How art dealers work and why you can become an art dealer without an art history education

Аnd why you can become an art dealer without an art history education? In this article, I aim to shed light on the art industry and discuss my personal journey of working alongside art dealers within the framework of art valuation projects. But I want to point out right away that I am an art expert, and my clients are experienced entrepreneurs.

How art dealers make money

Art dealers make money on the difference between the purchase price of an artwork and the sale price of an artwork. This is their margin. Moreover, such a difference can range from 1000 to 2000 percent. It's important to recognize that the substantial profit margins mentioned are not typical across the entire art market. Identifying the right art and partners globally is crucial. The majority of art dealers operate with more modest markups.

When high margins are possible

Achieving high profit margins is typically feasible through international transactions and under unique circumstances. One prime example involves a series of transactions between art dealers in Europe and their counterparts in Russia. For instance, in Russia, artworks by less renowned artists from the first wave of emigration can be acquired at significantly low prices, yet these pieces can fetch prices 10-20 times higher in Europe. Conversely, in Europe, artworks by some of the Peredvizhniki are relatively inexpensive, whereas in Russia, they are highly sought after and command steep prices. The challenge for art dealers in these transactions lies in ensuring the authenticity of the artworks. In this context, my role is to assist in verifying the authenticity and facilitating the organization of these deals. The transactions involving the works of Vladimir Bekhteev, Alexander Benois, and Nikolai Lapshin were high-margin.

The second option is the acquisition of a work by an unknown artist, determining the authorship, and reselling it at auctions at a higher rate. Typically, artworks from the 19th-20th centuries are chosen for such transactions.

Who are the parties to the transactions?

Step 1. In the transaction, the auction platform serves as the initial party, while the art dealer acts as the secondary party. If the platform lacks popularity or if the artworks showcased are not authenticated, these pieces are often sold at reduced prices. The art dealer capitalizes on these lower prices by purchasing in large quantities, subsequently undertaking the process of authenticating and verifying the legitimacy of the acquired artworks.

Step 2. The art dealer consults the art expert, who then confirms whether the acquired artworks are authentic and, when required, determines their creator. Following this, the art dealer is provided with a formal expert assessment, which can be forwarded to higher-end auctions and galleries.

Step 3. Once an artwork's authenticity is confirmed and indisputable, it gains acceptance into esteemed auctions and galleries within the secondary market. Consequently, its selling price greatly surpasses its original purchase price. However, art dealers often begin their collaborations with local auctions and galleries, such as those in Russia or Switzerland. So, the work of art acquires a worthy sales history.

Step 4. Upon finishing a series of transactions within domestic markets, art dealers shift their focus to the global scene. For instance, they might present to Russian collectors a piece of art that has previously been sold through auctions and galleries in Switzerland. In a similar manner, Swiss galleries might be offered artworks that have found success in esteemed Russian locations. Even in the face of sanctions, this approach proves to be quite effective, given the challenging nature of these transactions. For transactions in international markets, additional expertise may be required, including those provided by foreign art experts. Art dealers usually incur these expenses if they are confident in success. As a result, the artworks become more scarce and sought after.

Step 5. After such deals, art dealers continue to work on maintaining interest in the artist, which involves market-making and PR efforts, including possible conferences, including academic ones. Collectors are offered to display artworks at exhibitions in museums, participate in programs to support museums. This adds value to the collection.

Step 6. After presenting the artwork at museum exhibitions, the risk of its price falling significantly decreases. Moreover, after museum exhibitions, there will be no further question of authenticity verification. In this case, additional profit after a cycle of resales is possible.

How long are trade cycles?

The duration of cycles can range from 1 year to 5 years, depending on the complexity of the examination.

What are the possible risks?

High risks of falsification are especially prevalent during transactions in international markets. In Europe, there are many forgeries of itinerant artists that even professional galleries cannot identify. Such forgeries are often sold to immigrants at high prices. When crossing borders, immigrants turn to experts for customs procedures. During such customs procedures, forgeries are uncovered. Cases of falsification are quite common. The task of the art dealer is to prevent the sale of forgeries. They work together with experts and art historians who help separate the wheat from the chaff and reduce potential risks. The art dealer acts as a mediator between all transaction participants and controls the chain completely, working directly with the collector.

The role of an art expert

As an art expert, I offer informational, consultative, and specialized support to art dealers throughout all phases of their dealings. We collaborate closely, ensuring that at any stage, including when an art dealer is considering the acquisition of artwork by an unidentified artist, they have access to expert advice. They can inquire about the potential for the artist's identification before embarking on expensive investigative efforts, and I provide insights to guide their decision-making process. Additionally, I compile reports necessary for customs transactions, further supporting art dealers in their endeavors. This encapsulates my role and contributions as an art expert.

Where do international transactions take place?

Dubai has become a hub for international art transactions. However, sometimes such deals are conducted in Hong Kong. To ensure that the expenses associated with art expertise, logistics, and foreign exchange markets are worthwhile and the transaction yields significant profits, it's crucial to consistently monitor the market, select appropriate artworks, and grasp customs processes. Under these circumstances, art dealers with a proven track record of entrepreneurial success in other fields tend to thrive. The aim of an art expert is to provide support to art dealers throughout the entire process.