Businessweek Archives

The Art Of The Bid


Personal Business: COLLECTING

THE ART OF THE BID

The auctioneer never says "going, going, gone." And, contrary to popular belief, a mere scratch of an ear won't make you the proud, if inadvertent, owner of a Matisse. If you're one of the many collectors or would-be collectors intimidated by the thought of buying art at Christie's and Sotheby's, you can relax: It's not nearly as hard as it seems.

The spring auction season is about to blossom, with major sales of contemporary, Impressionist, and Modern art set to begin Apr. 30. Tough times in the art market should make the two big auctioneers more eager than ever to welcome new buyers. Best of all, says art adviser Jeffrey Deitch, "there'll be some better opportunities, because uncertainty will leave some people on the sidelines."

Buying at auction isn't for the uninitiated, however. The pace can be fast, creating enthusiasm that's contagious. And bidding strategy can be complicated. Yet once the hammer falls, the item on the block belongs to the final bidder--no returns. One neophyte was surprised recently to find that he owed nearly 20% more than he had bid--the "hammer price" plus a standard 10% "buyer's premium" paid to the house and sales tax.

HOMEWORK. That's why the auction-goer's work begins before the sale. Major auctions of the various categories of art follow a regular cycle. The heights are May and November, when painting sales take place in New York.

Sotheby's and Christie's announce the specific items for sale about a month in advance, when illustrated catalogs become available. You can subscribe to catalogs, order them by mail, or buy them at auction house offices. Copies are also posted at the exhibitions, which are on auction house premises the week before the sale. But it's better to buy the book; you will want to take it to both the exhibition and the auction.

As you peruse the catalog, pay attention to the way a description is phrased and printed. These nuances have meanings, which are spelled out at the beginning of the catalog. For example, Sotheby's guarantees only the data that appear in boldface type.

LOOK AND TOUCH. Each lot is given an "estimate," a range for the price it's expected to fetch. But you should do your own homework on the lots that interest you. Research recent auction prices for works of the same caliber by the same artist, and check with art dealers who carry similar works. As noted in the catalogs, nearly every lot has a secret minimum bid, known as the "reserve." This price, always below or at the low estimate, is set by the seller in talks with the auctioneer.

Next, go see the real items at the exhibitions. Introduce yourself to the house experts, and ask questions--nothing is too basic. All lots are sold "as is," so study condition. If you want to touch a piece, view it from another angle, or check its back for markings, ask.

You should jot down notes from all of these inquiries in your catalog, right next to the pictures. It will help you decide your top limit for each piece, which you should set before you go to the sale.

Prior to bidding, you must register. You can do that right before the sale, but it's better to preregister. Just give your name, address, and a bank reference. And once you have been to an auction, you can get a "client card" with a house account number that speeds registration.

Plan on checking in at least 10 minutes before the sale. You will receive a numbered bidding paddle. Sit where you want--except at evening sales. For those, you must get a ticket--it's free--with a seat assignment. The auctioneer starts the bidding below the reserve, then moves up in standard increments, depending on price. For a lot estimated at $100,000 to $130,000, bidding would probably start at $50,000, with each subsequent bid jumping $10,000. If it's a tough sale, you can try to cut the increment--but the auctioneer can refuse to accept it.

To bid, raise your paddle, your hand, or even your pen. Once you've got the auctioneer's attention, a nod will suffice. Esoteric bidding-signals are very rare. But if you must maintain total anonymity, you can arrange such a sign with the auctioneer in advance. It's impossible to bid accidentally. An auctioneer unsure of a wayward movement will ask: "Are you bidding?"

Just when to enter the contest is a matter of strategy. Some bidders prefer to start early, moving up quickly to deter competition. Some will try to intimidate rivals by never taking their arms down. Others hang back, not wanting to show enthusiasm that will incite other bidders.

FAKE BIDS. As you bid, you may encounter "chandelier bidding." Critics say this fake bidding by the auctioneer, done to get prices above the reserve, creates false impressions of the desirability of a work and inflates prices. Fact is, a lot won't be sold below the reserve anyway, and chandelier bidding above the reserve is forbidden by law.

You can learn to detect some chandelier bids. Watch the auctioneer's body language. Notice if the bidding pace seems too fast for a particular lot. Or, an auctioneer who usually places the bid he takes--"$50,000 on my left"--may skip such locations.

Doing that is not the same as saying "the bid is with me," however. This phrase indicates that the auctioneer has an "order bid" in his book. These offers are written maximum bids, left in advance, by people who cannot attend a sale. You will find order-bid forms in the catalog, as well as at the auction house. The house executes these bids, in sequence, against bids from the floor or the reserve. Order-bid ties are won by the first bid placed.

'FAIR WARNING.' If you can't attend a sale, you have another alternative: the telephone. Arrange this a few days in advance of a sale, and a service representative will call you when your chosen lots are about to come up. As he or she recounts the saleroom action, you say when to bid.

When the bidding is over, auctioneers usually linger a moment before pounding the gavel. "Fair warning," they may say, "the bid is on my right at . . . " Or perhaps "all done then, at . . . " This is your last chance to bid. If the lot did not make its reserve, the auctioneers must announce that, too. They usually say, softly, "passed," but they may instead say "withdrawn," "returned to owner," or "bought in," which regulars abbreviate to "b. i."

You still have a chance to purchase a bought-in lot, though. Immediately after the sale, approach the relevant auction-house expert. Make an offer, or ask what the seller will take. The auction house will consult with the consignor on your behalf.

You have bought the object of your affections. What next? See the cashier, and pay by cash, check, bank transfer, or--at Sotheby's--Visa or MasterCard. If you pay by credit card or preapproved check, you can take your purchase. If not, you won't get your lot until your check clears. Buyers who don't pay on the spot are sent invoices, with payment due in three days. It's best to complete these transactions quickly: After 10 days, the auction house sends your purchase to a warehouse and charges you for storage.

If you know these rules, buying at auction is simple--you choose how much effort to make. Deitch, who often bids on top lots for clients, has even staged a mock auction to practice bidding strategy. But auction houses aren't mystifying. They are exciting, even enchanting, places open to all comers. And for art-lovers who can't yet afford to buy, their presale exhibitions are great free shows of art that may never go on public display.Edited by Amy Dunkin; Judy Dobrzynski


Later, Baby
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus