DID YOU KNOW?
The marketplace has several different levels in which an item can be monetarily exchanged. It all depends on the circumstances surrounding the transaction, such as time exposure, available venues, consumer demand, compulsion to buy/sell, condition, etc. These variables certainly influence how art, antiques, and rare books appear for sale.
The older the object, the more likely it has ‘traveled’ through these various markets, especially when changing ownership. For example, an original Warhol screenprint may have been purchased directly at the artist’s studio known as the Factory, later traded with a fellow dealer during a fine art fair (wholesale ), then purchased by a private collector at a retail gallery (retail), who consigns it for auction (orderly liquidation), and later sold by the auction buyer’s heir due to forced liquidation of assets (forced liquidation).
With so many options to consider during a formal valuation, it’s important to engage a qualified appraiser who understands the nuances. Similar to selecting the appropriate valuation type(s), context is critical when determining the suitable market level(s) for every appraisal assignment.
Would you like to understand better the basic principles of the marketplace regarding art and antiques? Then read below for a brief overview of the types and general factors for market levels.
FOUR MARKET LEVELS
RETAIL Market
The retail market is where an item appears in the market intended for purchase by the end consumer. For works of art, venues may include a gallery or the artist. For furnishings, venues may include retail shops and department stores.
Fine art example: A contemporary artist displays her most recent painting during a gallery exhibition where a patron purchases it.
Furnishings example: A couple decides to purchase a midcentury new sofa at a local retailer specializing in sleek and clean lines for the home.
Wholesale Market
The wholesale market is where an item appears in the market for those in the trade. This market is often only available for a select few who work in the business such as dealers, designers, and fellow makers. Venues may include trade fairs and shows; it may also be a primary venue (e.g., retail or gallery) but offered "at cost." Items appearing at wholesale can range from brand-new to antique.
Fine art example: A dealer purchases a sculpture at cost from his long-time professional associate who manages the gallery representing that artist of said sculpture.
Furnishing example: An interior designer attends an exclusive furniture mart, for decorative professionals only, where she purchases a sunburst wall mirror at the industry price.
ORderly Liquidation Market
The orderly liquidation market is where an item is regularly sold within a specific timeframe. Property appearing for resale frequently appears for sale in this market. For works of art and furnishings, venues may include an auction house, estate tag sale, and other forms of consignment.
Fine art example: A granddaughter inherits an original drawing from the 1920s and decides to sell the work at a reputable antiques store.
Furnishings example: A collector decides to downsize and consigns a selection of Midcentury art glass to a regional auction house for an upcoming sale.
FORCED LIQUIDATION Market
The forced liquidation market is where an item appears under circumstances where property is sold quickly and within a very restricted timeframe. Sellers are without the freedom to consider exposure or price and often without regard to the most appropriate marketplace. This market usually appears under difficult circumstances, such as bankruptcy. It may also occur among individuals when they are under compulsion to sell due to a move, downsizing, or handling an estate.
Fine art example: An art gallery has gone bankrupt, and the inventory is sold at significantly reduce prices to satisfy impatient creditors.
Furnishings example: A family plans to move abroad in two months and have a yard sale to sell goods that they can’t bring with them.
GENERAL MARKET FACTORS
Consumer Primary $$$
Common venues: retail, gallery, artist studio, contemporary art fairs.
Timeframe: usually a reasonable exposure and marketing time to potential sellers.
Risk: while "fresh" to sell, consumer interest will determine if the asking price is realized or needs to be adjusted.
Consumer Secondary $$ to $$$
Common venues: auction, gallery, antique fairs, estate sales with time available.
Timeframe: usually reasonable exposure and marketing time to potential sellers; depending on the venue, it could be within a sales cycle or a longer amount.
Risk: resale value tends to be lower than the original retail price, with notable exceptions for high-demand objects with strong buying interest.
Distressed or Forced LiquidatioN $
Common venues: fire sales, store closings, estate sales with short timeframe available.
Timeframe: very limited time with little exposure and marketing to potential sellers.
Risk: an item in a forced sale tends to achieve less value than if there had been time for more extensive exposure and marketing to potential buyers.
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About the Author: Courtney Ahlstrom Christy is the Principal Appraiser of Ahlstrom Appraisals LLC. She has worked with auction houses, museums, and galleries - all of which have provided unique opportunities to closely examine works ranging from the antique to the contemporary.
© Courtney Ahlstrom Christy 2020