Evaluating Art Auction Results Pt. 3 – artmarketblog.com

2. Percentage of lots sold by value

 Evaluating Art Auction Results Pt. 3   artmarketblog.comIn part 2 of this series of posts on the real value of the statistics that are used to determine the success of a sale, I conducted an in depth analysis of the percentage of lots sold by number statistic. The other percentage figure often used by auction houses is the percentage of lots sold by value which, unlike percentage of lost sold by number, is rather complicated. There is also very little information relating to the way the percentage sold by value figure is calculated which made this post rather time consuming to put together. Other than the lack of information, one of the main problems with the sold by value figure is that there are variations in the way auction houses and other art market professionals calculate the figure. There is also an issue with determining exactly what the “value” in percentage sold by value refers to. This post will start to address these and other problems associated with the percentage sold by value figure as well as determining what the figure actually tells us and whether it is of any use.

As a result of my research I found that there are two formulas for calculating the sold by value percentage that are the most commonly used. The first formula I will analyse is probably the one that makes the most sense but is in fact NOT the “correct” formula and is NOT the formula used by most of the top art auction houses. If someone were to ask me to calculate the percentage sold by value for a particular auction, and I didn’t know how it was calculated, I would presume that I was being asked to compare the total estimated value of the works with the total value of the works sold. Because the value of the works of art in an auction is a matter of opinion, the auction house’s estimates should be used An example of the way this formula would work is:

(total sale value at hammer price) divided by (total sale estimate) x100

If the total sale estimate was $500,000 and the total sale value at hammer price was $400,000 then you would calculate 400,000/500,000 x100 which would equal 80% sold by value. If it was the other way round and the total sale value was 500,000 and the total sale estimate was 400,000 then the percentage sold by value would be 125%. At this point I will mention that if there are is an estimate range then the average of the high and low estimates should be used as the total sale estimate in the formula. One of the only references I could find to this particular percentage sold by value formula, other than the one I have written above, was on an auction results website which stated that:

% Sold by Value is based on total sales value at hammer price, including the premium, as a percentage of the average of the sum of the high estimates and low estimates for the sale. % Sold by Value can be greater than 100%

Although the formula in the reference above is essentially the same as the one I have been writing about it does have one minor differences that creates an even greater margin for error and a greater chance of confusion. The formula in the reference above includes the hammer price in the sale total which I did not include in my example because the buyers premium is not included in the estimates and therefore should not be included in the sale total. Including the buyers premium in the sale total increases the percentage of lots sold by value because the estimate does not include the buyers premium and therefore results in incorrect figures.

to be continued…….

 Evaluating Art Auction Results Pt. 3   artmarketblog.com**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.comt Evaluating Art Auction Results Pt. 3   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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