When deciding how, when and where to sell works of art collectors often consider selling works of art at auction. Though in theory the process is simple (you deliver your work of art to an auctioneer and they sell it on your behalf) in practice it is more complex. There are are a variety of factors, fees and issues which a seller should know about and consider when consigning a painting to auction.
When I work with a client to sell artwork(s) I sometimes recommend selling at auction because for some pieces of art auctions are likely to produce the quickest sale, the best price for the seller and the most fun for seller as well. For example, often very large groups of artwork, say from an estate, are best sold through auction houses who can manage a group sale rather than a piecemeal sales process through a private dealer. Other times auctions make sense when the works for sale are very specific in nature and would fit well into a particular sale and when that auction will be marketed to a particular group of qualified buyers. For example, when I was asked to sell a group of 20th Century Middle Eastern paintings for a client a few years ago I suggested that they be sold at auction. I knew there was an upcoming auction of that very type of artwork in London, the appropriate venue for these works and one likely to involve intense auction house marketing in the relevant buying population, and that the auction was the best chance for this material to find an interested audience.
Once one has decided to sell a particular work(s) at auction the choice of venue also then involves the question of whether to sell through a big auction house such as Christie’s, Sotheby’s or Bonham’s or a smaller regional auctioneer known for its expertise in a particular sale category or geographical location.
When negotiating a consignment agreement one should assume that there are going to be numerous contract terms which are set in stone and which the auction house legal counsel will insist upon keep intact such as warranties and guarantees. Other terms (such as the fees, the wording to appear in the auction catalogue, the use of the piece of art in advance of the sale such as in traveling auction previews, etc.) are more negotiable at the option of the department head. These terms should all be agreed upon in writing, in the consignment agreement, prior to delivering the work of art to the auction house for sale.
An auction house will agree with a seller in advance to auction estimates and reserve prices. While auction specialists generally know their buyers and the market a seller may negotiate with the auction house as to the high and low estimates if they feel they are too high (and the seller fears the work won’t sell) or too low ( and the seller fears leaving money on the table). There are many factors at play in estimating the auction price of a work of art, and that leaves room for differences of opinion and perhaps negotiation. Reserve prices (the price below which a work(s) may not be sold) are also negotiated between the auctioneer and the seller in advance and take into account how badly or how little the seller wishes to sell the work or how much the auctioneer feels the market can bear. It is always a good idea for a seller to listen to the experts and then to factor in his/her own considerations before agreeing to a reserve price.
There are a number of costs associated with consigning a work of art to auction that a seller may wish to negotiate. For example, a seller will generally be asked to cover the cost of delivering the works of art to the auction house before the sale, and likewise for picking the works up in a timely fashion should they fail to sell at auction. If there is any storage required the seller will also pick up this cost. The work(s) will also be required to be insured by the seller while in the auctioneer’s possession. In order to appear in a full color catalogue the work(s) must be professionally photographed — another cost that the seller will have to bear. There is often a fee charged by the auction house, as well, for any work that fails to sell at auction. Taken together, these fees can add up to a hefty sum.
Depending upon the desirability of the material you wish to consign and the state of the art and financial markets at the time auction houses may be more flexible and may be willing to forgo or reduce some of these fees in order to win your consignment and to prevent you from selling with a competitor.
Seller’s should be aware, as well, that they will be charged a seller’s commission for any work that does find a successful buyer at auction. These commission rates are often subject to negotiation as well, often depending upon how much business you have done with the firm as well as the nature of the artwork and market. For example, an auctioneer might be more flexible with fees when a seller has a lovely Monet never before sold at auction than with a painting by a little-known artist which has traded numerous times before.
Often seller’s do not consider the post-sale period of a consignment though each of these terms should be spelled out in a consignment agreement. Here are three key points that I try to teach my clients. First, auction houses generally will not pay the seller for the works sold until 30 days or more after the sale date in order that they have time to first collect their money from the buyers. Second, unless the seller and auction house agree to re-offer the work(s) at an upcoming auction those works of art that do not sell must be picked up within a short period of time from the auction house as auction houses are not in the business of warehousing sellers’ artwork. Third, if a work remains unsold the auction house specialists will often, at the request of the seller, contact potential buyers before the seller collects the work(s) with the hope of selling the work(s) in a private sale. These potential buyers may be unsuccessful bidders from the sale or those who were interested in the work at an auction preview or those that normally would have been interested but did not make it to the sale. A seller should expect, however, to get a lower price in this situation than at auction as the buyers will know the work did not sell at auction.
These are just some points to keep in mind. Remember that each consignment negotiation and each auction house has its unique points, but these tips should give you the basics of what to expect when consigning a work of art to auction.