Excerpted from "Fabulous Finds" by J. Lee Drexler and James R. Cohen. Available from Quill Driver Books, an imprint of Linden Publishing. Copyright © 2011 by J. Lee Drexler and James R. Cohen
Many people think they are making a great purchase when they buy oil paintings at reputable, large art galleries in Manhattan on Madison Avenue, Fifty-Seventh Street or in Tribeca. Oil paintings by unknown but decorative modern artists sell easily for over $10,000 each. However, if you try to resell these paintings, you may receive far less money than you paid. Generally, the only way to sell these works is to accept one-half of the sale price or possibly much less than what you paid in the gallery. Sometimes the gallery is willing to sell the painting on a consignment basis and will only take one-third or one-half of the sales price. This is a better arrangement if the work sells. But it could take one to two years before it does; or it may never sell.
An art gallery dealer whom I know regularly sells a minor artist's work for $6,000-$8,000. She is the only one that sells his works and thus constitutes the entire market for his artwork. One time I was handling an estate appraisal and I asked her what she would pay for one of his paintings. She answered that the most she would pay was $400. Unfortunately for my client, I could not find anyone else who would pay more. Just to make sure you are doing the math, the proposed sale price to the dealer was between one-fifteenth and one-twentieth of the price my client had paid to buy the piece from the same dealer five years earlier.
On the opposite side of the coin is the couple who bought Jasper John's American Flag for $1,000 at Castelli Gallery and sold it twelve years later for $1 million. they were lucky, perhaps astute, but you can't count on this happening to you by any means.
The safest way to buy art is at Sotheby's, Christie's, or a top auction house, where if you go to resell, you will usually be able to get close to what you paid. But you must know what you are doing or have an expert guide you.
If you have a great eye, the way to make the most money buying art is to buy a relatively unknown artist's work at a gallery before the artist becomes famous and while the prices are still low. If you hit it right, you can have an astronomical increase in value. You have to have a good enough eye, a deep enough pocket, good luck and the patience to succeed.
Be sure to click through HuffPost Home's slideshow to see ordinary items in your house that could be worth big bucks.
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