Although it is hardly a rare occurrence, art consignment still remains a mystery to a lot of people.
Consigning an artwork means delivering it to a specialized vendor (usually referred to as "the consignee") by someone in possession of an artwork (usually referred to as "the consignor") for the sole purpose of selling it at some point down the line. In other words, you basically lend a work of art to someone who tries to sell it so you don't have to bother with it.
Ideally, the consignee should provide an extensive list of possible customers, as well as a much better publicity and distribution system than owners could typically achieve on their own.
While it may appear like a fairly straightforward process, consigning works of art tends to get surprisingly complicated and can cause a plethora of problems. And, believe it or not, the root of these issues cannot usually be found in the greedy vendors as they often do not charge owners for accepting works on consignment.
The main issue surrounding art consignment is the fact the owner makes money only when and if the work is actually sold.
Art consignment was originally invented to accustom non-experts who either inherited a work of art or serve as executors of the estate. In other words, they have no time, wish and/or knowledge to really deal with the artworks and prefer to just send it forth to someone else who can try and sell it.
Over time though, consigning works of art became a viable option for anyone who hopes to sell a work of art without having to barter with auction houses or art dealers. In most cases, especially those where a consignor needs to liquidate assets as soon as possible to meet the cash requirements of an estate, art consignment really does make a lot of sense.
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When it works as planned (and, mind you, it typically does) the consignment of an artwork can prove to be a convenient way for owners to have the works sold in an efficient and time-effective manner.
Sometimes, however, things can go horribly wrong.
To put it bluntly, when your consigned work fails to sell, you make nothing. This means that, if you indeed decided to consign something, you have to be fairly sure that the work will sell within a reasonable period of time. Otherwise, you might want to take your chances with an auction house or a dealer of your choosing.
The plot only thickens when you realize galleries are under no pressure to actually sell the art you've entrusted them with. They have absolutely no money invested in it, which means their motivation for finding suitors is virtually nonexistent.
The worst case scenario is that the vendor keeps the art for months, or maybe even years with no results, after which the piece ends up returned to you. By that point, the work is far too overexposed and even less salable than it was back when you decided to consign it. It becomes borderline unsalable and you are stuck in the same situation you wanted to avoid when you made the choice to consign it in the first place.
And that's not even where potential problems end. The artwork you consign can get lost, damaged or even destroyed while under consignment. Luckily for the vendors though, most consignment agreements state that the vendor takes no responsibility for insurance, so that's also something you should keep in mind.
You may be wondering why galleries are willing to take on artworks even though they do not charge the consignor anything upfront and there's a strong chance the piece will end up rotting away in a storage facility.
The answer to that question is quite simple - there's just no risk for the galleries when they accept to consign works of art.
Since galleries don't invest operating capital in consigned art, they have nothing against accepting it. Furthermore, since they get a percentage in an event of sale, they can afford to offer it at steeper and less realistic prices and simply wait for the right buyer to come along. That way, they get a bigger slice of the pie when the new buyer takes out his checkbook.
Even if they don't locate the buyer, they get to display the work on their walls if the piece is a worthwhile one. Otherwise, all they stand to lose is a little bit of storage space.
Obviously, consigning works of art comes with its fair share of risks. But, depending on your situation, it may be a viable option.
If you do decide to go through with it, we have prepared a set of tips and pointers that will increase your chances of making the consignment work:
- Remember that the more collectible your art is, the more sense consignment makes - It's a widely known fact that highly collectible art sells fast and for big bucks. When you wish to consign a work that's an attractive option, buyers will be lining up with offers. If there's a real interest in your piece, you can net more if you consign an artwork than what you'd (probably) get at an auction.
- Try to seek out a gallery that has experience selling art similar to yours - This one's a no-brainer really. When considering a potential gallery to consign your work, ask to see sales records of similar pieces that they've already sold. Obviously, you'll also want to see the selling prices for those pieces.
- Always insist on a time frame - When negotiating terms of consigning an artwork, always highlight that you expect the piece to be sold in a specific time frame. The closer this approaches a guarantee in the form of a contractual obligation, the better.
- Make sure your art is offered at a fair price - If you've done your homework, you'll know what prices make sense for the work you're trying to consign at the time you're consigning it. Make sure the gallery agrees to try and sell the work for fair and reasonable prices.
- Be careful with buyouts - Sometimes, a gallery will try to add a contractual arrangement to buy your art for cash if it fails to sell after a certain period of time. Be wary if you end up in a situation like that. If a gallery manages to get a great buyout price, it may put little or no effort into selling your work just so they can buy it cheaply at a later date. Ideally, you'll want the buyout price to be as close to the selling price as possible.
- Make sure the gallery is not trying to just rent the art for free - Some galleries may offer to take consignments at ridiculously high prices, promising to net you more than any competing galleries. If that happens, there's a strong chance all they want is a good looking artwork hanging on their walls for a while. Be careful and avoid any gallery you suspect might be thinking like that.
Featured image: A photo taken at the Tate Modern, by Garry Knight via Flickr. All images used for illustrative purposes only.