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Buying and selling
Selling at auction
The traditional method
of selling art and antiques at auction is by far the
best as it gives transparency to the transaction but
there are many things to bear in mind.
To ensure a successful sale
the single most important aspect is the seller’s
expectation as to value. Pitched too high and the sale
will fail often leaving the seller with expensive unsold
fees.
It is best left to the auction
house when dealing with the subjective theory of value.
If you accept their sale estimates and reserve price
it is unlikely that you would be charged unsold fees
if the item failed to sell.
There are numerous auction
houses throughout the UK operating at different levels.
The handling of fine art and antiques, before the advent
of the internet, was almost exclusively the domain of
the London rooms because in those days they had enormous
marketing budgets and some of the best expertise available.
This is certainly not the case today.
There are around half a
dozen or so high quality auction rooms in the United
Kingdom provinces that challenge, often successfully,
the dominance of London and do as good, if not better,
job than the top three in London. Vost’s only deals
with this group, in addition to the top three London
auction rooms, when arranging transactions of fine art
and antiques because they meet the criteria of professionalism,
scholarship and marketing.
For items in the multi-million
pound bracket then London or New York is still the best
bet. These days it is commonplace for the provincial
rooms to sell an item in the low millions. Some of the
London rooms will not handle items below say £3,000.
This has made them too selective and has left many of
their old clients alienated.
A good provincial auction
house has the same, sometimes better, expertise available,
often ex employees of the London rooms. They will, by
and large, be more dedicated to their client; they will
often set aside greater funds for marketing an item
and they will be considerably more enthusiastic, as
it is so important to them and they will be more prepared
to negotiate their charges. The media are far more ready
to promote a provincial auction house story than one
from London and this results in greater awareness of
an item coming up for sale.
To maximise the value of
client’s art and antiques good cataloguing, marketing
and promotion are essential. Provenance, where there
is any, is also a key factor in pushing the eventual
price up.
All auction houses charge
what is known as a buyer’s premium that can range
from 5% - 25% of the hammer price (the price realised)
plus VAT. Since its controversial introduction it has
been contentious, particularly with the trade. Critics
say that they reduce their bidding to account for the
premium therefore the price realised is lower than it
would have been without the buyer’s premium. They
also ask what they get in return for paying the premium
which, with exception of possibly getting a free catalogue
is probably a valid criticism. Whatever, the premium
is here to stay unless it is challenged successfully
at law.
Charges to the seller can
vary dramatically. A lot depends on the perceived value
of an item and the sellers’ ability to negotiate;
this is where Vost’s can successfully intervene.
The charges usually include
a commission charge of the eventual hammer price, insurance
cover while the items is at the auction house, photography
and illustrations, transport and, where a large collection
is involved, possibly a contribution to the catalogue
and marketing expenses. All charges are normally deducted
from the sale proceeds.
Some auction houses operate
a ring fenced client fund account, this protects client’s
monies. Others rely on their membership of, for example,
the Royal Institute of Chartered Surveyors, to pick
up the tab in the event of the auction room going bust.
There are some where client funds are not protected
at all and there have been numerous instances of auction
rooms going into liquidation where clients have lost
their money. This is a point worth checking when dealing
with auction houses, amazingly few people do.
Selling to a dealer
This method can often be
a far quicker process than selling at auction; it depends
entirely on the integrity of the dealer who may well
be supported by a trade organisation such as BADA or
LAPADA. The possible downsides to this type of transaction
are that it is not transparent, and a dealer’s
motivation is to buy low and sell high whereas an auctioneer
tries his hardest to maximise the price for a client
to maximise his commission.
Selling by private treaty
This method of selling fine art
and antiques by private negotiation is usually confidential
as to any agreed price.
There can be tax advantages to this type of transaction
particularly when an item is significant and possibly
of interest to the nation. Vost’s are able to advise
you if this is likely.
Such a significant item may require
an export licence if sold at auction or overseas. If
a licence application were to fail then the item would
be offered to the state through one of its institutions
such as a museum. Either at this point, or if the item
is offered to the nation without going to auction, negotiations
as to value commence. Your legal or accountancy advisors
will be able to calculate exactly what the tax advantage,
if any, might be.
Buying at auction
Unless you understand the process
this can be full of pitfalls, caveat emptor or buyer
beware is most apt. The better auctioneers are very
honest with their descriptions but not all are, mainly
through ignorance rather than design. Again, this is
where Vost’s knowledge can be of vital importance
in sorting the wheat from the chaff.
In any event the process can take
some time from viewing to successful (if you are lucky)
purchase. However, systems now available do make it
easier for some buyers especially absentees. Many auctions
now have online bidding in real time, most will arrange
for telephone bidding or you can always leave a bid
with the auctioneer, this latter course has some potential
dangers and it depends on how you view the integrity
of the auctioneer. Familiarise yourself with the cataloguing
terms because they can at least be ambiguous, if you
do not understand them ask the auctioneer to explain
them.
Whatever your final bid price
might be there will be a buyer’s premium plus VAT
added to the price. It is essential to bear this in
mind when setting your maximum bid, once you have done
this, do not exceed it.
Before bidding at auction you
will have to register personal details with the auctioneer
and then receive a bidding number. This system is very
efficient and is computer driven but it does remove
the traditional personal nature of the transaction.
Unless you are known to the auctioneers payment by cheque
will have to be cleared before an item can be released.
Many accept debit or credit card payment but they will
charge a fee for accepting the latter.
Most auctioneers do not have transport
facilities to get your successful purchase to your home;
however they will be able to provide you with a contractor
to do this for you at your expense. If you do not collect
your purchase within an agreed time frame you will probably
be charged a storage fee, this is more likely in London
than the provinces.
Terms and conditions use by auctioneers
are extremely complex. In the event that you are not
satisfied with your purchase recourse can be difficult
hence caveat emptor. In any dispute over genuineness
the onus of proof that the item bought was not as described
is on the buyer.
Buying from a dealer
This process is often quicker
than buying at auction. There are a number of potential
benefits. A dealer will, under certain circumstances,
allow you to have an item on a trial and approval basis,
they may also be able to arrange payment terms and delivery
of the item.
You will almost certainly pay
a higher price from a dealer than at auction, in some
cases considerably more. Caveat emptor still applies
to a degree but if you are using a reliable and trustworthy
dealer belonging to say, BADA or LAPADA you should have
some recourse in the event of mis-description for example
but the onus of proof of mis-description will still
be on the buyer. A retailer is also subject to the sale
of goods act whereas an auctioneer is not.
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