Is it cheaper to buy art at auction?

A client recently asked me this question, and I thought it might be interesting to others as well.

Is it cheaper to buy art at auction than at galleries or through private dealers? The answer is very clear: sometimes. This is not very satisfying, I know.

While there are some auction categories that may allow buyers to purchase an item for less than retail prices (jewelry, for example) there are other auction categories such as Contemporary Paintings where a buyer might actually wind up paying the same amount or more than he/she would at a gallery because of the other bidders competing for the same lot. (lot = the item up for sale. Each item which is assigned a lot number by the auction house and may be referred to as Lot X rather than by name.) Remember, auctions are public and they receive lots of publicity and attention so unless you are buying at a secondary, less advertised sale the secret is out!

Often buying at auction is a good idea, however, because of the very nature of the beast. Often through the auction process a buyer will have access to works of art that he/she would never find otherwise. Auction houses spend a great deal of energy, time and money winning choice consignments from sellers in order to sell the very best and biggest name material in any given auction season. Buyers often reap the benefits by having access to and possibly purchasing those choice works. Given the volume of works that the auction houses deal in, as well, buyers can choose from an immense amount of artwork.

And don’t forget to factor in the fees. Even those purchases whose hammer price seems to be a bargain may not turn out to be as good of a buy as anticipated once the buyer’s premiums (or fees charged to the buyers by the auction houses) are added. (Hammer price = the dollar amount of the winning bid at auction as taken by the auctioneer before he/she physically pounds his “hammer” or gavel on the podium indicating that bidding is closed for that lot.) In addition to state and local tax (and the Value Added Tax (VAT) where applicable) auction houses add commissions on to the price of each sold item, on both the buying and selling sides of the transaction. Those fees typically are expressed as a percentage of the winning bid, say between 10 and 25 percent, and that percentage often changes depending upon the dollar amount of the lot sold.

One should not necessarily attempt to buy artwork or antiques at auction hoping to get a bargain although occasionally there is one to be found. As with buying a work of art in any context a buyer should do research in advance into such things as the condition and provenance of the lot under consideration. Be a smart buyer, at auction or elsewhere.