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August 2008

House Artist

While works of art and collectibles sell at auction, the market for architectural gems cannot seem to find a footing.

Felix Salmon

STORY TOOLS

When a gentleman dies, what happens to his suits? They might be made of the finest materials by the greatest craftsmen of his era, but even if they were never worn there is little use for them any more. In stark contrast, everybody knows what happens to a gentleman’s art when he dies. Even if it was a custom-made portrait (by Andy Warhol, perhaps), auction houses will bid aggressively for the right to sell off the best parts of the estate. That’s especially true for bespoke furniture. Top-quality art and design always sells for a hefty premium over mid-quality art and design, no matter who originally commissioned it.

But what about houses? Most great architects have quite a few great homes to their name: residential architecture is still the best way to develop a reputation, and the number of individual enlightened patrons willing to take a chance on an avant-garde architect is always much greater than the number of their institutional counterparts.

But when those important houses of the past come to be sold, there’s often no one there to buy them. Far from selling for a premium, they often sell for a discount: houses from a few decades ago are often a bit small by today’s standards, and might need expensive renovations. Sometimes the very worst happens: an important home built by Paul Rudolph in Westport, Connecticut, for instance, was bought as a tear-down for $3.2 million and demolished last year by David and Yvette Waldman, who wanted to build something bigger on the site.

Part of the problem with such houses is that the art of selling them is still in its infancy. Most people, when the time comes to sell their house, simply hire a real-estate agent to list and sell the property on their behalf. The aim is to reach potential buyers who are looking for a certain-sized house in a particular price range in a specific location.

With a house of architectural importance, of course, that doesn’t work very well. If you’re looking to receive some kind of premium for the house, you need to target architecture collectors, or at least people willing to pay such a premium. The people using listings services don’t generally fall into that category—and indeed most people who do fall into that category aren’t house-hunters permanently scouring nationwide listings in the hope of stumbling across something architecturally important.

So what to do? The most popular route these days is to go to an auction house. Christie’s put a lot of marketing muscle behind Richard Neutra’s Kaufmann House in Palm Springs, California, which seemingly sold for $16.8 million at its post-war and contemporary sale in May, at the low end of its pre-sale estimate. But then somehow the sale fell through.

And Chicago design auctioneer Richard Wright has auctioned a number of Modernist houses, tapping into his Rolodex of wealthy individuals interested in buying such things. Most recently, he tried to sell Louis Kahn’s Esherick House in Philadelphia, but in the end received no bids.

The two highest-profile architecture auctions of the season, then, both failed.

Occasionally, of course, auctions can have heartening results. Christie’s sold Jean Prouvé’s Maison Tropicale for $5 million, while Sotheby’s managed to get $7.5 million for Mies van der Rohe’s iconic Farnsworth House despite the fact that it is in an area of Illinois not normally frequented by the art-world jet set.

But both those houses were truly exceptional: the Prouvé house is uniquely able to be moved just about anywhere, while the Farnsworth House had acres of press coverage for months in advance, meaning that anybody remotely willing to buy it would have had ample opportunity to prepare for the auction. What’s more, there was a lot of fear that the Farnsworth House wouldn’t find a buyer—and that fear, weirdly enough, only served to increase the number of bidders, since there was a good chance that there wouldn’t be a bidding war at all and the house would go for something of a bargain price.

For houses like those by Neutra and Kahn, however, which failed to sell in May, it’s far from obvious that an auction is the best way to get the property into the hands of the best possible buyer.

Houses aren’t generally coveted in the way that most collectibles, including art, are. And buying a house is a much bigger life decision than buying a piece of art: someone who really values the house is likely to want to live in it, and anybody who’s ever moved knows how big of a deal that is.

That’s why houses in general aren’t sold at auction. The decision to buy a house is something done slowly, through negotiation and deliberation, in the full knowledge of what the asking price is. For an architecturally important house, that process becomes, if anything, even more important. A would-be buyer needs much more than just the floor plan, the address, and a structural-soundness report: he needs to learn about the whole history of the house, who commissioned it, what renovations have been made, what the interiors looked like originally, what the architect’s vision was, whether there are still original plans or photographs, and so on and so forth.

On the other side of the transaction, the seller has every incentive to wait patiently until a buyer emerges who really gets the house and its importance—and who is willing and able to pay for it and, most likely, move into it.

The best model for such a transaction is the brokered deal, where a qualified professional takes a small percentage to put together buyer and seller. That’s the model in most art transactions, after all: while the auctions get the press, the vast majority of paintings are sold not at auction but rather by private gallerists.

Taking the brokered route avoids the artificial deadline of an auction, and encourages potential buyers to invest the time and energy needed to come up with a price they’re willing to pay. With an auction, they might well not bother, if they think there’s a good chance they’ll be outbid in any event.

But so far no one has really emerged as a house broker who can fill that role, which leaves the auction houses as the only people left who know the potential buyers.

The problem is that there’s no obvious way of getting there—a world of architecture brokers—from here. In order for architecture brokers to emerge, you would need the auction route to have failed, and you would also need the market in collectible architecture to take off. Since the auction route is the market in collectible architecture, at least for the time being, you can’t have both at once. Which means that houses are never really going to be collectible.

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