Sotheby’s
Last week, we heard from one of our collectors that Sotheby’s is abandoning their 20% buyer’s premium and will now charge 27% on the first $1M, 22% up to $8M, and 15% in excess. Here is what the official email from Sotheby’s stated:
You may recall that, earlier this year, we announced a bold initiative to reduce our Buyer’s Premium to a flat 20% on almost everything we sell, and to create fixed financial terms for sellers bringing their material to auction. The idea was to encourage growth in our markets by creating transparency, simplicity, and fairness on fees that have always been intimidatingly complex.
Over the past 6 months we have listened to the market, evaluating the needs and preferences of both our buyers and sellers. So starting February 17, we will reintroduce bespoke terms for sellers while maintaining the underlying principles that motivated this change.
The parts that made me laugh a little are: 1 – “Over the past 6 months we have listened to the market, evaluating the needs and preferences of both our buyers and sellers.” So, you are saying that your buyers want to pay you more, and the sellers want to earn less? OK! If they really spoke with the buyers and sellers, I doubt that would be the case. And 2 – “maintaining the underlying principles that motivated this change.” Wonder what those underlying principles are? [read: We want more money]
We also had an interesting conversation with another client – he stopped by the gallery to say hello. During his visit, he mentioned wanting to sell an Old Master painting and contacted an auction room. He was told that his seller’s premium would be 17%, plus any additional costs like insurance, etc. Also, this auction room’s buyer’s premium is 27%. So, think about this: the total commission the auction house would get from the sale is between 44 and 46%. That seems a little unbelievable given that most auction rooms conduct business under the legal safeguard of Caveat Emptor – let the buyer beware.
Is this a good time to mention that Sotheby’s also has a 2% charge to the seller if the winning bid goes over the estimate? Yup, that’s right… if you’re selling a piece and it does well at auction, that’s going to cost you! They call it a “success fee”… hah, ok! Maybe it should be called a “we’re struggling, please help us fee.”
Here is some food for thought when looking to sell a work of art (we will use the numbers mentioned by our client). Let’s say a painting hammers at $100,000, meaning the buyer pays $127,000 and the seller gets $83,000 (or a little less if there are expenses) … auction house makes at least $44,000. And if the painting does not sell, then it is ‘burned.’ People now know that it never reached its estimated value, and future potential buyers will likely offer much less than the previous estimate … even if the painting was worth the price.
You are probably thinking, if it is worth the price, then why didn’t it sell? Auctions take place on a specific day, and lots are supposed to come up at a specific time (sadly with all the online platforms, sometimes sales can run late – hours late). What if the stock market takes a big hit that day? Many people will be hesitant to spend money. What if the auction room selling the work is a minor one and the people who would be interested never saw the sale? To be honest, there have been many times when we found important paintings being offered at minor sales and we acquire the work for a fraction of its true value. Great for us, but not too good for the seller. Had the sellers of those works done a little research and contacted us directly, they could have made a lot more money. And let’s not forget that sometimes potential bidders get distracted (family events, business, etc.) and forget that the sale is taking place … happened to me a few times.
Buyers and sellers need to do some research and find the best option when buying or selling a work of art. Sometimes it might be an auction room, but many times it will be a dealer who specializes in the specific period of art or the artist. A really good dealer will do their due diligence, will make sure the painting is authentic, is a fine example from one of the artist’s best periods, and will be open about its condition. And do not forget, when you buy from a good gallery, the painting will be ready to hang (with conservation and framing issues already taken care of).
Always remember that the art world is a jungle, so you should find the right guide before becoming someone’s meal.
By: Howard Rehs
Sotheby’s Ups Their Buyer’s Premiums
Sotheby’s
Last week, we heard from one of our collectors that Sotheby’s is abandoning their 20% buyer’s premium and will now charge 27% on the first $1M, 22% up to $8M, and 15% in excess. Here is what the official email from Sotheby’s stated:
You may recall that, earlier this year, we announced a bold initiative to reduce our Buyer’s Premium to a flat 20% on almost everything we sell, and to create fixed financial terms for sellers bringing their material to auction. The idea was to encourage growth in our markets by creating transparency, simplicity, and fairness on fees that have always been intimidatingly complex.
Over the past 6 months we have listened to the market, evaluating the needs and preferences of both our buyers and sellers. So starting February 17, we will reintroduce bespoke terms for sellers while maintaining the underlying principles that motivated this change.
The parts that made me laugh a little are: 1 – “Over the past 6 months we have listened to the market, evaluating the needs and preferences of both our buyers and sellers.” So, you are saying that your buyers want to pay you more, and the sellers want to earn less? OK! If they really spoke with the buyers and sellers, I doubt that would be the case. And 2 – “maintaining the underlying principles that motivated this change.” Wonder what those underlying principles are? [read: We want more money]
We also had an interesting conversation with another client – he stopped by the gallery to say hello. During his visit, he mentioned wanting to sell an Old Master painting and contacted an auction room. He was told that his seller’s premium would be 17%, plus any additional costs like insurance, etc. Also, this auction room’s buyer’s premium is 27%. So, think about this: the total commission the auction house would get from the sale is between 44 and 46%. That seems a little unbelievable given that most auction rooms conduct business under the legal safeguard of Caveat Emptor – let the buyer beware.
Is this a good time to mention that Sotheby’s also has a 2% charge to the seller if the winning bid goes over the estimate? Yup, that’s right… if you’re selling a piece and it does well at auction, that’s going to cost you! They call it a “success fee”… hah, ok! Maybe it should be called a “we’re struggling, please help us fee.”
Here is some food for thought when looking to sell a work of art (we will use the numbers mentioned by our client). Let’s say a painting hammers at $100,000, meaning the buyer pays $127,000 and the seller gets $83,000 (or a little less if there are expenses) … auction house makes at least $44,000. And if the painting does not sell, then it is ‘burned.’ People now know that it never reached its estimated value, and future potential buyers will likely offer much less than the previous estimate … even if the painting was worth the price.
You are probably thinking, if it is worth the price, then why didn’t it sell? Auctions take place on a specific day, and lots are supposed to come up at a specific time (sadly with all the online platforms, sometimes sales can run late – hours late). What if the stock market takes a big hit that day? Many people will be hesitant to spend money. What if the auction room selling the work is a minor one and the people who would be interested never saw the sale? To be honest, there have been many times when we found important paintings being offered at minor sales and we acquire the work for a fraction of its true value. Great for us, but not too good for the seller. Had the sellers of those works done a little research and contacted us directly, they could have made a lot more money. And let’s not forget that sometimes potential bidders get distracted (family events, business, etc.) and forget that the sale is taking place … happened to me a few times.
Buyers and sellers need to do some research and find the best option when buying or selling a work of art. Sometimes it might be an auction room, but many times it will be a dealer who specializes in the specific period of art or the artist. A really good dealer will do their due diligence, will make sure the painting is authentic, is a fine example from one of the artist’s best periods, and will be open about its condition. And do not forget, when you buy from a good gallery, the painting will be ready to hang (with conservation and framing issues already taken care of).
Always remember that the art world is a jungle, so you should find the right guide before becoming someone’s meal.
By: Howard Rehs