I can’t believe I have to ask this question, but how do I find out the price of a work for sale?
Can you imagine going to the grocery store and finding the cashier is unwilling to tell you how much a gallon of milk costs?
However, in the famously unregulated art market, it can be difficult to find out prices.
1. If you can find recent auction sales records for this work (see under “auction” to find out how)–you can get an idea of what the approximate price may be. If you can get recent sales data for comparable work, you can wager a guess. In a nutshell, that’s an appraiser’s job. Before you make an offer, know the ball-park range of what it should cost.
2. It’s the law in New York City, for example, that all galleries have price lists of art work. Most galleries don’t, or won’t, show customers a price list. (You gotta problem with that? I do.) If you want to know the price, persistently, politely ask. And then be aware that whatever price they mention is often negotiable.
3. If you’re in an artist’s studio, and you want to know the price, ask.
4. The auction catalog price for a work in an upcoming auction will indicate a range, for example $500-$600. That does not necessarily mean the work is worth between five and six hundred dollars. That range can indicate many things. a. The seller insists the work is worth that much, and even though the auction house knows better, they would rather have it go unsold than argue with the seller. b. The seller wants to earn at least $250. Half of the low estimate is often the least amount the seller will accept for the work, unless it has “no reserve” (we’ll get to that in the next question). c. The auction house knows it’s worth a whole lot more, but they bet that a low estimate will draw in lots more bidders and make them more money if someone loses their head in the excitement of the bidding. d. $500 – $600 is actually about what the work is worth.
Nowadays, if a work does not sell at auction, the record of its being for sale vanishes from the websites of the high-end auction houses. So you can’t find out if they asked too much for work for the market to bear. That once was helpful information. (You gotta a problem with that too? I do.)
The price is determined at the auction. (See data on auction prices to understand how the price you bid is not the price you pay…it’s usually just a fraction of the price paid. The price you bid does not include sales tax and “buyer’s premium” which is often 25% of the purchase price that you pay on top of the price bid. That money goes to the auction house, not to the seller.)
Please bear in mind that no work that sold for over $130 million dollars has ever resold at a profit. All those prices you see on news reports are evidence of wealth gone mad, not real art prices. Those works do not have resale value anywhere near what was paid. I mention this because it might be a comfort to know that billionaires show bad judgment too.
What is a reserve?
When a seller makes a deal with an auction house to sell art, the seller often names a dollar amount below which the auction house is not permitted to sell the work. That amount is the “reserve.” This amount is often half the low estimate in the catalog. Other times, the reserve can be the low estimate. The reserve is almost always confidential, alas. Often bidding will occur on the lot up to the reserve, and then stop. If the auctioneer says, “Pass,” it means the amount bid was not high enough to meet the reserve and the work will return to the seller. However, if the work does not sell at the auction, often you can contact the auction house SOON after the auction, make a lowball offer, and get a bargain. Sometimes, the auction lot has “no reserve” which means there is potential for a great bargain purchase.
I know I want it. How can I get the best price?
You’ve done your research, and you know what the work is going for. You know the range you might be willing to pay. Put on your nicest, kindest attitude. Go to the gallery. Then, say to the salesperson, “Is that your best price?” If the salesperson is not the manager, and the salesperson comes back with a price that’s too high, ask to speak to the manager. Repeat the line above. If the manager comes back with a price that’s too high, ask to speak to the owner. Exquisite politeness can work wonders. If they won’t meet your price, leave your phone number, and leave the store. You may get a call. If not, there is always more art. Always.
If you’re in the artist’s studio, bear in mind that the artist does not always have an obligation to give the dealer a 50% cut of the price, or whatever the dealer takes in the gallery. Also bear in mind you’re dealing with an artist. If you can afford the price, and it seems good to you, pay it. I leave you to your own discretion about haggling in general, but especially with the artist. Unlike people with jobs that have benefits such as sick days, health insurance, and pension, the artist’s job guarantees none of these things. It takes tremendous courage to take the artist’s path. I believe it is worth directly paying the artist well for bringing beauty to our lives.
If you are haunted by that one work, you can suck it up and pay too much. You have to decide if the feeling of paying too much will leech away your pleasure.
The artist’s work has never sold at auction, and the artist doesn’t yet have a dealer. How do I figure out the best price?
If the artist has no market yet, what you are buying will have no resale value. You may love it and enjoy it for the rest of your life, and that may be enough–but do not count on ever being able to sell it for what you paid for it.
How do I stay within my budget when at an auction?
Dr. Siegel makes a list of each work she wants to bid on, and the top price she’s willing to pay. Then she reviews this with the client (the individual or the organization’s art acquisition committee) for their approval. When you register to bid, the auction house representative will often ask you about the maximum you plan to bid. Take that number seriously and think about what your budget is. Get to the auction early and watch how the auctioneer behaves. That way you’ll understand more about how the game is played.
When the auctioneer announces the lot that I want, what do I do first?
If you have registered for the auction and have your paddle, wait. When the auctioneer first mentions a dollar amount, it’s often wishful thinking. If no one bids, the auctioneer will mention a smaller amount. Then wait some more. Let the amount drop as low as the auctioneer will take it. If this is a “no reserve” auction, if no one bids, offer a low amount. Embarrassingly low. Below what the auctioneer mentioned.
The auctioneer mentioned several amounts and they keep going up, but I can’t see anyone bidding. Are they very secretive bidders, like in the movies?
Usually, no, the auctioneer often makes up numbers. That’s called “Chandelier Bidding,” as in taking bids from the chandelier. It’s normal, but it’s misleading. The auctioneer won’t take the fake bidding above the reserve.
