I worry about the fellow who knows nothing, who has about $2,000 to $5,000 to invest, and has read the statistics about the kinds of returns you can get from selling works of art," Walt Reed says.
"The more he reads, the more he thinks that any work will do it for him. Any good salesman will size him up and sell him works that have been hanging around awhile -- works that will do as poorly for the investor as they did for the dealer."
Mr. Reed, a dealer in illustrations in Norwalk, Conn., adds that "inflation will probably prove everyone right in the end, anyhow."
Even a novice, he says, need not fear entry into the art market if it is always kept in mind that there are ways of getting more information and a second opinion. When dealing with such collectibles as art or antiques, market decisions are often based on imperfect knowledge. As the extraordinary prices paid for Turner's "Juliet and Her Nurse" or Picasso's "Saltimbanque Seated with Arms Crossed" last spring ($6.4 million and $3 million, respectively) appear to point up, the actual "value" of a work is often determined as much by how much someone wants it as by what appraisers claim for it.
The best way to determine whether one is being asked or given a fair price is to get a consensus. This is, in fact, what the Internal Revenue Service does when it seeks to assess a work of art that is being donated to a museum or that is inherited. In 1968 the IRS established an Art Advisory Panel composed of 10 experts -- academicians, dealers, and professional appraisers and consultants.
Among the ways one might get that consensus is:
* Get all the books you can on whatever period, style, or artist whose works you want to buy. Art departments of many public libraries, art museums in the area, and university art departments have slide collections, books, and other reference materials on art, architecture, decorative arts, graphic arts, and photography.
* Visit the galleries and dealers selling the specific works you are interested in buying. See how prices compare from one gallery to the next. Often, one gallery sells to another and the prices show that mark-up.
* Examine auction records for works of the kind and caliber you wish to buy to see at what prices they sold. Gallery prices, however, will probably be higher than at aution, as many galleries buy their works directly from auctioneers.
* Find a dealer you can trust -- probably the hardest task. This is especially important for people who are not particularly knowledgeable about when to buy and at what price. Organizations such as the American Appraisers Association and the Art Dealers Association, both in New York, will provide a list of the dealers who have the best track record in advising their clients.
* Many dealers will lend a prospective buyer one or more photographs of a particular piece which can be taken to an appraiser to determine whether or not the asking price is reasonable. Other times, a dealer will provide a detailed description the appraiser can use.Appraisers will set a minimum fee ($100 plus any travel time and other expenses involved) or will charge a client based on the value of the work or collection (1 1/2 percent). However, appraisers should be considered a relevant source of information and guidance only for those spending up to $10,000.
It must be kept in mind that there is no such thing as a completely "outside" opinion. Dealers represent the works in question, appraisers are generally connected with a specific collection, and academicians' reputations are staked on the art they know best.
Appraisers are under considerable pressure to overvalue works, and many dealers are under similar pressure to withhold works from the market to create a need, says Robert Schonfeld, head of the appraisal unit at Sotheby Parke Bernet, the world's largest art and antique auctioneers. He quickly adds that "this does not happen at Sotheby's." The goal of these appraisers is to establish or maintain sometimes artificially high prices.
Dealers, Walt Reed noted, pull out every stop to get attention for the artists they represent. "All forms of press agentry, show business, and manipulation of the market -- everything goes when it comes to selling a picture. Critics try to stem the effect of this, but you have to be very skeptical and very prudent."