How Buyers Premiums Impact Sales Results

Forbes has an interesting post on the recent contemporary art sales, and then looks a little deeper to determine the impact of reporting results including buyers premium. It long has been an issue, and even when I post results on the AW Blog I do try to note that the results include buyers premium as it can skew the expectations and success of the sale based upon pre sale results without a premium and post sales results with a premium.

Forbes reports

Without the buyer’s premium, last week’s results start to look a little different. Take out the buyer’s premium and Eric Clapton’s Richter was sold for £19 million, not over $21 million. Christie’s combined sales of post-war, contemporary and Italian art in London last week, which raised £41.2 million ($62 million), compared to its estimate of between £36.6 million and £51.9 million, was pretty weak already. Take out the buyer’s premium and the auction house barely reached its low estimate.

The buyer’s premium issue makes the record-breaking prices trumpeted by auction houses and reported in the press pretty misleading. With November’s impressionist and modern art and post-war and contemporary sales in New York fast approaching, that’s definitely something to keep in mind. Here are a few of the star lots up for auction in New York next month:

Sotheby’s is going to try to follow its success selling Eric Clapton’s Richter in

London with the sale of Abstraktes Bild (712), Richter’s first painting from 1990, in its evening sale of contemporary art on November 13. The estimate? Over $16 million.

Also in its November 13 contemporary evening sale, Sotheby’s will offer No.1 (Royal, Red and Blue), painted by Mark Rothko in 1954, one of the paintings the artist himself selected to appear in his solo show at the Art Institute of Chicago the same year. The estimate: $35 million to $50 million.

In its November 14 sale, Christie’s will offer Andy Warhol’s 3D silkscreen painting Statue of Liberty, produced in 1962. The estimate is also in excess of $35 million.

Of nine Picasso paintings offered in Sotheby’s impressionist and modern art evening sale on November 5, Nature morte aux tulipes, painted in March 1932, is expected to fetch $35 million to $50 million.

The star lot of the New York impressionist and modern art evening sale at Christie’s on November 7 will be one of Claude Monet‘s famous water lilies series Nymphéas, painted in 1905. The estimate is between $30 million and $50 million.

Other than collectively indicating that when an auction house isn’t really sure what a super famous painting will sell for, it sticks a price tag of $30 million to $50 million on it, the thing that all these estimates have in common in that they do not include buyer’s premiums. Whatever Christies’s or Sotheby’s say these paintings fetch come November, the hammer price will be lower.

Source: Forbes