Has the auction market—the venue for much of what is rare and beautiful, whether it be an Alexander Calder mobile, a classic sports car, or a sought-after bottle of Burgundy—been unfairly framed, B-A-D scrawled across its canvas like an Ed Ruscha gone wrong?
There is unquestionably a surfeit of bad news. Take Sotheby’s, the world’s largest publicly traded auction house: Last fall its auction sales plummeted 46 percent from the previous year’s corresponding quarter, from $1.9 billion to $1 billion; this March, its stock price collapsed from a 52-week high north of $29 to a low of $6.05. Nor have other firms—international alphas such as Christie’s and Bonhams & Butterfields, or national, regional, and specialty houses such as Rago, Freeman’s, Wright, and Heritage (see "Auction Houses," page 62, for complete listings)—had much to crow about.
But regardless of the bleak numbers and bleaker headlines, a more complex and positive picture exists. Every asset class in the equity markets showed significant declines in 2008, and benchmarks such as the Dow and S&P nosedived 33.8 percent and 38 percent respectively; auction categories in aggregate, by contrast, saw far more modest falls. According to the Mei Moses index, which is based on repeat sales of individual auction items, the entire art market shed less than 4.5 percent, and Old Masters (considered a much steadier category than, say, contemporary art because of their stable, conservative collector base and long track record) actually gained slightly.
In February, Christie’s sale of the Yves Saint Laurent and Pierre Bergé collection (totaling $484 million) broke multiple records. Coupled with solid results from bellwether winter and spring auctions, this demonstrates that when the right piece is offered within the right estimate, lucre still flows—liberally. So which categories are hot and which are not? How might you partake, as either buyer or seller?
Buying at auction has two general steps: registration and bidding. Whether you plan to enter the fray via telephone, fax, e-mail, or the Internet, submit an absentee-bid form, or raise a numbered paddle yourself, data such as proof of your identity, contact information, a signature, and credit-card or banking information is generally necessary (exact requirements can be found either by contacting the auction house directly or by checking its web site). Registration is designed to be fast and simple, and bidding is straightforward. Unlike in comedies, the auctioneer will not mistake a scratching of the ear as a bid. If you prefer anonymity, consider investigating absentee written bids or bidding via telephone or the Internet (for telephone bidding, where there are a finite number of lines and auction-house representatives, it is best to register at least several days in advance). When making a bid, however, always consider the buyer’s premium, the commission that auction houses add to the hammer price. This can be a flat or stepped rate, can vary substantially (it is usually between 15 and 25 percent), and should be confirmed either online or with an auction-house representative. Also, bear in mind any applicable sales, use, or value-added taxes.
Selling at auction involves setting the reserve price, the minimum amount for which you agree to sell your property. Items are offered for sale in discrete, numbered lots. A lot’s reserve price is not public information. A reserve is agreed upon by the consignor and the auction house, and does not exceed the lot’s low estimate. The consignor and auction house similarly agree on the lot’s low and high estimates, which are public and therefore should be carefully considered, especially as psychological components come into play. As David Rago of Rago Art and Auction Center in Lambertville, N.J., explains in his online auction guide, "A low price estimate encourages bidding. It makes your property seem more attainable and more desirable. And the more people who bid, the more your property is likely to sell for. It’s a fact, but it makes a lot of people nervous, understandably. It’s not a sure thing."
May’s Impressionist and modern-art auctions at Christie’s and Sotheby’s illustrate how effective this strategy can be: For its May 6 sale, Christie’s adjusted its estimates downward and saw impressive results (totaling $102.767 million, well within the estimate range of $87.6 million to $125 million), whereas Sotheby’s May 5 sale reached only $61.4 million against a low estimate of $81.5 million. (Interestingly, Sotheby’s Impressionist paintings with lowered estimates sold briskly—and above their high estimates—whereas unadjusted modern works had few bidders and went unsold.)
Upon a lot’s sale, the auction house charges a seller’s premium, a percentage of the final sale usually ranging from 10 to 25 percent. The premium is calculated on a sliding scale based on factors such as the consignment’s size, value, and rarity, and the consignor’s volume of business with the auction house. The seller’s premium is an area that should be negotiated, and compared among competing auction houses. A consignor should also be vigilant of other fees—insurance, photography, restoration, shipping—which can all be negotiated as well. Guarantees are sums, not publicly disclosed, that are paid to consignors regardless of a sale’s outcome; they are still offered by the larger auction houses on a selective basis, with far less frequency than before.
