Where and when
Fall and spring are the most important seasons for the auction world. Though London hosts the first big sales of the season, it is usually the bidding in New York that garners attention from the press.
Did you know? Auction house galleries are open to the public. Those who are in New York during the first week of November should take advantage of the scheduled viewing times to visit museum quality masterpieces which may never again be seen in our lifetime.
Of note this season is the Ebsworth Collection that is being sold by Christie’s on November 13th, which is estimated to bring in roughly $300 million and break several records. Among the most notable works are Edward Hopper’s Chop Suey with a low estimate of $70 million, Willem de Kooning’s Woman as Landscape at $60 million, and Jackson Pollock’s Composition with Red Strokes at $50 million.
Relative to the rest of the art market, auctions are seen as transparent and democratic, because anyone who demonstrates that they have sufficient funds and passes the standard know-your-client (KYC) checks, can register for a paddle which allows them to bid on an object. In order to understand the auction process, a few key concepts need to be covered.
Consignor: the owner of the property which is offered for sale at auction.
Lot: an object or group offered for sale as a single unit.
Estimate: each lot is assigned a low and high estimate, which represents the opinion of auction house experts as to where the object might sell. The low estimate plays a crucial role in determining the reserve price.
Reserve Price: the confidential minimum price below which the seller would prefer to keep the lot and let it go unsold at auction. As a legal matter, the reserve may be no higher than the low estimate.
Hammer Price: the amount of the winning bid, which the auctioneer announces by hammering the gavel.
Buyer’s Premium: a fee paid by the successful winner of a lot in addition to the Hammer Price, which differs by auction house. The premium is calculated as a percentage of the final hammer price and usually, ranges from 12% to 25%.
During the sale
The auctioneer opens bidding below the reserve price and accepts bids in ascending increments until no further advances are made in price. If the amount of the final bid is equal to or greater than the seller’s reserve price, then the lot is sold to the successful bidder. However, if bidding does not reach the reserve price, the lot is “bought-in” and returned to the consignor.
The winning bid
The winner of a lot must pay the full purchase price, which is equal to the hammer price together with the buyer’s premium, plus any additional state or local taxes before they are allowed to collect their prizes. After the sale, the final purchase price is published online and becomes a matter of public record.