Buying at auction, estimates, buyer’s premium and a clear head
Catalogues, reserves, hammer prices and the charges that come after. How an art auction works, what you really pay and how to bid without losing your head.
An auction looks like theatre: a raised rostrum, a quick-speaking auctioneer, paddles lifting around the room, telephones held by staff along the wall. Behind the drama is a clear set of rules, and once you know them, buying at auction is far less intimidating. This guide explains how a sale works, what you will really pay and how to bid with a clear head.
How an art auction works
Auction houses sell works on behalf of their owners, known as consignors. Each object is a lot with a number, a description and an estimate, all published in a catalogue some weeks before the sale. Beforehand there is usually a public viewing, a short exhibition where anyone can examine the lots, often free of charge.
The best known names were all founded in London: Sotheby’s in 1744, Christie’s in 1766 and Phillips in 1796. Today they hold sales in several cities and online. Alongside them, many regional auction houses across Europe and beyond sell art at every level, often at more modest prices, and they are good places to learn.
Sales come in different forms. The major houses hold evening sales for their most expensive works, day sales with a wider range and online-only auctions with lower estimates. Regional houses often hold general sales that mix paintings, prints, furniture and decorative arts in a single catalogue.
Auctions belong to the secondary market, where works are resold. You are buying from a previous owner, through an intermediary, under the auction house’s written conditions of sale. Those conditions are the rulebook, and they are worth reading before you bid on anything.
Estimates, reserves and the hammer price
The estimate is the auction house’s opinion of the likely price, given as a low and a high figure. It is a guide, not a promise. Lots can sell well above the high estimate, or not sell at all. Estimates draw on recent sales of comparable works, condition and demand, and they are not a judgement of what the work is worth to you.
Most lots also have a , a confidential minimum price agreed between the consignor and the auction house. At the major houses the reserve is typically not higher than the low estimate. If bidding stops below the reserve, the lot is , which means it remains unsold.
The is the figure at which the auctioneer’s hammer falls. It is the winning bid, but it is not what you pay.
What you actually pay
On top of the hammer price comes the , a charge the buyer pays to the auction house. It is calculated as a percentage of the hammer price, and the rates are substantial. They differ between houses and usually step down at higher price levels, so read the current schedule in the conditions of sale before you bid.
Taxes may follow, such as VAT or sales tax, depending on the country, the status of the lot and where it is shipped. In the European Union the may also apply. It entitles artists, and their heirs for up to 70 years after the artist’s death, to a royalty when a work is resold through the art market above a minimum price. Depending on the country and the auction house, this royalty may be added to the buyer’s invoice.
arisano gives no financial, tax or investment advice, and this guide does not quote fee levels because they change. Add every element together and treat that total, not the hammer price, as your real budget.
Four ways to bid
- In the room. Register in advance, usually with identification, and receive a numbered paddle. Raise it clearly when you want to bid.
- By telephone. A member of staff calls you during the sale and bids on your instructions. Book this in advance.
- Online. Many sales can be followed and bid on live through the auction house’s own system, after registration.
- By absentee bid, also called a commission bid. You leave a written maximum, and the auctioneer bids for you as cheaply as possible up to that limit.
Whichever route you choose, the auctioneer moves in set steps called increments, and the pace can be fast. A popular lot may be decided in under a minute. Decide your maximum before the lot comes up, and keep to it.
Before and after the sale
- Read the catalogue entry and the conditions of sale, including the buyer’s premium and payment terms.
- Visit the viewing if you can, and ask for a condition report on any lot you are serious about.
- Work out your maximum hammer bid by subtracting premium, taxes and other costs from your total budget.
- Register to bid in good time, using your chosen method.
- Bid calmly, and let the lot go if it passes your limit.
- If you win, pay by the deadline and arrange collection or shipping before any storage charges begin.
Lots are usually sold in the condition they are in, often described as “as is”, so the condition report and your own inspection matter. Ask the specialist in charge of the sale any question you have about a lot, its condition or its history; answering buyers is part of their job.
For high value lots, auction houses may ask for financial references or a deposit before they accept your registration. Think about packing and shipping before the sale too, and check in the conditions of sale when the risk passes to you, because the work may need insurance from that moment.
Treat the total, not the hammer price, as your real budget.
Terms in this article
- Hammer price
- The winning bid at the moment the auctioneer’s hammer falls, before premium and taxes are added.
- Buyer’s premium
- A charge the buyer pays to the auction house, calculated as a percentage of the hammer price.
- Reserve
- A confidential minimum price agreed with the consignor, below which a lot will not be sold.
- Bought in
- Describes a lot that fails to reach its reserve and therefore remains unsold.
- Artist’s resale right
- A right in the EU and elsewhere giving artists and their heirs a royalty when works are resold on the art market.
Readers ask
Can I return a lot I bought at auction?
Generally not simply because you have changed your mind. Lots are usually sold in the condition they are in, and the conditions of sale set out the limited circumstances in which a sale can be cancelled, for example if a work proves to be a forgery under the house’s own definitions. Read those terms before bidding, and ask for a condition report.
Who pays the artist’s resale right?
Under the EU rules a royalty is due when a work by a living artist, or one who died less than 70 years ago, is resold through the art market above a minimum price. Who bears it in practice depends on national law and the auction house, and some major houses add it to the buyer’s invoice. Check the lot symbols and the conditions of sale.
Is buying at auction cheaper than buying from a gallery?
Not necessarily. Once the buyer’s premium, taxes and other charges are added, the final cost can be close to, or above, a comparable gallery price. Auctions give access to the secondary market and the occasional surprise, while galleries offer advice and a direct link to the artist. arisano gives no financial or investment advice; compare total costs, not headline figures.