In terms of categories and subcategories performing especially well, Steve Davis, president of Barrett-Jackson—an Arizona-based auction house specializing in cars—points to "no-excuse cars with bulletproof provenance," among them Corvettes and European racecars, that continue to demand premium prices. (Conversely, he says, "poor-quality clones that represent wannabe Hemis, Shelbys, and COPO Camaros are trading for considerably less than they were.") Ben Hall, head of Old Masters and 19th-century art at Christie’s, has been pleased but not surprised by the continued stability of the Old Masters, which, he adds, held up well even in the early-1990s down market. Silver and jewelry, David Rago says, performed exceptionally in his December auction, "down perhaps 5 percent from the pre–Lehman Brothers days." Both Charles Curtis, master of wine and Christie’s head of North American wine sales, and Jeff Zacharia, president of Zachys Wine Auctions, pop their corks for vintage Champagne ("It’s still expanding," says Zachys), and see continued strength in rare Burgundies and Bordeaux ("The top top end barely adjusted," says Curtis) and astounding buying opportunities in young bottles of the same. In collectibles, "common-date pre-1933 U.S. gold coins have been the strongest performers, with premiums rising to record levels—often triple the historical premiums over melt value," says Jim Halperin, a cofounder of Heritage Auction Galleries, who says rare coins in general remain "significantly higher" than before 2005. Heritage also deals in the rarest of the rare: Skulls of dinosaurs, saber-toothed tigers, and woolly mammoths have repeatedly pulled in six figures through the auction house.
In the decorative arts, Carina Villinger—a specialist in 20th-century decorative art at Christie’s—says that pieces "with proven track records and outstanding quality," such as those by pre–World War II European masters Eugene Printz, Emile-Jacques Ruhlmann, and Jean Dunand have held up well, whereas David Rago says, "Old-school antiques that haven’t been ‘cool’ this past decade—arts and crafts, Chinese export porcelain, mechanical banks—have experienced relatively little price drop." That’s in contrast to the midcentury and postmodern pieces by such formerly white-hot market darlings as Paul Evans, which Rago says had seen up to tenfold increases before retreating 25 to 30 percent.
Regarding Impressionist, modern, postwar, and contemporary art, photography, and even Russian art, the mood is cautiously optimistic. A piece’s quality and provenance are always important, but now—as the Saint Laurent sale in February, December’s sale of part one of the Constantiner Collection (at $7.7 million, a record for a single-owner photography sale at Christie’s), and the much-watched May sales underscored—they are crucial, especially when coupled with tempting estimates. Even while acknowledging the importance of these criteria, Robert Manley, head of Christie’s New York evening sale of postwar and contemporary art, says, "The market can’t be summed up in sound bites." Nevertheless, he acknowledges, "so much of our struggle is a psychological one." As it is in the general economy, so is it in auctions.
AUCTION HOUSES
INTERNATIONAL
Bonhams & Butterfields, www.bonhams.com/us
Christie’s, www.christies.com
Sotheby’s, www.sothebys.com
NATIONAL AND REGIONAL
Doyle New York, www.doylenewyork.com
Freeman’s, www.freemansauction.com
Neal Auction Company, www.nealauction.com
Rago Arts and Auction Center, www.ragoarts.com
SPECIALTY
Art and collectibles
Heritage Auction Galleries, www.ha.com
Swann Galleries, www.swanngalleries.com
Autos
Barrett-Jackson, www.barrett-jackson.com
Gooding & Company, www.goodingco.com
Kruse International, www.kruse.com
RM Auctions, www.rmauctions.com
Russo and Steele, www.russoandsteele.com
Contemporary art, design, jewelry, and photography
Phillips de Pury & Company, www.phillipsdepury.com
Modern and contemporary design
Wright, www.wright20.com
Rare books and maps
PBA Galleries, www.pbagalleries.com
Sports memorabilia
Memory Lane, www.memorylaneinc.com
SCP Auctions, www.scpauctions.com
Wine
Acker Merrall & Condit, www.ackerwines.com
Hart Davis Hart Wine, www.johnhartfinewine.com
Zachys Wine Auctions, www.zachys.com/auctions