Article: Galleries or Auctions: Where to Buy?

One of the most obious questions one will eventually face when starting a collection is  whether it is better to buy from galleries or at auction. Before we start to answer that question, however, it is crucial to first keep in mind the distinction between primary and secondary market—which often answers the question for you before it even arises.

1. Start by distinguishing primary and secondary markets

First off, if galeries are usually associated with the primary market by observers outside the art world, their activities are in truth, more often than not, a mix of both. A gallery may for instance directly sell work from the living artist it represents, in which case it belongs to the primary market, but it may also resell a work on behalf of a collector, or offer a piece acquired on the secondary market (from another gallery or even at auctions). There are also galeries who mostly specialize on the secondary market, be it because they specialize heavily on a specific type of art (it could be as diverse as old masters, modern art, or 1980’s art), or simply because it is easier to make safe investments on artists who are already recognized. Needless to say these secondary market galeries are usually international galleries, not local ones.  

Auction houses for their part, apart from rare instances of artists putting up one of their works for a charity auction, operate almost exclusively on the secondary market. They tend to become genuinely relevant once an artist has been collected for long enough, and enough works begin to circulate between owners. Before that point, auction results can remain anecdotal and sometimes reflect opportunistic resales more than a stable secondary market. For a young artist, access to the primary market is therefore usually the main issue.

The relevance of each channel therefore depends very much on the artist, the maturity of the market and the type of work one is looking for. For a young contemporary artist, the primary market usually remains the main place where works are available. Galleries control access to recent production, decide where works are placed and often maintain long-term relationships with collectors who support the artist. And, for many of the living artists lucky enough to even have such representation, their secondary market may barely exist yet. Take Florian Krewer’s market, for instance. It is still largely structured through galleries and primary-market placements; a work may occasionally appear at auction, but the few isolated results do not yet constitute a mature auction market from which one can draw reliable conclusions. On the other hand, some living artists such as George Condo, have reached a level of their career that you could almost say they are already in a “public domain” of sorts. That is to say: their production is so prolific and their collector base is so widespread that even galeries that do not represent them in any capacity offer some of their works on the secondary market. For instance, you will see Condo works showcased on Gladstone booths at fairs these days, even though the gallery never represented the artist.

Now, the reason it is important for a collector to have a clear idea of what is “secondary” and what is “primary”, is pretty straightforward: it usually impacts pricing quite a bit. An artwork bought on the secondary market from a gallery is of course going to be more expensive than a comparable work on the primary market, bought from the gallery that does represent the artist. However, that is not to say that everything is cheaper on the primary market: a contemporary artist, the secondary market of whom is plumetting, may still have its gallery offering his or her work at the same price. During periods of correction, the secondary market can thus reprice faster than the primary market. For a collector, this gap can create opportunities—but it can also be a warning sign that the primary-market price has not yet caught up with the reality of demand.

This highlight another important difference between auctions and galleries: auction houses can adjust much more quickly to deteriorating market conditions. Estimates can be lowered, reserves can be adapted and sellers can be encouraged to accept more realistic pricing in order to secure a transaction. We saw a lot of this in recent years, during the slowdown of the art market. On the other hand, galleries representing living artists have much less flexibility. Their role is also to defend the artist’s primary-market price, and lowering it too visibly can damage the broader market they have spent years building.

In part because of this, auction houses have managed to capture a growing share of collectors’ attention these past few years. Partly because they have changed the way they present themselves. What was once perceived as a fairly cold, dealer-oriented environment has become much more collector-centric, with more curated sales, stronger storytelling and a much more accessible public image. And collectors now seem much less reluctant than they used to be to buy at auction. But one should keep in mind that auction estimates can be deceptively attractive—especially once buyer’s premium, taxes and competition between several bidders are taken into account.

Now that these foundational considerations are out of the way, let’s see where to buy depending on the circumstances.  

2. Use galleries when access and selection matter most

One of the main advantages of galleries is access. A good relationship with a gallery can give a collector access to the strongest works in a series, a broader view of the artist’s production, and sometimes priority on future pieces that may never reach the open market.

That access, however, usually comes at a cost. Waiting lists, allocations, priority given to long-standing clients, requests for institutional placement, or implicit restrictions on resale are all part of the primary-market ecosystem. The art market is notoriously difficult to access, and having the funds to buy a work is unfortunately rarely all it takes... There are however also good reasons for it, and it is not always for the sake of exclusivity: galleries also have to play a role in who gets an artwork to protect artists from “flippers” (people who buy to resell immediately, and are not really interested in spending much time with an artwork on their wall) and to build their careers.

In short: galleries are your go-to when the main issue is qualitative access to a production that is still largely controlled.

3. Use the secondary market when the work you want is no longer available on the primary market

As an artist’s career develops, the works collectors want most may belong to earlier periods or series that are no longer available from the primary market. This is obvious for artists such as Twombly or Judd, but the same logic can apply to living artists as well: an exceptional work from ten years ago may simply be more desirable than what is currently being produced.

The secondary market therefore gives access to a much wider range of periods, formats, provenances and levels of quality. In short: once an artist reaches a certain level of maturity, look for the right work first and choose the channel afterwards.

4. Within the secondary market, auctions and private sales solve different problems

Auctions are particularly useful when a genuine public market already exists. They provide a large and visible inventory, public comparables and observable price points, and they allow collectors to access works without necessarily having an existing relationship with a dealer.

Private secondary-market transactions offer something different. Galleries, dealers and advisors can source works that never reach auction, carry out more targeted searches, and keep the acquisition itself—and therefore the purchase price—private. This can matter, especially if the work were to return to market within a relatively short period, for whatever reason (if you don’t like the work anymore, or if you simply need some cash). Very visible short-term resales often perform badly at auctions, as most bidders know exactly when and at what price the work was previously acquired.

Private sales also leave more room for negotiation and due diligence. A seller may accept a reasonable offer in private, while competition at auction can push the same work higher. But the opposite can also happen: you can get an amazing artwork for a bargain when an auction attracts little interest, just like you can get unreasonable asking prices in private from sellers who are protected by the confidentiality of their own purchase price. Which bring us to the main difficulty with private sales: pricing opacity. This makes comparables, market knowledge and the quality of the specific work particularly important when assessing a private asking price—and can make you “pass” on a great work simply because you don’t have access to that information. In such cases, we obviously advocate (advertise) to use art advisory services, who can help you access that information.

In short: auctions make sense when the public market is sufficiently deep and the work is attractively priced; private sales become particularly useful when access, negotiation, discretion or a very specific search matter more.

5. Last but not least: be careful when auctions appear too early in an artist’s career

For a young artist, repeated auction appearances soon after primary-market purchases deserve attention. A single resale may mean very little, but several works returning quickly can point to a more speculative collector base. Strong early results may reflect genuine demand, or simply flipping combined with temporarily limited supply. It is therefore worth looking at who is selling, how long the works were held, how much material is starting to circulate, and whether demand is growing at the same pace.

In short: for a young artist, auction activity should first be read as information about the structure of the collector base before being treated as a new buying opportunity. Once more, that is where advisory services come in: to help you make sense of public information.