| The Art Advisory Service also consults
on estate sales, which help replenish supply in the market.
If an estate hasn't appeared on the market before, it has
freshness, the opposite of exposure. The mix of items in
an estate also makes having an adviser very important: The
markets for different genres or periods are never the same,
and it's best to wait until the time is right to sell.
As an art market insider, Guglielmino
knows who owns what and who is seeking what, which enables
her to arrange private sales, client to client, keeping
the transaction totally confidential and avoiding the risk
of failure at auction. If a work is fantastically appealing,
however, selling it at auction may be wise; the competitive
excitement that can work against a novice buyer can also
drive up prices astronomically.
ART IS A HARSH MISTRESS WHO DEMANDS
A LOT OF UPKEEP; that's where the curatorial side of the
service comes in. It handles invoices, pays proceeds, recommends
shippers, orders humidity controls, gets rid of termites,
advises on conservation, and coordinates transportation.
Guglielmino personally consults on where to hang paintings
and how to frame and light them.
The cost of all this blue-chip advice
is kept hush-hush, as are clients' names. Typically, independent
advisers charge about a 10 percent commission per transaction;
Citigroup charges a lower commission but in addition collects
an annual retainer, which includes advisory and curatorial
services. Guglielmino will divulge that the average client's
net worth is in the hundreds of The first point Guglielmino
makes to buyers is that or make a killer investment, they
should think again
millions and purchases are usually
$100,000 and up. "And if you're selling," Guglielmino
says, "it actually benefits you to sell through us,
because we get a much lower commission—2 percent rather
than about 8 percent," the usual commission for selling
at an auction house or through an independent adviser.
Leveraging of art assets runs parallel
to the art-acquisition and curatorial side of Citigroup's
Art Advisory Service; Guglielmino runs both sides. "We
have quite a different client base for the two sides,"
she says. "Our loan portfolio is much bigger. We have
some of the top collectors in the world who have their own
curators. It's a very American cultural thing, I've learned,
to want all your assets working for you. You have mortgages
on your real estate, so why wouldn't you do the same with
your art?"
The big advantage of collateralizing
art is that clients get to keep the art while it pumps liquidity.
Valuing art for loan is different from valuing it for sale.
In the latter, the bank wants to get the client the best
price. In the former, it insists on substantiated value
based on precedents. Collateralizing art, however, is not
without risk. In 1991, when the markets and art values dropped
precipitously, Citicorp had some defaults, and the bank
worked with the owners to liquidate the art. When this kind
of cooperation isn't feasible, the bank sells the leveraged
art at auction.
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