By Justin Gest for CNN
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(CNN) -- Nearly half a billion dollars worth of fine art was exchanged during Christie's sale of modern and impressionist art in New York City last week. Fancy being a player in the art world? Here's our paint-by-numbers guide.
Step 1 -- Check the attic: You never know, there might be something of value lurking up there among all those dusty boxes. Last week curators looking after Queen Elizabeth II's art collection discovered a forgotten 17th century Caravaggio in a storeroom. The painting had an estimated value of $125m. But if you're not in luck...
Step 2: Make $100 million.
Step 3: Repeat Step 2 five times.
Step 3 -- Decide why you want to collect art: There are several reasons why some of the world's most wealthy individuals and families collect artwork:
1) You may have a genuine interest in art.
2) Art has been increasingly looked upon as a secure financial investment --particularly works by the most famous artists. Indeed, some things never fall out of favor. For instance, a Picasso will always be a Picasso -- unless, of course, you are American casino magnate Steve Wynn -- who accidentally poked a hole through a painting he was about to sell for $139 million (Full Story).
3) Collecting art remains a statement of status. If you live on the Upper Eastside of Manhattan, your friends will expect you to have quality pieces of original art hanging on your walls. So that "Reservoir Dogs" poster? Yeah, it's coming down.
Step 4 -- Hire a Dealer: The dealer is like your agent -- the middle man, connecting a buyer with the proper seller and vice versa. However, a dealer is also your advisor, and he or she must have the proper expertise. Dealers should know about the specific genre and time period of the art from which you are interested, but also about how to maneuver through the market.
For instance, if you were interested in purchasing 19th and 20th Century European and American masterpieces, you might ring Daniella Luxembourg, a prominent private art dealer based in London. "I think the task of dealers and advisors is to really encourage insight from our clients," she explained. "It's a process of learning art." At Christie's last week, Luxembourg made a splash with the $38 million purchase of Ernst Ludwig Kirchner's "Street Scene, Berlin" on behalf of New York's Neue Gallery. She called the purchase a "lifetime opportunity."
Step 5 -- Develop Your Sense of Taste: "Developing taste is difficult," Luxembourg said. "The best thing is to follow your intuition. But in new fields and genres, people are hesitant and slightly afraid to expand." She said that collectors should read and view art extensively, so that they can "walk through the passages of art and see what touches them."
Many collections are praised for their focus on certain time periods or genres. However, Luxembourg warns that a narrow collection is not always best. "It depends on the quality of the collection," she said. "Some are diverse and stupendous, and others are focused and boring."
Step 6 -- Auctions or a Private Sale: Finally, it's time to buy. And the choice is between going through a public auction house and arranging a private exchange. (Alternatively, see "The Thomas Crown Affair".) Both have their advantages and drawbacks.
Public auctions at institutions like Christie's or Sotheby's are open to anyone, while private sales are significantly more discreet. In a private sale, you have more control over price deliberations and the nature of negotiations. You can also rest assured that there won't be some crazy person trying to outbid you just to make you sweat.
But perhaps most importantly, there are financial advantages to private purchases. First, the buyer is not normally charged commission by the dealers involved, while auctions take a share from both the buyer and seller. Second, private sales keep the value of the work under wraps. This is particularly useful because it leaves future buyers in the dark about a piece's most recent sale price.
But that's not to say there are no financial advantages to be exploited at auction houses. Often, auctioneers' start prices are not adjusted for estimated value, and bargains can be had. The more valuable pieces, however, are often accompanied by an unpublished "reserve" price -- a price floor imposed by the owner in agreement with the vendor. If the bidding doesn't reach the reserve, then the deal is off and your bargain is lost.
Perhaps that's when you might consult Thomas Crown for some "help"...