You always hear about art in the secondary market. What does it actually mean? Are
they good investments? What are the benefits of the secondary market. Buying at
Auction Houses such as Christie’s and Sotheby’s, Phillips, and Bonhams are supposed
to offer art pieces with Provenance which is a French word that means that the piece
has documented history of ownership, custody, or location of a work of art from its
creation to the present.
That is what makes great art out of reach for most of the buying public. Now you can
imagine that keeping track of things can sometimes be difficult due to various reasons
and a lot of documentation is lost, incomplete or disappear when changing hands, in
estate sales, gifts or sales that just do not have enough paperwork. That’s how art
pieces become available in the secondary market.
That’s where other Auction Houses come into play. Many have Certificates of
Authenticity or some form of information vouching for the piece. Some do not even have
that. It is then that a keen eye and research come into play to find out what you are
purchasing or willing to purchase. Especially if you like the piece of art.
There are a lot of fantastic pieces that could be sold at Christie’s or Sotheby’s but there
is just not enough provenance to insure the purchase.
So, the secondary art market refers to the resale of artworks that have already been
purchased at least once. While the primary market involves the first sale of a new piece
directly from the artist or their representing gallery, the secondary market handles all
subsequent transactions.
Here are Key Characteristics of the Secondary Market:
.Resale Focus: This market comprises works being sold by collectors, dealers, or
estates rather than the artist themselves.
. Pricing Drivers: Unlike the primary market where prices are often fixed by a
gallery, secondary prices are highly volatile and driven by supply, demand, and
rarity.
.Market Players: Major venues include auction houses (like Sotheby’s and
Christie’s), specialized secondary-market galleries, and private art dealers.
.Value Factors: An artwork’s value in this market is heavily influenced by its
provenance (ownership history), physical condition, and the artist’s historical
significance.
Why all of this Matters:
Investment Data is tracked: It acts as a measurement for an artist’s long-term
value; frequent high-price resales can solidify an artist’s reputation. The
secondary market has provided a clearer view of what is sold with and without
provenance
Liquidity: It allows collectors to “cash out” of their collections to fund new
purchases or manage financial needs. It gives you an avenue to buy and sell
your art from a reputable licensed establishment
Access to History is available: It is the only way to acquire works by deceased
masters or “sold-out” contemporary pieces no longer available from the artist
directly and may not have 100% of the documentation.