What are the factors that govern whether or not fine art becomes a valuable investment? Should you buy fine art simply because you love it, or because of its future value?

I frequently encourage my clients to set aside the investment aspect of art buying and concentrate simply on selecting art that feeds their soul and completes their space to perfection.

A visitor studies Andy Warhols ‘Dollar Signs’ in Sotheby’s London showroom. Photo by Mary Turner, Getty Images.

But if you’d like to also factor in the investment potential of art, here is a check list of the most important considerations:

1. What would you like to collect? Are you eager to become expert in that art, or will you be engaging a professional to guide your purchases? Do not invest without first doing your homework.

2. How much can you afford to invest? In 2017, the average price for a piece of contemporary fine art was $27,900. If that’s out of your budget, you may wish to consider low cost, up and coming artists, and aim to spot the next Picasso rather than invest in established fine art.

3. Sobering news: from a return perspective, art returns 7.6 percent each year, while the S&P 500 delivers an average 9.8 percent return. Mutual funds anyone?

4. Once you’re ready to invest in art, how do you assess if the price is correct? Art is a commodity, so sometimes fads will inflate prices on hot artists. But most art prices are based on more concrete criteria: the artist’s education, exhibition history, reviews in important art journals, which galleries carry their work, and important collectors who own their work.

5. If you are buying art with a proven track record, you can access auction records that will vet prices. But auction prices may be much lower than those from established galleries. Auctions are the wild west of art sales, where a ‘buyer beware’ ethos prevails. Sometimes auctions actually drive up prices when multiple buyers are hell bent on owning the same art.

6. Reputable galleries or consultants will charge standard retail prices, but your purchase comes with the guarantee of authenticity, and a host of other support services including personal advising. As you may have guessed, I’m big on buying art you love, and investing in financial assets. There are no shortcuts to developing the expertise required to making successful fine art investments. So feed your soul, and just maybe, you will fall in love with the next Picasso.

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You don’t need to be a Renaissance Medici to custom commission art, but you do need to ask yourself and the artist a few important questions.

The most successful commissions are done by artists who enjoy a lot of direction, for art buyers who don’t wish to micro manage every detail.

Do you feel comfortable establishing some firm expectations and then letting the artist create, yielding to the artistic process? Be aware some artists thrive with a lot of patron input; others wither and feel constrained. Have an honest conversation with any prospective commission artist, and ask them where they fall on this spectrum.

Insider Tip: If you determine custom work is not for you, some artists are willing to keep your preferences in mind when they create, without a commitment from you. In essence they will do a gently guided ‘soft commission’, and grant you right of first refusal upon completion. It’s worth asking.

But if you’re excited for the rich experience of commissioning art made just for you, here are tips and rules of the road to insure a happy outcome:

Commissioning site specific art is an exciting bespoke experience, but requires a high level of communication and trust between artist and collector.

Studio visits, color samples, and lots of conversation preceded this commission for a car loving client who found a kindred spirit in sculptor Bill Thompson.

Artists like Lisa Houck are inspired by client input. This commission began with the client’s suggestion of a Morning/Noon/Night theme for their master bedroom, and includes a cameo appearance of their beloved cockapoo.

Ready to take the plunge?

1. Create a written contract between you and the artist, stipulating materials, size, due date, the price and the deposit amount and terms of the final payment upon completion of the art. Buyer beware: most commission deposits are 50% of the cost of the art, and non-refundable.
2. If feasible include the creation of a model or drawing, for a small fee, at the onset. Some artists will apply the model fee to the price of the art if you go ahead. The artist will keep the model fee should you decline the commission. This is a crucial step, and helps to make sure everyone is on the same page.
3. Expect a wait of 8 to 10 weeks for a standard commission, or months to years for major installations.
4. Do not ask for any changes outside the original terms of the commission.
5. Do ask the artist if you can see the work in progress at the half way point. If there has been a misunderstanding about expectations, they can sometimes be caught and corrected at this juncture.

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