🤝Introduction

The art world has never been more global or more accessible. The best estimates put annual art sales at between 60 and 70 billion dollars a year, and transactions happen in galleries, at art fairs, through advisory services, and online. Yet, even highly experienced art lovers find auctions -- which generate about 20% of annual sales -- intimidating. It's also unquestionably one of the most exciting ways to get what you want at a market price.

The art market is like a big weather system, and it does extend globally. Auction is about 20% of the business, but auction gets the most attention deservedly. It is the place where you know the price is the market value because someone is paid for it, competing with someone else.

It works in two ways: one, a family or collector or institutional has chosen an auction as the venue. The other is, auction houses going after those works, making presentation in order to sell the art works, so it works both ways. Let’s say that an artwork can make $1,000,000 under the hammer so the estimate of the auctions house might me around $800,000 and $1,000,000. And then the auction goes through a rigorous process to vetting the work.

The Auction House

The auction houses are standing behind the work for authenticity so if you buy through one of those houses, they are guaranteeing that. Every auction house publishes an online catalog of works several weeks before a sale, so you can scroll through images and take advantage of the enormous amount of information available not only about prices, but about the history of the work and other works available from the same artist, exhibitions and more.

Good to know: With so much information at your fingertips in real time, it can be hard to decipher what is worth buying and at what price.

So, as with any other investment, it's imperative to have the counsel of someone with art expertise to help before deciding. An independent art adviser can be hired, who will happily go through the online catalog, providing additional information or, better yet, walk through the presale exhibition. What moves someone on screen won't necessarily move other person in the same way in the room, and this subtlety can change your decision. Art is not simply a commodity investment, it's an emotionally charged narrative from its creation to its acquisition, and ultimately to the visceral power of its viewing.

A Super Interesting Story

The old-school auction process

In the days leading up to the sale, there is a lot of preparation. All of that then comes together in a kind of war room situation in two or three sequences before the night of the event, culminating into the two hours right before the curtain goes up. In 1852, a painting by Murillo, The Immaculate Conception, was auctioned in London. The Louvre coveted it, as did the National Gallery, and when the Tsar of Russia's emissary also raised his paddle, a bidding war ensued. The Louvre was triumphant, winning the work for the then staggering price of £24,600. That was the highest price paid for a work of art for more than half a century. Today we are living in the age where records fall more frequently. Only last year another bidding war brought a Leonardo da Vinci painting to a new world record sale of $450 million.

In the great old days, the auctioneer Christopher Burge, the godfather of auctioneers would have a meeting with everybody else around the table in silence, only he could speak. And then with the map of the room in front of them, like a quarterback before the game, take it all in, and then go out onto the field of battle. He walks into the rostrum, leans forward, announces the work, and the bidding begins. And then, the auctioneer will speed up the bidding process, slow it down, sometimes get one more bid out just before the hammer. When the hammer comes down, the price of an object has been determined by the people who want it, in full view of the world.

The real value

The common wisdom is that a lot of the most expensive works are being bought by individuals who are banging into storage facilities and waiting to flip them. But in fact, this is not what really happens. What happens is, generally the personal assistant of the buyer makes a phone call to the auction house saying: “we have to pick this work this afternoon because is has to be hanging on the wall for dinner”. The motivation to acquire a work of art is generated much more by the heart than by the mind or by the pocketbook. A first edition of James Joyce's Ulysses is rare; there are only a few thousand. The value is consequently very high for an object of ink on paper that's also "available" in a Penguin paperback. But the true value of this rare object is also inspired by the extraordinary power of the novel itself, a work of ground-breaking originality and genius, and by its place in the world of literature. So, for the first-edition Ulysses the motivation to acquire it is both for the prize of owning an original copy and the association of the dream of reading it. It's the same with a painting; there is only one of each in the world.

The owner is the only person who can "read it" every day.