Have Art Auction Houses Become Too Greedy?

Why Auction Charges are Generally 30% on purchases and up to 20% on sales?

 

I started collecting and trading art in 1983. I paid 8% -10 % on purchases and 6-10 % on sales. Within the last thirty years auction houses raised their charges to normally 25% on purchases and 12%-20% on sales, which become even higher with state taxes depending on the country the transaction happens.

Result?

I was a trader of art who bought and sold mainly through auctions. They made a living and I made one too. If I was lucky on any investments, I made a better living and the selling auction even a better one. Over the last thirty years charges for everything, not just auctions have gone through the roof and the trader, the middleman has gradually been pushed aside and gradually died away to a certain degree.

25% buying commission excessive

The internet has created plenty a chance for everybody and that has also created a competition from far too many people who are willing to pay the over the odds charges which for the majority of items sold at auction, about 90%, is now 20- 25% on purchases plus state taxes.

The commission charges when buying at auctions has gone up and up to the point of thinking; are they justified or not?

0%- 6%, 10-20% Selling Commissions

While the buyers at auction have no bargaining power over the auctions, the sellers do have plenty to negotiate with and argue about. The better the time for sale, the more valuable the item, the lower the commission might be be.

Thus, if an item is worth millions the negotiated commission for the seller might be zero, as the auction will make some money from the buyer which is about 10% in such a case. However, when the item is the value of a few hundred pounds, auction houses have to charge 20-25% in order to cover their expenses which are indeed high; catalogues employees, experts, internet expenses and premises. Nothing comes cheap and we all have to pay for whatever services the auctions offer us. I must admit they elevated the art of selling through auction into an art.

Negotiate and Prosper

If you are a seller of a good item, then the chances are you can negotiate hard and get a good agreement from any auction. It might be a 6% offer or near that percentage if your property is estimated to sell in the tens of thousands. All concerns must be ironed out on consignment and especially the commission charges, illustration charges and insurance.

I am finally addressing this to the auctions which these days charge 25% of commissions for buyers. That, I believe could be lower in order to benefit all parties in the business and that includes the auctions, the sellers and buyers. Greediness never rewards anybody in final analysis!

Peter Constant

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