Buy low, sell fast – the art of flipping
Bought for $44,000, it sold for $277,000 18 months later
An article that did the rounds last week stated that sellers were “flipping” art they owned at the latest round of contemporary art sales in London this month. It referred to art works that had been bought in the past six years as if there was something slightly distasteful about selling them so soon. One example was Peter Doig’s The Architect’s Home in the Ravine, which had only been bought two years ago. The other was Andy Warhol’s six small self-portraits, which had last been bought just under four years ago. Nearly 25per cent of the art on sale, it said, was being recycled, or “flipped” in this way. What it didn’t do was to define flipping or distinguish it from everyday trading.
In general, “flipping” is the rapid resale of an under-priced asset. In art, the term has been used to describe the process of buying works by an artist either from their studio or from an exhibition of freshly made work (the “primary market”) with the idea of reselling it for a big profit soon after on the secondary market – preferably at auction because the price is public, and that profit would then excite other players in the market.
This kind of flipping was a phenomenon about four years ago, when newly discovered artists such as Lucien Smith, Jacob Kassay and Oscar Murillo saw their prices leap from a few thousand pounds in their galleries, to hundreds of thousands of pounds in auction rooms within the space of two or three years. But that model has not persisted. By 2016, when the art market in general dipped, such exaggerated flipping burned itself out, and the artists’ prices fell back to normal. Alex Israel, for instance, saw prices for his 8ft, pastel-coloured “Flat” paintings rise from $70,000 in 2013 to more than half a million dollars at auction the following year. But last week, one from the series sold for just $104,000.
The so-called flipping from last week was of a different kind. The Doig and the Warhol were examples of speculators buying into an already established commodity in the belief its value would keep rising. In the case of the Doig, there was a small gain, but nothing compared with what a flipper might expect. The Warhol was unwisely traded at a time when the artist’s market has been treading water. The auction market for contemporary art is driven by the promise of short- and long-term gains, though the roulette wheel of fashion can often result in losses.
There was very little evidence last week of flipping – just Charles Saatchi, trying to double up in four years on the sack-work art of Ghanaian artist Ibrahim Mahama, in the £30,000 range. In the case of Grayson Perry, whose market has been energised by the Serpentine Gallery exhibition last year, a pot that Saatchi bought 15 years ago for £12,000 sold for £224,750, but that’s not a flip, just patient timing. Then there were the opportunists cashing in on established artists who are experiencing an upturn – artists like 60-year-old George Condo, whose Woman and Man, 2008, which was bought two years ago for £386,500, made £1.3 million.
A seller who bought a colourful abstract by 71-year-old Stanley Whitney from the Lisson Gallery less than two years ago for $60,000, sold it for $120,000. An even quicker turnaround was had for a bargain spotter who bought a 1982 painting on folded polyester by Sam Gilliam for $44,000 through online auction site Paddle8 some 18 months ago, and sold it last week for $277,000.
Flipping or just trading up? It’s hard for some to tell the difference. But last week, it was less a case of dealers trying to turn a fledgling artist into a superstar overnight than of dealers and collectors trading into a burgeoning market and realising bargains. This, it hardly needs saying, has been the essence of the art market since time immemorial.