WALT REED worries ``about someone 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. 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 for a while - works that will do as poorly for the investor as they did for the dealer.'' Mr. Reed, a dealer in illustration art in Norwalk, Conn., adds that ``inflation may eventually prove everyone to be right, anyhow.''
The art market has grown enormously since the 1960s, fueled in no small part by the potentially high returns such an investment can make. Economists now see art as one more form of ``hard money,'' with first-rate works increasing in value 15 percent a year.
The best way to find out if you are paying or getting a fair price for an art object is to obtain a consensus of authorities. This is what the Internal Revenue Service does to assess a work of art being donated to a museum or which is inherited. The IRS established its Art Advisory Panel in 1968, and it is composed of people in the know - art dealers, full-time art appraisers, academicians, and museum curators.
Among the ways to find a consensus:
Get all the books available on whatever style, period, or artist whose works you want to buy. Most museums have extensive collections of books on a variety of media, ranging from early history to contemporary art. University libraries can also be helpful.
Visit the galleries and dealers selling the specific works you are interested in buying. See how prices compare among galleries. Often, one gallery sells to another, and the prices reflect that markup.
Examine auction records for works of the sort you want to buy to see what prices they sold at - museums have these books, as do many public libraries.
Find a dealer you can trust - that's probably the hardest thing. This is especially important when you are not particularly knowledgeable about when to buy and at what price. Organizations such as the American Society of Appraisers, the Art Dealers Association, and the American Association of Appraisers will provide lists of dealers anywhere in the country who have the best track record in advising their clients.
Neither appraisers nor dealers, however, are licensed by any state or the federal government, and membership in any of these associations is as close to professionalism as any of them can truly claim, since the organizations do check out prospective members' references. However, anyone can hang out a shingle and claim to be a dealer or appraiser.
Remember, too, that there is no such thing as a completely ``outside'' opinion. Dealers represent the works in question, appraisers are generally connected to a specific collection, and academicians' reputations are staked on the art they know best.