Art Market Madness: The Auction House Price Guarantee
I received a news article the other day which was rather startling but very exciting. What was even more startling was that I received another article on my desk a couple of days later which reported another instance of the same scenario. What was is that excited me so much, well, the two articles reported two separate auction houses offering guarantees to the vendors of certain paintings that they would get a certain price for their artwork at auction. That’s right, both Sotheby’s and Christies guaranteed that the vendor of a Rothko painting at an auction in the USA would receive at least a certain amount of money for the work regardless of the sales outcome. Christies and Sotheby’s even tried to outdo each other by raising the guaranteed sale price they were offering the vendor in an effort to secure the sale of the work. The other article came from Australia which reported that the auction house Deutscher Menzies had also guaranteed a minimum price for a work they were offering for sale.
Although the works being sold with the guaranteed sale price were highly desirable works there is still considerable risk to the auction house when offering an underwritten minimum sale price guarantee to a vendor. The next question you may be asking is why would an auction house offer such a guarantee??. Well, to put it simply, because of the publicity and prestige the auction house will receive from selling an expensive, highly desirable painting.
What excites me most about the actions of these auction houses is that it shows huge confidence in the art market to the extent that guarantees are being made on the sale price of an artwork which is unheard of.
Exciting times indeed !!!
**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.