Art Auction Estimates Mean Little – artmarketblog.com
While looking through the real-estate section of a newspaper the other day I realised how much more useful those listings were that included information (date and price) regarding the last time the property was traded as well as the estimated price. There is no doubt that it is in the best interest of the auction house to provide an estimate because with an estimate the auction house is, in essence, able to dictate to the buyer what they think they should be getting for the painting regardless of whether that estimate reflects the current market value. Basically what I am getting at is that auction houses do not have to justify the estimate that they place on a work and as such are able to manipulate the perceived value of a work by providing highly inflated estimates.
If the auction houses were to include date that each work was last sold and the price that it sold for it would mean that they would have to actually justify the estimates that they put on works and would therefore not be able to get away with unrealistically high estimates. Auction houses can also use low estimates to make the sale price look far higher than it really was by setting the estimate below what they know the work should sell for. As an example of the way that the previously traded price can have a major impact on the way the value of an artwork is perceived and how the estimate is not as useful as people may think let’s pretend that Cezanne’s La Cote du Galet à Pontoise is about to be sold at auction. Let’s say that the estimate for La Cote du Galet à Pontoise was set at US$4million – US$7million and sold for US$8 million dollars which would seem like a successful sale. For starters the estimate should be more like US$7million – US$10million and if one was to look at the sale history of this work one would find that La Cote du Galet à Pontoise came up for auction at Sotheby’s in 1996 and sold for US$11 million then came up again for auction at for auction in 2000 at Phillips de Pury & Co where it sold for US$8.5 million. Doesn’t look like such a great buy now does it. The moral of the story is don’t rely on auction estimates to determine the value of a work of art and always look at the date and price of the last sale.
**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.
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