that artist/artwork in the market. The demand is likely to be high after an artist has performed well at an auction or has participated in a major exhibition or has been recognized internationally. This generally translates into a better selling price. However, when there is a slump in the market it may be good time to buy but not to sell.

Some people may want to buy newer works and may decide to sell the older ones to create space. One must realise selling an artwork is not a simple and easy process. Sometimes the painting may remain with the gallery for a long time before being sold. One may not always get the asking price. Also, when reselling the artwork, it helps to remember that there are gallery commissions, and tax implications, which will affect the profit margins. According to gallery owner Premilla Baid, “There is no right time to sell. It is a very subjective thing. When we sell artworks for our regular clients, we charge them 10% of the sales.”

To ensure you make a sound investment it is essential you know how to pick upcoming artists with the potential to appreciate. Which means when your reinvest the funds try to pick up works that are likely to appreciate in the future. Remember, art should always be looked at as a long-term investment option.

In general art cannot be compared to the stock market or real estate, there are a lot of variables involved and one must make a decision after a thorough research of the market conditions.
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