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FAB Market Insights

Stay informed with our art news and market insights.

Auctions + Art Fairs, Collecting + Investing
12.2.2020 by Ray Waterhouse

Do your research and know what you’re buying.

With any expensive purchase or investment, you want to be well-informed in order to make good decisions. This guide to buying fine art at an auction is a great place to start. The internet can be a helpful first step when doing research, both to find out about the artist and relevant prices that have previously been achieved. Most databases require subscriptions, such as artnet and artprice, or you can contact us at Fine Art Brokers and we can provide initial data for no fee. Comparing artworks should not only be done visually, as there are a number of criteria to consider – quality, subject, date, provenance, and condition amongst them. Even if you aren’t an expert, you can usually still get a pretty good idea of an artwork’s worth based on a few indicators. Beware a painting that has been offered frequently and unsuccessfully at auction.

The auction estimate is only a rough guide and is often a marketing tool by the auction house, in other words, it is sometimes deliberately low to tempt bidders, or it can be low because there are negative issues. Other times the estimate can be high due to the demands of the seller. The seller will set a reserve below which the lot cannot be sold, and the reserve cannot be higher than the low estimate.

The auction specialists are only too happy to answer serious questions. Ask about why the owner is selling, ask for a condition report, and with a painting ask to see the back to see if there are any clues to the history; labels from important collections or exhibitions add to value. Nearer the date of the auction, ask about the general interest from other parties. Don’t give away your bidding strategy, though – remember the auction specialists are contracted to the seller and can potentially use your bid to get bids from other clients.

Study the catalogue carefully, as this lists what the specialists know about the lot. If there are any asterisks next to the lot number, check the glossary at the back. Also, know how much Buyer’s Premium is payable, and the Conditions of Sale. If you are successful and the hammer price is $50,000, normally 25% premium is added as the auctioneer’s fee. And know about the sales tax rules too.

Ray Waterhouse seated at Sotheby's auction house in New York, glancing to the side as he holds a catalog

Ray Waterhouse at an auction, Sotheby's, New York.

Know what you are walking into and know when to walk away.

Considering what to bid can be a nerve-wracking experience. You are dealing with your own money and making not just a purchase but an investment. That can certainly be a daunting thought, so you need to set a limit. An auction can be adrenaline-inducing, so try not to get too caught up in the moment and bid more than you intended.
Equally, just because others are not bidding aggressively does not necessarily mean the lot is unworthy – if you have done your due diligence you will be sure of the value to you and your collection before the auction begins.

Understand the key players at an auction.

There are some key players in the art auction process and we list here some typical roles that you’re likely to run into:

  • Consignor - This is a person or institution, usually the owner, that has consigned the artwork.
  • Specialist - This is the person or persons who put the auction together. They are in charge of having the art consigned, determining the estimate, preparing the cataloguing, and displaying the exhibition.
  • Auctioneer - This is the man or woman who will be conducting the bidding.
  • Client services – Large auction houses have employees who act as liaisons between the bidders and specialists, and they also take phone bids.
  • Guarantors – Sometimes valuable art has a guarantee, whereby a third-party person guarantees to buy a work if there is no bid above the guarantee, and participates in the upside if the bidding exceeds the guaranteed price.

Other terms you should know:

  • Paddle – even if you bid online, you will be assigned a Paddle, which is your bidder’s number. If you attend an auction, you will be given an actual Paddle.
  • Absentee and Telephone Bids – the auctioneer can bid on behalf of bidders who have left a commission bid. Or auction specialists take phone bids to relay them to the auctioneer.

To view the whole list of auctioning terms, visit HERE.

Ray Waterhouse viewing a waterscape painting by Gustave Caillebotte at Christie's auction house while holding an open catalog

Ray Waterhouse viewing a painting by Gustave Caillebotte at Christie's, New York.

General notes on buying at auction.

  • Large auction houses like Sotheby’s, Christies, Phillips, and Bonhams have international and also regional offices, and have sales dedicated to different dedicated to specialist sectors, such as ‘Post-War and Contemporary Art’ and ‘Impressionist and Modern Art’. The most important art is offered in Evening Sales.
  • Smaller houses tend to mix different periods of art together.
  • Do check out the guarantee policy of auctions. Most houses act merely as an agent and do not bear as much responsibility as you would expect regarding authenticity, certainly a lot less than galleries whose invoice is a form of guarantee of authenticity.
  • Auctions used to direct their marketing at dealers and specialists, and there was a difference between auction prices and ‘retail’. Now, with massive marketing campaigns in excess of any gallery, auction prices are on a par with retail and often exceed what any gallery could charge when a bidding battle occurs.
  • We have mentioned this already, but do check the final cost of a potential bid. A bid of $100,000 becomes more than $127,000 with buyer’s premium and sales tax or VAT.
  • Before bidding, you need to register. This can take time, and often credit checks are needed so don’t try to register as a first-time buyer just an hour before the auction starts. ‘Know your buyer’ regulations are increasingly strict.
  • If you win the bidding – Congratulations! – but remember this is a binding contract. When buying from a gallery, second thoughts are often possible, but not with an auction.
Ray, Sandra Safta Waterhouse, and clients in front of 2D artwork with large red apple and radio against tile background.

Ray and Sandra Safta Waterhouse with clients at Sotheby's, New York.

Contact an art professional.

If you haven’t consulted with an art advisor or an art brokerage before, it is something you should investigate especially in the early days of your collecting. The best advisors and brokers are highly trained and educated experts who dedicate themselves to helping new and experienced collectors acquire and sell art wisely. They don’t impose their views; they guide you and help you navigate the buying process. Good advisors tell you when to say ‘no’ and have a keen eye for sensing the best artwork to choose and its value. They can also help educate you about different artistic schools and introduce you to new kinds of artwork that you might not have been aware of before. Art advisors and brokerages like Fine Art Brokers help to prevent you from making mistakes when considering works at auction, can bid for you to help you and protect your privacy, and only charge when a deal is concluded.

Last Updated 2021