Art Auctions and Real Estate

While reading an article about the up-coming Christie’s auction of some masterpieces from author Michael Crichton’s collection, I was struck by the similarities between selling fine artwork at auction and selling residential real estate. Pieces from the Crichton collection are currently on display in Christie’s New York showroom. I’m interested in the works of art, especially Jasper Johns’ iconic “Flag” painting (1960 – 66) which is considered a transformational worked that paved the way for Pop Art and Andy Warhol among others. Scheduled to be offered at auction in May and valued at $32 million, a current price estimate for the piece will not be set until after an auction of Contemporary paintings in London next week.

Sound familiar? Home Sellers usually have a value in mind, whether realistic or not. When it comes time to set a listing price, however, Sellers look at sales prices of recently sold, similar homes and make appropriate adjustments from there. If the comparable sales aren’t selling high enough, then discretionary Sellers hold their properties off the market.

Buyers approach the purchase of a home as if it were at auction too. They know what they’re looking for, study the current inventory and try to assess how much competition there will be for the home of their choice. They, too, compare the listing price with recently closed sales. When there aren’t enough closed sales to create a clear market trend, Buyers tend to hold back, either waiting for more inventory to become available or making very low offers. Most Buyers try to keep their emotions in check, but like buyers of fine art, sooner or later, many fall in love and have to have the home of their dreams.

And so the log jam is broken. Signaling a tentative recovery following the art market’s recent boom and bust cycle, Alberto Giacometti’s sculpture, “Walking Man I”, just sold for over $104.3 million, the highest price ever paid for an artwork at auction. The buyer is no doubt betting on the long-term value of the Giacometti and wants to buy before the price goes higher.

It’s just like real estate. A few good sales open up the market, more Sellers offer their homes for sale and more Buyers have the confidence to buy. Prices and interest rates are low now and there is a lot of pent-up Buyer demand. With the expected seasonal increase in inventory, Spring 2010 may be the ideal time for both Buyers and Sellers to jump in.

If you or a friend wants to talk real estate, please give me a call!

Tags: buyers, Christie's, demandm sellers, Flag, interest rate, Michael Crichton, Painting, Real Estate, Walking Man