Auctions aren’t just the province of art dealers and collectors. But fear and intimidation keep many regular people from exploring — and scoring — art, decorative objects, jewelry, designer clothing and other finds that go for less at auction than at retail.
“There’s a mythical Hollywood version of auctions, where you scratch your nose and buy something,” said Richard Wright, owner of a namesake auction house specializing in modern and contemporary art and design. “First of all, auctions aren’t that way and, second, auctioneers are in the business of trying to match up buyers and sellers. We want to make it an open and straightforward transaction.”
Auctions also can be as much fun as a college football game. But the entertainment value doesn’t generally come from an auctioneer gushing gibberish.
“There is a wild country calling style that you’ll see at state fairs or in the country where they’re selling cattle,” Wright said. But generally, the auctioneer is “pretty darn clear. I would say ‘Charles Eames chair, I’m opening the lot at $600; $600, I have $600 on the phone, will you say $650 now?’ “
You generally can attend without an invitation, admission fee, trust fund or purchase. But a little homework is advised if you’re in the market for bidding. Here, Wright provides a tutorial.
1 Find an auction Liveauctioneers.com lists many types of auctions and broadcasts them live, which is a great primer, Wright said. At Auctionzip.com, you can type in your ZIP code to find auctions of various types near your home. Specialty auction houses such as Christie’s, Sotheby’s and Wright handle high-end art and design. Other houses, such as Leslie Hindman Auctioneers, offer a range of auctions, including estate auctions, where you would find a wide variety of merchandise at all price levels.
2 Inspect the merchandise Most auctions have preview days. Go, so that you can see the objects up close. “If you are going to buy higher-end things, also ask for the condition report,” Wright said. “The report has been done by a specialist. If it’s a ceramic, they’ve looked at it under a black light. The condition report should point out any problems.” If you can’t attend the preview, ask for additional photos and get a sense of the dimensions. “I take out my ruler, even as a professional,” Wright said. You also can submit a bid during the preview.
3 Research the price The auction catalog or specialist estimates in advance what a piece’s selling price will be. “Depending on the piece and the interest level, they can be wildly wrong, low and high,” Wright said. “Feel free to ask the auctioneer, ‘How did you determine the pricing on this lot?'” Because the auctioneer works first and foremost for the seller, do some independent research, if the piece is an investment, Wright suggests. Subscription services such as artnet.com allow you to see auction results for similar pieces.
4 Know the terms of sale “It’s important to understand the buyer’s premium. Buyers are always charged a percentage of the selling price. It varies, from 18 to 25 percent. You also may be responsible for state sales tax, shipping and delivery, so it is important to calculate the ‘all-in’ price before you bid — you might be close to 35 percent higher than your hammer price.’ ” The terms of sale also will state whether there’s any guarantee.
5 Show up “The best and safest way to bid is in person at the auction house,” Wright said, usually using a numbered paddle that you’re issued if you register. “The second best is phone bidding. You call on the phone, and it’s live, so it’s a little nerve-racking if you’ve never bid before.” Another option is an absentee bid, whereby you authorize the auction house to bid on your behalf up to a certain maximum. A final way is on the Internet, which also is live. “But any form of Internet bidding has a time delay, and it’s still the most error-prone way.”
6 Time your bids Never bid first. Here’s why: At smaller auctions, auctioneers often open at a higher price and drop it if no one bids. Auctioneers don’t typically do that at higher-end auctions, Wright said, “but still there is a bias against bidding first because you want to see the level of competition.” Most items are offered with a reserve price, a minimum price the seller will accept. If you’re in the
audience and no one is bidding at $600, you can decide whether you want to let the lot not sell and take your chances on making a lower offer after the auction. Some sellers won’t accept post-auction offers. Sometimes others will have the same plan, or may send an offer by note to the auctioneer during the auction. “It’s not a sure thing to buy it afterward.”
7 Know your limit “Be aware that the event is live; you can get competitive,” Wright said. “You bid, and you feel like everyone’s looking at you even though they aren’t.” People also have loss aversion. “At a certain level, egos can really come in.” So for novice bidders, Wright encourages setting a limit and sticking close to it. “In auction parlance, we talk about items being well-bought or well-sold. If it was well-sold, well, you didn’t really ‘win.’ But we are going to propagate the win-lose terminology because that’s what makes things sell.”
Auction FAQ
Is it OK to watch? Auctions are generally free to attend. At most auctions, you can walk into the room and observe, or register if you think you might like to bid. “You can register to bid and not bid on a thing, which happens many a time.” If you just want to see a particular segment of an auction, you can time your arrival based on this general rule of thumb: “A really fast auction goes 100 lots an hour. The very slowest is 50 lots an hour.”
What if no one bids on an item? At times, if an item is not selling at the reserve price, the auctioneer might sell the item cheaper at the podium and make up the difference himself or herself, especially if there’s a string of items that aren’t selling at the minimum price. “I’m much more motivated to take a lower profit while I’m standing at the podium to help my public results look better and to maintain the selling psychology in the room,” Wright said.
What if I change my mind? If you get cold feet on something you won, there’s not much recourse. “Illinois state auction law is clear: Title passes upon the hammer,” Wright said. “You are also liable for insuring it. If I have a fire the night of an auction, I’m not going to say, ‘Sorry, it’s your item.’ But if you want to be very strict per the law, the title does pass. Beforehand, you sign a bid agreement that reinforces this idea.” This safeguard also protects the bidder, so that the auctioneer can’t accept a better offer after the auction.
