Calculate Auction Premiums

artnet news recently reported on a new website widget which calculates the auction house buyers premiums for sales at most of Phillips, Sotheby's and Christie's auctions. What is nice about the online calculator is the ability to enter the hammer value and determine the sale price including the buyers premium, or enter the full price including buyers premium and get the hammer price.

The calculator is located on a Fusion Net website. Click HERE to visit the Gavel Calculator and try it out for yourself. Hopefully they will be adding additional auction houses in the future.

artnet news reports on the Gavel Calculator

The hefty premiums that auction houses tack on to public sales is undoubtedly one of the most opaque and confusing aspects of the booming art market. Auction premiums change constantly and are anything but simple, applied as they are on a sliding scale (i.e. 25 percent on the first $100,000, 20 percent on the next $1.9 million, 12 percent on anything above $2 million). They were at the heart of the price fixing scandal that erupted in the late 1990s, which resulted in jail time for former Sotheby’s CEO Alfred Taubman, not to mention hundreds of millions of dollars in settlements and legal bills for both Sotheby’s and Christie’s.

Now financial blogger Felix Salmon has rolled out an innovative and much-needed (not to mention free) new widget to address the premiums problem. Meet GAVEL (embedded below), the acronym for the auction price calculator he dreamed up that is available at Fusion.net, where he is a contributor. Despite its wonky acronym (Generate Auction Valuation Extra Levy) we predict it will be enthusiastically received by anyone who follows auction prices, including collectors who want to have a better idea of how much they’ll be shelling out in premiums before getting caught up in the moment.

As Salmon told artnet News, “You can find calculators on the Internet for just about anything, whether you are working out mortgage amortization or bond yields. You name it, you can calculate it. Because I write about art auctions a lot, it seemed like there was a gaping hole.” Earlier this year he tackled the wild world of sellers’ commissions in a revealing post for Reuters titled “Adventures in art-market commodification, enhanced hammer edition.”

Even more complicated than figuring out how much of a premium gets added to the hammer price is “working backwards to the hammer price.” “You read something in a press release and it’s impossible to find out what the hammer price is. It’s completely impossible so no one ever does it,” says Salmon.

Now it’s GAVEL to the rescue. Not only does the GAVEL calculator compute the premium based on the auction house, currency, and location of the sale, it also allows users to strip out the premium in order to go back and see the original hammer price.

Source: artnet news