Please know that the first dollar figure that the auctioneer states may be a high hope of the auctioneer. Don’t leap into bidding. Let the prices drop—or make a lowball offer below what the auctioneer says, unless it’s clear that there’s someone else bidding. If the auctioneer says several dollar figures below the low estimate and they are said in rapid succession, that’s often a sign that no one is actually bidding. Yes, they can do that. You can just call out, “Will you take fifty dollars for that?” if it’s clear there are no real bidders.
In addition to buyers who are sitting in seats at the auction, the auctioneer is also likely taking bids from phone bidders (you can see auction-house employees on the phones, stationed near the auctioneer if that is the case), and sometimes the auctioneer is taking bids from the internet (usually an auction-house employee near the auctioneer—and this person is usually staring intently at a screen and putting up their hand to bid.)
If the auctioneer says that there is an “offer on the books,” that means a person left an absentee bid (a legitimate written offer for the work made by someone prior to the auction). You cannot win the lot unless you outbid that absentee bidder. If you bid against the absentee, the auctioneer will inform you if the absentee bid is still competitive with yours. The absentee bidder authorizes the auctioneer to bid on her or his behalf up to a specified dollar amount which the auction house will not disclose–except by notifying you that you outbid the absentee bider.
I see from the auction catalog that I can bid at an auction several ways: “by phone,” “online,” “in person” and “absentee”…. What do these terms mean? And what is the best way to bid?
By phone bidding means someone employed by the auction house calls you up a few lots before your lot comes up. That person from the auction house keeps you apprised of the bidding and offers you an opportunity to bid through the caller employed by the auction house.
Advantage: Anonymity. And laziness—you can bid from the bathtub. I have purchased many works by phone.
Disadvantage: If you’re not in the room, you can’t see if there’s real competition. Dr. Siegel notes, “I was recently the only customer in the auction room at a major auction-house auction where the auctioneer started off by welcoming everyone to the auction. This was broadcast online, and I’m sure whomever was watching thought the auctioneer was welcoming more than just me, but I was the sole bidder there. I waved at the auctioneer, he nodded at me, and he continued his theatrical patter.”
If you’re not in the room, you may miss opportunities. Remember to always go to the auction house in the days prior to see the work before you buy. And inspect art at the time of pickup to make sure its condition is the same.
Please know that the first dollar figure that the auctioneer states, that is breathlessly repeated to you by the person on the phone, may be a high hope of the auctioneer. Do not leap into bidding. Let the prices drop—or make a lowball offer below what the auctioneer says, unless it’s clear that there’s someone else bidding. Again, if the auctioneer says several dollar figures below the low estimate and they are said in rapid succession, that’s often a sign that no one is actually bidding. Yes, they can do that.
Online bidding means, for the purpose of this website, that you are at the website where the live auction with a human auctioneer is streamed and you click on a bid button. (This does not refer to Ebay or any dedicated online auction site. Unless you can see art and inspect it in person, don’t buy it. Period.)
Disadvantage: By far the slowest response …. computers malfunction. Even though major auction houses are claiming to do exclusively online auctions, online bidding is not recommended at this time, since the technology is not quite there yet. The major auction houses will work with you on other ways to bid at online auctions if you claim discomfort with the computer. Ask to speak to the director of the auction for help with this. Ignore the bright young intern who will claim that you have to bid by computer.
In Person bidding means you are in the room with the auctioneer, and you raise a numbered paddle to bid for yourself. I like to sit at the back of a room, because I like to see who is bidding against me. If you want someone to bid for you in the room, you can hire or send someone you trust, also known as a “proxy.”
Advantage: You can get unexpected bargains. If there is any dispute about who won the lot, the auctioneer usually defers to the person in the room, rather than a person on the phone or on line.
Disadvantage: Others in the room will sometimes bid simply because you do. They like competing for its own sake. This can be annoying.
Absentee bidding: You fill out a form, usually up to a day prior to the auction, and get confirmation from the auction house that they will bid for you up to your clearly stated limit.
Advantage: You can stay within your means. You don’t get caught up in the adrenalin rush of bidding and then spend more than you can afford. Check after the auction and you’ll find out if it’s yours.
Disadvantage: If you are not at the auction, you may miss out on something you would have been willing to spend a few more dollars on.
What is the Art Market Bubble?
The Bubble is where you can spend the most money–and be the most ripped off in the art world. There are sixty-to-eighty contemporary artists whose work right now is selling for far too much money. Why? Insider trading, price fixing and other things that are illegal in other industries are commonplace in the largely unregulated art market. By and large, Bubble artists are producing work for 2,000-3,000 newly wealthy millionaires and billionaires who are squandering money decorating McMansions: wanting to “keep up with the Joneses,” so their houses look like the houses of their new rich friends. Or they are stashing art in warehouses, hoarding it to “flip” it—sell it fast when the price goes up. Many Bubble artists do not even make the art themselves: they hire skilled workers and have a factory where the work is made. Some of those art factories are in China where workers earn little. The work often sells for millions of dollars. The art is largely without content in the sense that it is abstract (I like a lot of abstract art, just not this stuff.) If you are looking for a experience of enduring joyful soulful communion, the Bubble is not the place to look in art market. If you want to have long-term value in the art you collect, stay away from the Bubble artists. The Bubble is a market for upscale decorators and unscrupulous or deluded art advisors and dealers. These works will largely not hold value over time. Read The Twelve Million Dollar Stuffed Shark: The Curious Economics of Contemporary Art by Don Thompson for more information. If you are buying art to flip it, please also research the Dutch tulip mania. People got very excited about investing in tulip bulbs and lost their fortunes.