OBLIGATIONS OF AN AGENT IN THE ART MARKET by Elin Lake Ewald, ASA
(Spring 1990 - Personal Property Journal - s/b PPJ Vol. 3 (1))
From time to time personal property appraisers are asked to act as agents in the sale of paintings, antiques or other objects of value. Some appraisers turn down these requests as a matter of course, some don’t want to bothered, and some eagerly seek the assignments as an adjunct to appraisal work.
Since this is a litigious society, professionals especially must be on the alert for actions that could be interpreted adversely. Different states define the role of ‘agent’ in a variety of ways, some stipulating rules that are highly stringent; appraiser/agents may not be aware of the laws governing their actions in their particular state until a dissatisfied client decides to sue.
Perhaps it’s time to clarify the role of an agent and to set up guidelines to serve as a yardstick for those of us who take on that role. There are rules of ethics and methodology for appraisers devised by ASA, rules that set the standards for the industry. If the appraisers also work as agents, related standards should also be observed. I recommend the following:
OBLIGATION OF AN AGENT IN THE ART MARKET
The role of an agent, who takes on the assignment of selling for a client a work of art, constitutes a fiduciary relationship that involves specific steps to maximize the best return for the client.
- The agent draws up a contract stating the exact steps he intends to follow in order to produce for client the best results of the sale of a work of art.
- The fee for the work involved (see following) should be commensurate with fees charged for similar roles in the art marketplace, i.e., approximately 15% of selling price for the sale of works under $10,000; 10% for works up to $100,000; and a descending percentage for works that increase in value. Although these fees are flexible, it is usual to provide lower fees in direct proportion to the increasing value of the work.
- The agent should research the art sales market in order to provide for his client a full and complete picture of the possible sales outlets and the specific costs the client should expect to incur in each – dealer’s commissions, seller’s premiums, photography, insurance, etc.–relative to each of these markets. For instance, he should contact at least two dealers who specialize in that particular market as well as at least two auction houses showing transparencies, slides or color photographs of the work in question, in order to develop a sense of what the client might expect in terms of price estimated and realized for the work. He should present to the client recent retail prices and realized auction prices for similar works of art by the same artist.
- The agent should explain to the client the ramifications of sale through both dealer and auction house, what the attendant costs might be, and what the contractual agreements would be if sold through either source.
- The agent should be relied upon to be completely open and ethical in statements made as to what commissions will be offered or paid, either to dealers or through auction houses. He must reveal if any commissions, other than the ones stated in a contract, have been offered. That is, if an auction house offers a percentage of the sale to the agent this must be revealed to the client.
- The sale through a dealer is usually at one-half the retail price agreed upon. If the work is taken on consignment by the gallery the usual procedure is for the gallery to take a 30% commission on the sale. The commission taken by the auction house from the seller can be, and usually is, to the advantage of the client if the agent is skilled and knowledgeable in negotiating that commission, particularly if the work to be auctioned is considered of artistic or historic importance and is expected to realize in excess of $50,000. Reserve prices should be explained and set. All related costs, such as photography, shipping and insurance, should be explained to the client, as well as any penalties that might be incurred if a painting is withdrawn prior to sale. All of these facts must be explained to the client prior to negotiating any sale on his behalf.
- Most importantly, the agent must be totally aware of the market for the work of art. Although it is not necessary that he/she is an acknowledged art expert, it is imperative that the agent have a full and complete understanding of the monetary value of the work of art before engaging in its disposition since, without this knowledge, the work may (sic) sold to the disadvantage of the client.
- After compiling all the above information the agent should offer to the client the various choices available to him concerning the sale of the work of art and, subsequently, render all services required to successfully conclude that sale.
- Lastly, there should be no change in the initially stipulated agreement without the written consent of the client.
The professional world and the public sector look to ASA to set standards and, by example, to adhere to those standards. Those in the ASA who have achieved the level of certified personal property appraiser should be in the best possible position to determine the most accurate fair market value for a work of art, an antique or an art object. Whether that item is to be valued for estate or donation purposes, or for sale in the secondary market, ethics and professionalism are the key words in any valuation performance.
Elin Lake Ewald, ASA, serves as a Member of the Board of Directors and Editor of the Newsletter of the New York Chapter of ASA. She is a member, Panel of Arbitrators, American Arbitration Association, and is listed in WHO’S WHO IN AMERICAN ART. Ms. Ewald, President of O’Toole-Ewald Art Associates, Inc., specializes in damage/loss/fraud cases involving fine and decorative art. For several years she has written a monthly newsletter on the art market.