It is a blood sport in the art world: affluent collectors and artist speculators vie for the best pieces that come to market in posh salesrooms, giving entertainment for the rows of observers. As an auctioneer, their success or failure sets the tone for the whole art market, as successful sales signal an ongoing boom. At the same time, unsuccessful auctions erode public trust in the industry. Even if you’re not in on the action, it’s a lot of fun to watch the auctions unfold, especially when record prices and famous bidders are involved.Art auctions in Australia can appear to be incomprehensible riddles to those unfamiliar with its baroque logic. We’ve put together a glossary on auction phrases to help you understand how these glitzy events come to fruition.
The auctioneer serves as the emcee of the event. Frequently British showmen (or lady) can have comedy and dramatics to wriggle extraordinary prices even to reluctant bidders at the most opulent auction houses. Among the newer generation of contemporary-art travellers, there can be a tendency toward the edgy and in-your-face among the auctioneers’ signature styles (sometimes in the manner of Guy Fieri).
Hammer: That’s the auctioneer’s hammer, which is handled like a cross between such a conductor’s baton as well as a judge’s gavel, and then when it comes right down with a gentle touch, other times with such a resonant thunk—it announces a sale.
When the hammer is thrown at the auctioneer’s podium, it hits the auction block. Artwork is called “go on the block” when put up for auction, even if shown by white-gloved handlers behind the speaker or on a screen behind the auctioneer.
Many high-flying purchasers prefer to communicate with the auctioneer more subtly, using a predetermined set of signs rather than the snobbish paddle, which has a number on it. There are many bidding expressions, from the simplest nod to a complex language.
The work that is up for grabs in a specific round of bidding is referred to as the “lot.” The term “a lot” refers to a collection of works that include more than one work.
One of the “three Ds” (death, divorce, or debt) is often cited as the reason for a consignor to put artwork up for auction.
This is the value that the auction house’s experts have estimated for a specific lot.
On-staff connoisseurs, known as “specialists,” collect, appraise, and contextualise the artwork for the auction’s catalogue. They are responsible for the auction’s final product. For example, in modern art, Chinese porcelain and paintings, specialists are highly qualified individuals who travel the world to survey private collections.
Preliminary estimation: That’s the bidding house’s best guess as to how much a given piece of art would sell for at auction; it is featured in the bid catalogues. It is written in “$14,000,000 – $18,000,000” or a permutation thereof and contains a low figure and a high estimate. Estimates for individual works and the sale of the entire collection are available. Journalists can get a kick out of stating that an item “unrelentingly hurdled its high figure,” “sputtered and perished short of its low figure,” and other such things in auction reports.
The minimum price will allow an auction house to offer artwork, implying that the work will be purchased if the bidding doesn’t reach the reserve price.
The glossy professionally created a glamorised catalogue that the auction site sends out to collectors and other relevant individuals to whet their appetites for an auction, provide estimates for the works for sale, and pump them up; for the purchase; itself! To compile a million-dollar catalogue for a large auction, expert art historians and photographs are hired to justify why a piece is worthy of a price tag that can reach astronomical levels.
Lot on the magazine’s cover: The most anticipated piece of art by the auction house is shown on this lot, usually a painting or sculpture.
Auction houses impose a buyer’s premium, ranging from 10% to 20% of the closing price, based on the auction company in question and the piece being sold. The buyer’s premium is usually included in the final price quoted in auction reports and records.
If the auctioneer intends to acquire the consignment, they can forgo the seller’s commission charge, which is the amount the auction house collects from the consignor (or negotiated down).
When an auction house guarantees to pay a consignor a certain sum, regardless of whether the art is sold, this is known as a guarantee. Auction houses used contracts to acquire masterpieces for headline nighttime sales in the mid-2000s art book. Still, the 2008 financial crash eroded faith in the art market, and auctioneers lost millions upon millions of dollars handing out guarantees on exaggerated goods. Sotheby’s and Sotheby’s have mostly discontinued giving assurances that the auctioneers support. Sales of modern art have returned since then, thanks to third-party warranties, after a 75% drop in revenues in the immediate aftermath.
If an auction house can locate a buyer prepared to pay above the reserve price for a piece of art before the sale, they offer a third-party guarantee. The house may thus guarantee the consignment that the art will sell, no matter what happens on the premises or off-premise. ‘
After dark, the most sought-after items are auctioned in a dramatic and exhilarating setting known as an “evening sale.” Bidders (and observers) usually wear formal clothes, with gawkers craning their necks to see if they can spot famous people.
Sales that take place the day following the nighttime sales and feature lower-priced items are known as “day sales.”
An auctioneer’s bid is the amount they are prepared to pay for a piece of art, whether the bid is made directly in the salesroom, through a proxy, over the phone, or online. You don’t want to put one of these in the wrong spot by mistake.
The minimal amount whereby a bid must outbid the preceding offer.
Bids made on behalf of someone else using a proxy are known as absentee bids. Art auctions in Australia and enthusiasts and other industry professionals often represent anonymous buyers. It is well known that Larry Gagosian, especially, enjoys buying on behalf of people.
Bids made by telephone to one of the auctioneer’s well-dressed phone bank professionals are called telephone bids. It’s not uncommon for top lots to be won via telephone bids because so many spectacular transactions are made to unknown purchasers in China, Russia, and elsewhere. This frustrates auction enthusiasts, who prefer to watch action develop more spectacularly in the salesroom.
Fake Chandelier Bid: An auctioneer logs a Chandelier Bid to invigorate sluggish bidding by pretending to notice a bidder off to the side. This tactic, termed as just a “rafter bid,” is considered shady and unethical in the construction industry.
When the gavel is dropped, the winning bid price before the homeowner’s premium has indeed been added to a sum, is known as the “hammer price.”
When an artwork doesn’t sell at auction, it is referred to as “bought in,” and the consignor receives it back.
The sell-Through Rate (i.e. the per cent of items sold) and the Sell-Through Value (i.e. the amount bid on each lot) are tallied to evaluate the auction’s performance. According to the standards, rates below 80% are regarded as anaemic, uninspiring, or worse.
The percentage of the total number of lots on sale that did not sell is known as the Buy-In Rate.
Every lot at a White Glove Sale is sold, resulting in a 100% sell-through rate. After one of these, it’s not uncommon to see a stream of champagne being uncorked.
It’s common for a group of purchasers to band together to avoid bidding against one another in trying to beat works at intentionally depressed prices, such as for Warhol or a specific category such as the Zero Group. Because the small group of affluent participants dominates some marketplaces, this behaviour is difficult to stop.
To keep the work price from dropping below a predetermined level, a dealer will bid favour an artist whose work they represent or in whose work they have a monetary stake to protect that artist’s market worth. Artists represented by prominent galleries often expect this kind of security.
Auction houses cooperate in setting prices and eliminating competition, breaching federal antitrust law when they do so. For example, the price-fixing controversy at Christie’s and Sotheby’s, where Christie’s and Sotheby’s CEOs met in private 12 times to determine seller commission rates, thereby locking consignors into extortionate fees, was the most well-known example. At Christie’s and Sotheby’s, a combined $512 million was paid out in class-action litigation as well as years of reputational damage. A judge in 2002 condemned Sotheby chairman and founder A. Alfred Taubman to one year a day in prison in the crime.
