What Art Dealers Will Accept in Payment
Grant, Dan, Consumers' Research Magazine
In order to succeed in their profession, art dealers need to be patient and accommodating. Works of art can be quite expensive, and few of the wealthy collectors who purchase pieces are likely to have $200,000 or so sitting in the bank on which they can write a check. More often the case, these collectors must sell stock or other assets, or wait for an inheritance or a certificate of deposit to come due before they can make a substantial purchase, and the process of raising money may take time.
Waiting for money to arrive may bog down a sale, and dealers sometimes take a tangible asset in whole or partial exchange for a desired work of art. "I've traded for houses a couple of times, maybe three times," says Santa Fe, N.M. art dealer Gerald Peters. "I've taken stock in trade a few times, too."
Paul Gray, director of the Richard Gray Gallery in Chicago, has accepted a case of wine ("it was very good wine") as partial payment for a painting, and he did the same with a watch. Though, when he took a new Toyota from a car dealer in exchange for a contemporary painting, he says: "I think I may have paid him some cash." ("My sister needed the car," he explains.)
Many art dealers have the experience of being offered some object in trade, the most common being another work of art, although other items may be suggested as well. "When the gold boom was going on, someone once paid me in gold coins," New York art dealer Andre Emmerich says. Gilbert Edelson, Administrative Vice President of the Art Dealers Association of America, noted that he has heard of instances in which jewelry is used in a trade: "Everything is OK as long as both parties agree."
The aim, according to Gray, is to "help make the transaction as painless as possible; it's part of maintaining the friendly relationship between the collector and dealer." In addition, he adds, exchanges of property offer a "psychological benefit" to the collector who will "trade something they don't think is as valuable as what they're getting, although it usually is. I'm not in this business to lose money."
While speeding up the sale of artwork, noncash exchanges may add several layers of complication for both collector and dealer. The dealer may end up owing a consignor after the swap has taken place, and that person is not likely to want anything other than cash; a dealer suddenly in possession of an extra house now will be the one scrambling for money to pay the consignor. The object offered in exchange for art may need to be appraised, and differing estimates could lead to protracted negotiations that slow down the sale and sour the relationship between dealer and collector. Even a generous appraisal, of course, is not money in the bank, "and someone may end up getting the short end of the stick," Peters says. Of the three instances in which he has accepted stocks for artwork, "in one case, I made out great, making 10 times my money; in another case, I guess I came out even. …