To the outside observer, an art auction can seem like an entirely different universe. From the wide range of insider terms to the elusive buying process, it’s a spectacle that can confusing and a little frightening. If you want to get a glimpse inside this world and begin to make your own way into it, here’s a breakdown of the art auction process.
If you want to understand the world of art auctions, then you’re going to need to learn the lingo. Lots of different terms will be thrown around at an auction, and it’s important that you’re familiar with them before you show up to an auction. Here’s just a bit of the jargon you might encounter:
An estimate is one of the more self-explanatory ones, but it’s an essential term to know. The estimate is the approximate price the auction house thinks the piece should bring. Very often it will be a range.
Some auctions or some pieces at an auction may be no-reserve. With no-reserve the highest bidder takes home the prize no matter how low the winning bid. When an item has a reserve (which is normally not published although it can sometimes be tied to the low end of the estimate) the winning bid must be more than the reserve or the item does not sell.
The Guarantee Line indicates key information such as the authenticity of a work, the name of the artist or maker and the origin of the object.
This is typically only found in the really high-end (read multi-million) valuations. To avoid a piece not selling at auction (which would negatively impact that pieces value at future sales) the auction house enters an agreement with a purchaser to guarantee they’ll buy the piece for a certain price. For instance if I want to buy a particular Warhol painting that the auction house (and seller) want at least $30 million I can enter into a guarantee that I will buy it even if bidding does not reach that figure. In return for that guarantee the auction house will give me a large discount on the buyers premium so it saves me money had I needed to bid $30 million. If the price goes well above $30 million the guarantee doesn’t come into play. If there were only one other bidder and that person didn’t want to bid over $20 million it saves the auction house withdrawing the piece from the sale (just like not making reserve price) and possibly tainting the value of the piece. Unless you’re in that uber-rich category a guarantee is not something you’ll probably run into.
Once that gavel goes down, you’ll know you have your hammer price. The hammer price is the price of the winning bid, before any other additional fees like buyer’s premium.
These are tools you’ve surely seen in the movies. When raised, they demonstrate that a bidder is interested in the piece. Not everyone uses these, though—hand gestures or nods work just as well.
A brief walk-through
Each art auction is its own unique experience, but there are some similarities between all of them. Generally, before the auction process, bidders are able to peruse the artwork that will be up for sale; if you’d like to see the pieces in person first, check out the presale exhibition to give them a thorough look-over. An expert will also appraise each piece and give an estimate for the price it should go for.
No matter whether it’s a physical or an online auction you’ll normally have to register before you can bid for an item at the auction. For an online auction you’ll need to enter a credit card (unless you make other arrangements) that the auction house will automatically bill if you win an item.
On the day of the auction, all the potential buyers will gather and bid on the pieces they’re interested in. Art pieces are auctioned off one at a time, and buyers are determined then and there. It’s an exciting and fast-paced event that promises an adrenaline-filled time.
How buying works
You may have some preconceived notions of how buying works based on television shows or movies, but the actual process is a bit different. First off, it’s important to do your homework ahead of the actual auction. As we mentioned above, you’ll want to see artwork in person if possible to truly assess its condition. You should also investigate the artist behind the pieces. That way, you can find out what past pieces have sold for, about the artists’ reputation, and other important details. By obtaining this background information, you’ll get a better idea of how much you’ll want to pay for the piece. Don’t forget that there’s usually a buyer’s premium ( a payment to the auction house) that can vary depending on bid amount that you need to factor in to your calculations as to your maximum bid.
On the day of the auction, the specifics may vary, but you may bid in person, over the phone, or online—depending on the auction’s policy. If you’re able to make the highest bid and secure the piece you want, the auction house will tell you the next steps for finalizing the deal and finally receiving the piece. If this is an online auction or you’re a phone bidder, the auction house will let you know of local businesses who will pack and ship your item to you (for a cost of course). Typically you’ll have only a few days to arrange for the shipper to pick up your item from the auction house.
Don’t let unfamiliarity or uncertainty deter you—the world of art auctions is an exciting, ever-changing one that promises great rewards. As long as you stick to your bid maximum you can end up with a well-priced buy and, even if the bidding goes beyond your maximum, there’s always the next time.
If you want to start on your art collecting journey, there’s no better option than to throw yourself into it headfirst. Once you’ve bought a piece you love, look no further than our state-of-the-art custom framing to really bring it to life and to keep it in pristine condition for years to come.