Art collectors contemplating their first major art acquisition may have walked into a couple of previews at the New York auction houses or attended art fairs during Art Basel Miami Beach Week, The Armory Show Week in New York City or art fairs held in Europe. While developing their tastes as collectors, it can be helpful to also consider the buying process and the ways it differs at traditional auctions and art fairs.
Auction houses put together sales around specific collecting categories such as paintings, sculpture, antiques and jewelry. Buying at auction can be a really fun way to add to your collection.
As with any purchase, you need to spend some time researching the painting you’d like to bid on. Preferably you will conduct your own price research and due diligence but the absolute minimum is to read the sales catalogue. Auction houses produce a catalogue for each sale that contains information about all the objects (lots) in the sale. Make sure to read the catalogue thoroughly, including any notes and symbols for each lot and the small print in the back of the catalogue, which specifies the buyer’s premium, any applicable taxes and other important information related to the sale.
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Before the sale takes place, the artworks will be on display at the auction house. You have an opportunity to inspect the painting you are interested in, with or without your advisor, and to speak to the auction house expert for that particular sale. Some objects look better photographed than in real life so it is always better to view the artwork in person. Make sure to request a condition report: the condition of an artwork can have a large impact on its value.
If you are satisfied with the results of your research and once you have registered for the auction, you are ready to start bidding: in person, on the phone or online. It is very easy to get carried away when you are in the sale room so set yourself a maximum number above which you will not bid or let your advisor bid for you. If you are successful in obtaining the painting, remember that your cost does not end at your winning bid: you will be charged a buyer’s premium on top of the hammer price (click here for buyer’s premium charged by Christie’s, Sotheby’s and Phillips).
Participating In The Actual Auction
Bidding at auction is a bit of a process. Registration is required to be able to bid and new buyers may need to provide financial references, proof of financial assets or a deposit. Bids can be made in person, on the phone, or online. There are different schools of thought on the best bidding strategy to employ but that is a topic for a future column. So is the way presale estimates, reserves and opening bids are set for art accepted into an auction.
Investment firms, art dealers and other experts can bid on behalf of a buyer. Bidders who are going it alone should make sure to have a personal maximum bid memorized, which will not be exceeded. In the excitement of an auction it is very tempting (and easy!) to continue raising the paddle until a work has been bought at a price well above one’s budget.
Traditionally, buying at a gallery was more expensive than at a traditional auction, which was a considered a wholesale platform for dealers. These days, buying at auction is no guarantee of the lowest price and buying at auction can be as expensive as buying at a gallery or art fair.
Important to know is that the hammer price isn't the final amount due for an artwork purchase at auction. Auction houses charge a buyer’s premium on top of the hammer price. For example, a successful bid on an art work at $500,000 (the hammer price) at Christie’s in New York means that after the buyer’s premium has been added, the artwork price rises (in this example) to $605,000. After that, there may be sales tax, shipment, installation and insurance costs to pay for as well.
The Art Fairs
Buying art at art fairs has gained traction among many art collectors as art fairs have gained acceptance with the most promiment fairs offering collections an international world of art within walking distance inside a large tent, convention center or pier. Purchases made at art fairs compete with sales that may have taken place inside brick-and-mortar galleries. Collectors should be aware that buying at an art fair is essentially the same as buying from a gallery, with a few differences.
Art fairs contain a sense of urgency that can be difficult to resist. With so many buyers around, collectors may feel pressured to buy something quickly and expensively because they don’t want to lose out on the opportunity. Buying in a rush without research may be a mistake and could lead to collector's regret. Attending art fairs armed with information is the best way to consider art acquisitions.
These days, much of the art in the major art fairs can be previewed online either through the art fair's website or through an outside service such as Artsy. Art Basel, Frieze and The Armory Show have been offering art fair previews through Artsy for the last few years with some fairs offering on-site kiosks to make finding artwork of interest easier to find among long aisles of gallery booths.
When spotting an artwork of interest, it's better for buyers to take some photographs of the work, do some research and give themselves some time to consider the purchase. Deciding to return to the fair when truly ready to buy may mean the artwork is lost to another buyer but this is better than possibly being stuck with an expensive piece the collector didn't really want.
Buying at an art fair is less formal than buying at auction. Whereas at auction a buyer simply shows up to register and bid on a work, art fairs allow buyers the opportunity to talk with the gallery owner and sometimes even the artist. Buyers also can ask to negotiate pricing. At the auction houses, there is no such flexibility.
Last But Not Least
Like buying at the Auction Houses, collectors may have to pay sales tax, shipping, insurance and installation fees on top of the art purchase. These costs can depending on the gallery's policy, the value of the art and the geographic distance between the collector's home and the art fair's location.
Buying art, whether at auction or art fairs, can be really fun, but collectors shouldn’t let a lack of preparation spoil the experience. Prospective buyers should do their research, make sure they aren’t rushed into a decision, and be disciplined about the art they can afford.