How to buy art & collectibles at auction

A foolproof guide for what to do before the auction

Ethereal Summit Auction 2018

 

There is a lot to consider when choosing to buy art and collectibles at an auction. While it can be one of the best ways to get your hands on the best deals for the best pieces circulating the market, it can be a stressful process. Auction houses hold some of the best items on the market, but many people opt to buy from galleries and dealers because it seems easier. Auctions houses historically have a surplus of supply (all of those great works) and are always looking for more buyers. Taking a little time to understand auctions can give you access to the best the market has to offer.

Whether you’re planning to invest in a Kaws toy or on a Banksy multiple, we want to help you make the best decision. Read through our Auction Buyer’s Guide and head into your next auction with more knowledge, confidence and peace of mind.

Here are four key things to consider when preparing to buy art and collectibles at auction:

  • Provenance research
  • The item’s market
  • Setting a price limit
  • Factoring in secondary costs

Below, we’ve outlined each consideration.

1. Provenance research

Provenance is the most important driver of an items value. As a pervious Codex article points out, it directly affects the three main types of disputes that occur when buying or selling an item, including disputes over ownership, authenticity and value. For a TLDR on on the importance of provenance for an item, check out this article.

Because of the potential difficulty for a non-expert to know if a provenance is comprehensive enough for a future buyer’s standards, it is an important step to buy from a reputable auction house. It’s still important to conduct your own research, but buying from a reputable auction house can reduce your risk considerably. But how can you gauge the quality of an auction house? Ivan, a private art collector, explains in the interview below that looking at an auction house’s rate of lots sold can indicate the quality of an auction house, if they are selling a high percentage of their lots at each sale you can be confident in the reputation and quality of a sale.

2. The item’s market

Understanding your item’s market is key in ensuring you are buying the lot for a good price. Just as you will have done research on the provenance of a specific item, you should do research to understand the price point and market of your desired lot. Auctions often post catalogues online weeks in advance, giving you sufficient time to look at past trends and gauge what you feel is an acceptable range to purchase the lot.

The art market is notoriously opaque, so resources may be limited in getting a comprehensive look at sales prices of items similar to your lot. Reputable and helpful resources do exist, so it is best to leverage the existing transparent data to the best of your ability. Artnet is a database of auction results that you can subscribe to for prices on specific trends. There has also been a surge of art market reports, reflecting the industry’s appetite for more transparent data. You can use these reports to spot trends in auction seasons, medium type, location of sale and more. We recommend looking into the ArtTactic reports, Clare McAndrew’s Art Basel Report, The TEFAF Report and the Hiscox Online Trade Report.

Hiscox Online Art Trade Report 2018 examines the blockchain and art market

4. Set a limit

Once you have researched the provenance and market’s price range for a work, it’s prudent for most buyers to set a limit in what they are willing to pay. Decide before the auction begins what you feel comfortable spending. There are countless examples in past auctions of buyers overspending because of emotions in a bidding war. After all, the excitement is part of the allure of buying at auction. However, a responsible buyer will set a limit so their excitement in the moment doesn’t become their problem later.

Historic highs paid in bidding wars at live auctions the past five years

5. Factor in other costs

Part of setting a limit is understanding the full scope of what you will actually be paying. Additional costs beyond the hammer price will vary from country to country, artwork to artwork and auction house to auction house. While there are some industry standards for certain additional costs, it is best to find out before the sale. Some additional costs are the buyer’s premium, import or export fees, shipping and insurance.

The best way to understand the additional payments is by looking up each auction house’s buyer’s guide online. These guides outline the conditions of sales for each region they have auctions in. As shown below, Phillips website layouts guides for each city of their auction houses.

Phillips New York Auction Guide 

Most auction houses have all additional fees clearly outlined somewhere on their site, so there are no surprises after the hammer falls.

Buying at auction is a great way to get your hands on some of the best art and collectibles from any market. Preparing yourself with the four points outlined in this article is the best way to enter a sale with confidence.


About Codex

Codex is the leading decentralized asset registry for the $2 trillion arts & collectibles (“A&C”) ecosystem, which includes art, fine wine, collectible cars, antiques, decorative arts, coins, watches, jewelry, and more. Powered by the CodexCoin native token, the Codex Protocol is open source, allowing third-party players in the A&C ecosystem to build applications and utilize the title system. Codex’s landmark application, Biddable, is a title-escrow system built on the Codex Protocol, which solves long-standing challenges in auctions: non-performing bidders, lack of privacy and bidder access. The Codex Protocol and CodexCoin will be adopted as the only cryptocurrency by The Codex Consortium, a group of major stakeholders in the A&C space who facilitate over $6 Billion in sales to millions of bidders across tens of thousands of auctions from 5,000 auction houses in over 50 countries.

To learn more about Codex initiatives, visit our white paper. To inquire about partnerships and developing dApps using the Codex Protocol, please contact us via Telegram or Twitter