Sotheby’s Hedge Bets with Irrevocable Bids – artmarketblog.com
On the 20th of October Sotheby’s introduced a new way of bidding on an artwork which has been called an irrevocable bid. Almost the opposite to the price guarantees that auction houses give sellers, the irrevocable bid is a guarantee given by a buyer prior to an auction taking place that they will make a bid of a certain amount on a certain work. The irrevocable bidder would most likely attend the auction and can bid above the irrevocable bid that they made should the bidding exceed the value of the irrevocable bid. Should the irrevocable bid be the highest bid then person who made the irrevocable bid will be required to pay the amount of the irrevocable bid plus the standard buyers premium. However, should the winning bidder not be the irrevocable bidder then Sotheby’s will compensate the irrevocable bidder by giving them a percentage of the difference between the winning bid and the irrevocable bid. The irrevocable bid is as good a sign as any that the art market has changed from a sellers market to a buyers market with buyers now being rewarded for bidding with a particular auction house as opposed to the price guarantees offered to sellers to encourage the owner of a particular artwork to sell at a particular auction house. As far as I am concerned the fact that people are actually willing to make an irrevocable bid is a sign that the art market is not as weak as many people seem to think it is.
Sotheby’s explains the irrevocable bid as:
Lots with this symbol “” indicate that a party has provided Sotheby’s with an irrevocable bid on the lot that will be executed during the sale at a value that ensures the lot will sell. The irrevocable bidder, who may bid in excess of the irrevocable bid, will be compensated based on the final hammer price in the event he or she is not the successful bidder. If the irrevocable bidder is the successful bidder, they will be required to pay the full Buyer’s Premium and will not be otherwise compensated. If the irrevocable bid is not secured until after the printing of the auction catalogue, a pre-lot announcement will be made indicating that there is an irrevocable bid on the lot. (Effective for sales commencing October 20, 2008) -
**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.