When The Hammer Falls: Buying Art At Auctions

The following is a beginner’s guide to paddling your way through an auction as we highlight the terms, steps involved, and what to look out for.

What is an auction?

The simplest definition of an auction is that it is a process of buying and selling goods or services to the highest bidder. The word is derived from the Latin word augēre, which means to “increase” or “augment”.

Auctions have a long history, going back to as early as 500 BC. In Babylon, auctions of women for marriage were held annually, wherein the auctioneer¹ would start with the woman considered to be the most beautiful and progress to the least. During the Roman Empire, following the military victory, enslaved people captured during the war were auctioned and the proceeds of the sale went toward the war effort. 

A lot has changed since then and the Internet also led to a rise in online auctions to solicit bids² for everything from paintings, sculptures, ceramics, jewelry, watches, wine, property, and livestock to second-hand goods.

Why do people buy at auctions? 

An experienced auction buyer will tell you this: Auctions can be great places to buy art. People can find bargains if they are skilled in researching and setting their limits before bidding. Auction houses sell a significant amount of good quality art, fresh from estates and private collections. They also have a wide network of corporations, businesses, museums, and private collectors who possess valuable pieces of artwork, which add , sometimes rarely seen in the market but included in their public sales.

Buyers also have a longer time to deliberate over what they see before buying, as auction houses usually announce their sales months ahead via their websites, catalogues and viewing exhibitions. Collectors can take these opportunities to do their research, broaden their knowledge and possibly expand their art-buying horizons.

How to buy art at auctions?

For first-time buyers at auctions, it is best to stick with established auction houses. They are experienced, organised and equipped with specialists who have done the appropriate research on the authenticity, provenance³ and detailed information on the artwork and artist. The pieces are also generally good quality work from reliable sources.

It is advisable to try to preview and attend as many auction house previews as you can, prior to actually bidding for a piece. An auction sale entails the excitement of how the auctioneers offer the merchandise one piece at a time and how buyers respond either by raising their paddles or just purely nodding their heads. The rapid pace is exhilarating especially when it leads up to the ‘star pieces’ of the sale.

Buyers should do as much research on the art and artists that they are interested in. One must read up on the history of the artist/s, the work they have produced and prices that they have been sold for in the past. Information can be derived from websites, art history books, and catalogues from previous exhibitions and auctions.

The next step is to attend the auction house preview and spend plenty of time studying the artwork. Auction houses schedule previews in different cities so the buyers can have an opportunity to view the pieces in person. This is an experience which online websites are not able to offer. When you view an artwork you are interested in, check on the condition, the style and process that the artist had in creating the piece. You will feel the impact of the work as you view this yourself and even observe what others say about it.

Buyers can also request for condition reports⁴ and the history of provenance (ownership) from the auction house.  If the piece has been owned by someone famous or well-respected, the value may be higher and would make it more in demand. An example of this would be an abstract painting by Gerhard Richter entitled ‘Abstraktes Bid’ bought by the famous musician Eric Clapton back in 2001 for US$3.2 million. The same piece was sold during an auction at Sotheby’s, London in 2012 for over US$ 34.2 million (over 10 times the price he originally paid for it) (Source: The Independent, 30 September 2016).

After viewing and doing one’s research, a buyer must decide on a maximum price they are prepared to spend on an item. Having this number in mind during the actual bidding will help buyers stick to their budget.

Remember that a buyer’s premium⁵ (as seen in the table below) and tax will be added to the hammer (final) price⁶.