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Retail Gallery Prices May be More Than Art is Worth

Q: I bought two paintings at an online auction by an artist who's pretty well-known in the area. A couple of galleries in a large nearby city sell similar paintings for between $4000 and $6000 each. Since I didn't pay much for mine, I figured I'd sell them to one of the galleries for a quick profit. I called both dealers, but neither wanted them-- one said they had plenty of paintings by the artist in the gallery already, the other thanked me for the offer but said they weren't interested at this time. They wouldn't even buy them for $1000 each!! One gallery told me they would take them on consignment, but that was it. How can a gallery sell art for thousands of dollars and not even want to pay a fraction of that to buy it back?

A: When an artist's retail prices are high like this, but his wholesale or secondary market prices are comparatively low, the probability is good that the supply of work by the artist on the market at any given time is significantly greater than the demand, and that his art sells slowly when it does sell. If an artist has any degree of activity on secondary markets whatsoever, dealers tend to buy back the art for reasonable percentages of retail either to keep surplus art off the market, keep control over what's available for purchase at any given moment, prevent price fluctuations, and in general, maintain the artist's retail price structure as it stands. In the case of your artist, the dealers don't seem to care one way or the other how much his paintings sell for outside their galleries-- not a good sign.

If you give your paintings to the gallery that offered to take them on consignment, that probably won't help you much either (it'll certainly help the gallery, though, by taking them off the market). Since the gallery already has plenty of paintings for sale, they're going to feature the ones they-- and sometimes the artist-- make the most money on first (like those they own outright or have consigned directly from the artist), and save the ones they make the least money on (like yours) for later. Your paintings will likely be only two of a number of pieces that any prospective buyer will be able to choose from. With those odds they could take years to sell.

Your best bet is to try selling them yourself, like at a local or regional auction, at an online secondary market or auction website, or at a resale gallery in your area that has no work by the artist and wouldn't mind having some. This way, you can price them well below what the galleries charge and use those high gallery prices as evidence of how much money someone can save by buying your paintings instead. If the artist has reasonably good name recognition outside of the area where you live, you might also consider selling them at a larger regional auction house. Whatever you do, keep your selling prices (and hopes for making a quick profit) as realistic and reasonable as possible; chances are slim that you'll get anywhere near gallery retail.

In the art business, the younger and/or less experienced artists are, the weaker their secondary or resale markets tend to be. Artists like this simply haven't been around long enough to develop substantial followings, or for people who've bought their art to be putting it back up for sale, thereby initiating secondary market transactions. Better known artists-- like in your case-- can also have weak secondary markets, as you're in the process of discovering, when plenty of their art is available for sale from multiple sources, and it tends to sell relatively slowly.

The general lesson to be learned here is that retail art gallery prices are not necessarily indications what art is worth on the open market. It's only worth that much in the rarified atmospheres of those galleries, not everywhere, as many less experienced art buyers and collectors believe. Galleries can price their art however they wish and according to whatever markups or business models they abide by, and are under no obligation to price it according to what it may or may not be worth on secondary markets. If a gallery feels like marking a work of art up five or ten times over what it typically would sell for on secondary markets, that's their prerogative. If they can sell it at those high dollar amounts, fine-- assuming they don't misrepresent it in any way. This is why you should always have some idea of what art sells for on secondary markets before paying retail at galleries or, as in your case, buying "cheaply" outside of the galleries only to find out later that you didn't get the great deals you thought did.