Private Treaty Sales

As most readers of the AW Blog are aware, auction houses have made considerable income over the past several years through private sales. Baron's has a very good article on private sales and the trend of auction houses working to place fine and decorative art privately.

Both Sotheby's and Christie's have been very active in promoting their private sales divisions, but the article notes that other auction houses, such as Heritage are active as well.  The article notes commissions can range between 5% and 33% of the sales price.

Of course for appraisers the downside of these private treaty sales are that most of them art private.

Baron's reports

Owners of valuable artworks might want to comparison shop at both auction houses and commercial art galleries before they make a decision. The commission on the sale, for instance, is completely negotiable at both auction houses and galleries, ranging from five to 33 percent.

So play them off of each other and ask yourself, Who will do the best job? How will the artwork be marketed (through an exhibition, an emailed PDF, telephone calls)? How quickly do they suggest a sale might take place? Would the gallery or auctioneer purchase the piece outright?

Private sales are generally kept quiet, which is how sellers and buyers usually like it. But this past May, Heritage Auctions uncharactersitially announced its largest single private treaty sale, in a kind of coming out party announcing it’s a player in the space. The sales was $850,000 for the very first issue of the Batman comic book, from 1940, purchased by a private equity group that specializes in collectibles of this type.

The seeds for this transaction were sewn earlier when the leader of this private equity group, a collector who had bought and sold at Heritage over the years, mentioned to Jaster, “If you hear of anything interesting, let me know.” The auctioneer did indeed know an East Coast collector-slash-investor who had the Batman comic book. He made a discrete approach; within a short period of time, Jaster had brokered the deal.

Private treaty sales tend to be a service made available to long-time clients of an auction house, but these types of sales are occurring as fast as some relationships are forming. According to Christie’s managing director, Caroline Sayan, the auctioneer earned $808.6 million in private sales in 2011, amounting to 14 percent of the house’s $5.7 billion revenues, and a 44 percent increase in private treaty sales over 2010.

Source:  Baron's