Gordie wondered if it was quite ethical for an auctioneer to run the bidding up to the reserve, rather than let it finish at the point where there is only one bidder left.
Right – well, first of all, most items have a reserve; that is, a price below which the lot will not be sold. Put it this way – if you went to a car dealer, wanting to sell your car for £2,000 and he only offered you £500, you’d probably not sell, would you? Especially if you still owed £1,000 on it. You would have a figure in your mind for negotiation, but there would be a point at which you could not sell it unless you were completely desperate – and if you knew it was worth the money and he’d be selling it on at a profit, you’d keep bargaining for a realistic offer, or take it home again.
When you send a picture to an auction, you own it until the fall of the hammer and you are under no obligation to sell it for less than the sum that you and the auctioneer have agreed it’s worth. You will also agree with the auctioneer if there’s any flexibility on that. For example, let’s say there’s £100 reserve, but someone bids £95. If the auctioneer takes it to £100, another bid actually pushes it past the reserve, so he probably would let it go at £95.
For an auction to work, there needs to be at least two people bidding. But let’s say you are willing to pay £100, but no one else is bidding. It is acceptable for the auctioneer to point down and take bids ‘off the book’ until the reserve is reached – but not after. This is up to the ethics of the auctioneer – if he knows that there is someone in the room who might pay more than the reserve, he must not take advantage of that, but let the piece find its own level in the bidding. Nor may he use a commission bid (that is, someone who has left a maximum bid with him) to bump up the bidding past the reserve. The Sage is always cautious about leaving bids unless he trusts the auctioneer because not all of them are completely scrupulous about not using commission bids.
So far, you think that as a buyer you are being manipulated. But look at it from the other side.
Gordie and Z are friends with an interest in pictures in common and they go to an auction together. Gordie really likes the Seago and says so. Z likes it too, but she wouldn’t dream of running the price up high for her friend, so she says she won’t bid until he drops out. Fair enough, but it would not be fair on the owner of the picture that the price is artificially low because two friends have done some private negotiation.
Between friends or colleagues this is one thing, but among dealers it’s a different matter. And this is where you need a skillful auctioneer who knows what things should be worth and has valued them correctly with a realistic reserve. An auction ring is illegal, but regularly used.
A group of dealers gets together and agrees how to bid to get lots for the lowest possible price. The designated bidder buys the items and pays for them and afterwards, they all get together and have a private auction amongst themselves. The pieces are resold, the buyer is reimbursed and everyone shares the profit – except the former owner who didn’t get the value of his pieces, and the auctioneer who earns a reduced commission – and, arguably, deserves to, you might say. Well yes, if he only takes live bids in the room and then lets it go, but if he’s allowed to bid an item up to its sensible reserve, it won’t happen; or at any rate, to a much lesser extent.
Of course, at the sort of auction we went to yesterday, this sort of thing would not happen. There was no question of any dodgy dealership at all and, although the room was full, there was also a whole tableful of people taking telephone bids. No question of collusion and quite a few private buyers, because I saw them. The sale went well because it deserved to; it was, genuinely, a private collection put together over many years, of very attractive and appealing local pictures. It was very professionally conducted in a relaxed atmosphere. I thought it was lovely that the vendors had chosen to sell in Norwich rather than send the pictures to London and I think that paid off, in that there were so many private collectors as well as dealers.
I think I may have given you the impression that there is only ever one person bidding – that’s not so and it’s all the more fun when there’s spirited bidding in the room. Some people are willing to come in at the start and others prefer to wait and see how it’s going (if the auctioneer gave up as soon as no one bid, these people would never come in, but they might bid strongly once they get going). If I want a piece I bid promptly (if I can get a bid in edgeways) and remain determined, bidding again as soon as I’m taken out. I know perfectly well that I’m not going to get it for more than a bid less than the guide price or estimate (unless I’m very lucky and the reserve is well under that; an unlikely circumstance) so I don’t mind if there’s not another bidder – though there may well be and it’s more fun that way as there’s an extra element of competition. I fix in my mind the price I want to pay and the price I will go up to if I must – though if there’s really spirited bidding, I might think ‘hm, maybe I’ve undervalued it a bit’ and go a bit further if I can afford to. Always remember to add on the auctioneer’s commission and VAT on the hammer price, and check if there’s any extra tax on the item itself. There may be if it’s being sold by a dealer, if it’s been imported for sale or if the painter is still alive he’s paid commission every time his piece is auctioned.
If you go to a general auction sale and there isn’t a catalogue or it’s just a printed sheet, there may be no reserves and everything is just sold as seen.
I’ve not been clear enough – let’s go through it carefully.
I go to an auction and see a tea cup and saucer that is just what I want. And the estimate is only £200-£220 – what a bargain that would be! The bidding starts at £80 and goes up steadily until it reaches £160, but then the other bidder shakes his head. He doesn’t appreciate fine china, it seems. The auctioneer looks around for another bidder, but he doesn’t see one. There am I, all hopeful and keen and ready to continue bidding, but the reserve (the price the seller has said that the bidding must reach) is higher than £160. It is normal practice in any auction house for an auctioneer to continue as if there is another bidder (this is called ‘taking bids off the wall’). So, he says “£170”, I bid £180, he says “£190”, I put my hand up again for £200 and then the auctioneer continues to look around – but if there is no other bidder and the reserve price has been reached (that is, he has bid up to the reserve), he will bang down his gavel, and the cup and saucer becomes mine.
Sometimes, it works the other way. No one wants to start the bidding and then the auctioneer will probably offer a lower starting price. Then, when I’ve put in my bid, he will point at his book to indicate that he is bidding against the reserve (that is, running up the price because my bid is still lower than the price he can sell at) until someone else is encouraged to start bidding; then he’ll take my bid alternately from the other person’s in the usual way. I’ll probably be overcome with excitement and end up bidding more than I meant to for the cup and saucer.
Of course, more often there are at least two bidders and it isn’t necessary to do any of this. But if the auctioneer waits ages, anxiously, for bids, it absolutely kills the atmosphere and there’s a good chance that hardly anything will sell. That’s why a good auctioneer is worth his weight in teacups.
Anything more you would like to know, Gordie and Dandelion? Or TMI already? Query anything I’ve said, by all means.