Des Moines, Iowa (WiredPRNews.com) — With the housing market in a slump and the stock market in a volatile drag, a large number of wealthy individuals have been looking to find another type of equity. Specialists at auction houses and banks say that many of their clients have recently become interested in taking a loan against their art collections.
Two auction houses including Christie’s and Sotheby’s and select banks have been proffering art finance for a long time but during the recent years, as the value of art pieces have risen, collectors have taken advantage of their collections. Though loans may be structured in different ways, some banks are offering both term loans and credit lines to individuals, trusts, galleries and museums worth worth high amounts. They can loan against specific works or whole collections, normally up to half of the market price of the offered collateral.
Since the business of auction is seasonal and major sales happen only during the fall and spring, many sellers are asking for an advance on their artwork’s value. In case the work does not sell and buyers are not able to repay their loan amount, the auction houses either work on the reselling strategy through private sales or future auctions, or agree upon accepting other consignments as collateral.
Often, the collectors who borrow against their art are allowed to keep it on their wall but there are some circumstances when the auction house or the bank may take possession of it. These circumstances may be when the art piece is jewelry and is highly portable and valuable, or when the borrowers have been out of the nation where it is difficult to keep a check of the collateral and harder to make a claim on the collateral in case the borrowers default.
Wired Art Reporter