How auction pricing works
Every lot at auction has an estimate, a range of prices the auction house expects the work to sell within, and a reserve price, which is the confidential minimum below which the work will not sell. The reserve is typically set at or below the low estimate.
The price you pay as a buyer is the hammer price, the price at which the auctioneer's hammer falls, plus the buyer's premium: a percentage charged on top of the hammer price. Major auction houses charge buyer's premiums on a sliding scale: approximately 26% on the first $600,000 of hammer price, 20% on amounts between $600,000 and $6,000,000, and 14.5% above $6,000,000. At lower price points, the effective buyer's premium can exceed 30%.
This means that a work with a $10,000 hammer price costs approximately $12,600 - 13,000 all-in. Always calculate based on the total cost, not the hammer price.
Before the sale: Due diligence
Condition report: request a condition report for any work you are seriously considering. Auction houses provide these free of charge; they document known damage, restoration, and conservation history. A work sold 'as is' at auction has no return right, what the condition report discloses is what you are buying.
Provenance research: check that the work has clear ownership history, particularly for works produced before 1945. Auction houses are legally required to conduct provenance research, but their conclusions are not infallible. For significant works, independent provenance research is advisable.
Physical inspection: view the work in person at the presale exhibition if at all possible. Auction photographs are produced to maximise appeal; physical inspection reveals condition issues, scale, and material qualities that photographs cannot convey.
Bidding: In the room and online
Register to bid before the sale, most houses require registration 24 - 48 hours in advance for new clients, including a credit check or deposit for significant amounts.
Set your maximum bid before the sale and do not exceed it in the room. Auction environments are designed to generate competitive excitement; the adrenaline of live bidding reliably causes buyers to exceed their intended limit. Absentee bids, submitted in advance, executed by the auctioneer on your behalf up to your maximum, remove this risk entirely.
Online bidding through the house's own platform or third-party services (Invaluable, Bidsquare) is now standard at most auction houses. Bid increments are typically fixed and displayed on screen. Connection reliability matters, have a backup plan if your internet drops during a sale you are actively bidding in.
Frequently asked
Generally no. Auction sales are final, with limited exceptions: if the work is found to be a forgery after sale, if title is defective, or if material information was misrepresented in the catalogue. Review each house's conditions of sale before bidding, they are binding contracts.
A work that does not reach its reserve is 'bought in', withdrawn without sale. The result is not publicly announced but is visible to market watchers as the absence of a sale result. A bought-in result can be damaging to the market value of a work if widely noted.
For established artists with secondary market histories, auction can provide price transparency and competitive pricing. For emerging artists and living artists whose primary market is managed by galleries, gallery purchase at published prices is usually more straightforward and supports the artist's career more directly.