Market observers are wondering if the largest private collection of paintings by Mark Rothko could be the next such "quality works" to hit the market. Between 2003 and 2004, just before Rothkos shot into the stratosphere, the now-disgraced money manager J. Ezra Merkin acquired 12 Rothko canvases from the artist’s estate and other sources for a reported $100 million. Now that Merkin is being investigated for his role in the Bernard Madoff financial scheme, he may have to sell them. Whether he does so one at a time, in small clusters or as a single group, the result will be a test of how prices for Rothko, whose current auction record is $72.8 million, stand up in a recession. They could be worth $350 million to $400 million or more, but that is still less than they would have brought at the peak of the market. "It’s the kind of situation where a secondary-market dealer fields an offer and sends it on to the owner," says a prominent New York art adviser. He adds that he is unaware of any pending deals but says that competing art advisers have been flooding Merkin with offers.

Although the true depths of distress selling could take time to become apparent, the spring auctions in New York next month and in London in June will be indicators. The sales will also reveal salesroom reaction to a shifting pricing structure. "There’s still a substantial spread between the asked and bid prices," says the New York adviser. "Many owners are still convinced of last year’s sums." But that is changing.

Even great works require reduced expectations. At the Sotheby’s Old Master paintings session on January 29, J. M. W. Turner’s Temple of Jupiter Panellenius, 1814-16 (est. $12-16 million), consigned by the New York dealer Richard Feigen, went for a hammer price of $11.5 million, arguably a bargain for a rare and acknowledged masterpiece. One connoisseur at that sale was willing to venture above the $10 million threshold, but in general, auction shoppers have been going for the underpriced gems.

This was evident in London in February. At the Sotheby’s Impressionist and modern sessions, the veteran art adviser Abigail Asher, of the Los Angeles and New York firm Guggenheim, Asher Associates, purchased on behalf of a client the small but sublime René Magritte oil Souvenir de voyage, 1958 (est. £400-600,000; $586-879,000), for £746,850 ($1 million). Although the price (before premium) was just above the high estimate, that estimate was at least 30 percent below what it probably would have been last fall. At Christie’s Imp/mod event, meanwhile, the classic Jean Dubuffet Miss Araignée, 1950 (est. £400-600,000; $594-890,000), went for £713,250 ($1 million), seemingly a triumph for Christie’s but actually a coup for the buyer, who may have done his homework and known that the painting failed to sell at the house in 2004 with an estimate of £1 million to £1.5 million ($2-2.7 million).

"We’re trying to buy bargains," says Philip Hoffman, the CEO of the London-based Fine Art Fund, who underbid, through the London private dealer Ivor Braka, Bridget Riley’s first-rate Gala, 1974, at the Sotheby’s contemporary sale. "We thought it was good value and could be a very expensive piece in five years time." In fact, the Riley, which sold to a telephone bidder for £735,650 (before premium) against an estimate of £600,000 to £800,000 ($879,000-1.2 million), was a better deal than even Hoffman may have realized: Months before the credit meltdown, Sotheby’s had estimated the painting at £800,000 to £1.2 million ($1.5-2.2 million) and, say several trade sources, had guaranteed it for £1 million ($2 million).

Two contemporary-sale cover lots bested their estimates but were still cheap relative to the artists’ recent price histories. At Sotheby’s, Gerhard Richter’s Troisdorf, 1985 (est. £1.5-2 million; $2.2-3 million), sold for £2.1 million ($3 million), and at Christie’s, Jeff Koons’s Monkeys, 2003 (est. £1.4-2 million; $2-2.9 million), was nabbed by the Gagosian Gallery for £1.4 million ($2 million). "It’s a steal," the New York art adviser Sandy Heller says of the Koons, which he believes could have fetched twice that amount six months ago. Indeed, another Koons painting from the same series sold for $4 million at Sotheby’s New York last November.