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Five Essential Rules for Buying at Auction
Malcolm Katt
07/16/07 - 09:38 AM EDT
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Museums, dealers and sophisticated collectors all buy art and antiques at auctions, and their level of expertise is high. If you are inexperienced in buying through this format, you need to learn as much as you can before you place a single bid.
That way, when you're sitting in Sotheby's (BID - Cramer's Take - Stockpickr) or Christie's showroom or any local auction house, you'll be armed and ready.
Rule 1: Do Your Homework
Before buying at an auction, do your research. There are several ways to get information about any items that you're interested in:- Get the auction catalog. It usually contains a description of all the items up for sale, the names of the artist or maker, the title of the artwork, its dimensions and medium, a photograph, and an estimate of what the auction house believes it will sell for.
- Go to the preview. Auction houses typically put items on public display. In large auction houses, promotional advertisements that announce the auction will list available viewing times, which may include several preauction sessions. Make sure you thoroughly inspect what you're going to bid on. Bring a few basic tools to aid you: a tape measure, small flashlight and magnifying glass, perhaps even a reference guide and digital camera. Jot down the lot number of each item that interests you and take note of any flaws.
- Get professional help. Auction-house specialists who catalog items are a rich source of information -- they know the objects and can compare them to similar items they've seen. Many dealers can advise you on the item you're considering. They charge a fee for this service, typically by the hour or for a percentage of the sale price. You can find dealers at the National Antique & Art Dealers' Association of America. Consult with a professional to assess what the market is for a particular piece and to how to spot issues of condition and quality. Further, bring your expert to the preview.
- Go online. View what similar items have sold for by researching previous auction results, and research information about the maker of the item. For example, ArtPrice.com lists over 4 million auction results collected from 1700 to the present day and covers more than 370,000 artists. It's important to remember that appearance and condition affect value. Issues of condition might not be obvious in the catalog photograph -- and don't necessarily accept the auction house's description. Note that while you can get a condition report from the auction house, it's usually not in-depth.
Rule 2: Bid With Your Head, Not Your Heart
You can easily overpay at an auction as the result of an emotional bidding duel. Don't be misled by presale estimates -- they are not necessarily indicative of the final sale price. Estimates are the result of negotiation between the auction house and the consignor (seller), so they can represent wishful thinking on both sides. A dealer who specializes in a particular field can evaluate presale estimates and advise the price to pay for a given work in light of current market factors. Always set a limit on what you will pay beforehand. And keep in mind that your winning bid won't be your total price. On top of the price when the gavel goes down, there is the buyer premium, usually 15% to 20% of the sale price, as well as state and local taxes, and possibly shipping and storage. Calculate these charges when setting your bid limit. Don't get swept up in the excitement of the moment and surpass your preset limit.Rule 3: Read Auction-House Policies
These conditions typically appear at the front or the back of the auction catalog. Usually the auctioneer will recite the terms and conditions of the auction at the start of the sale. You are generally buying an item in "as is" condition, without a guarantee or a return privilege. Auction houses make no warranties of any kind and almost never rescind a sale.Rule 4: The Code of the Hammer
Auction houses are protected by law against persons who bid successfully and later decide they made a mistake. If you are the winning bidder on an item, you're expected to pay for your purchase before you leave and are generally expected to remove your item immediately or make arrangements for shipping or storage. Once the hammer falls, the risk of loss passes to you, so if you drop that precious vase on the way to your car, you own the pieces. And just a note -- everyone has heard horror stories about how someone at an auction scratched his nose or turned her head, and now owns a hideous sculpture. This should not be a worry for the uninitiated -- auctioneers respond to these types of auction bids only if they were prearranged.Rule 5: Buy What You Love
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