Selling Art Privately vs. Auction
The decision to sell privately or via auction will largely come down to the piece of artwork that you’re attempting to sell – I guess thats not a huge surprise.
If you know that the work is valued at less than US$10,000 then it may already be best to focus on contacting auction houses about selling the work, or focusing on smaller galleries or independent dealers.
Sotherby’s for example generally don’t offer support on private sales unless the value of the work is at least US$100,000. Many smaller galleries and independent agents with lower cost bases to cover will offer much lower thresholds than this if the work is interesting enough or they have a potential buyer already in mind.
Your decision is also going to rest upon the amount you previously paid for the work and the current market worth relative to this.
Benefits of Selling Privately
There is many benefits to selling your work privately, but here are the key ones to consider from my perspective:
(1) You can try and sell privately before even considering the auction route. The danger of going directly into auction is that if your work doesn't sell then the record will be in the public domain and could significantly impact the future saleability of the work. It can also damage the artist if this occurs regularly.
(2) Just like using a real estate agent to sell your property, you would usually agree a start price and a ‘lowest agreeable price’ that provides the dealer with some negotiating space. If the buyer agrees to a price within your acceptable range then the dealer can accept the offer on your behalf and everyone is happy. If the buyer offers below your lowest agreeable price then the dealer still presents you with the offer and you still get to decide on whether to sell or not. This provides a largely zero risk situation for you as the seller.
(3) Whilst you can reduce the risk of selling to cheaply at auction via reserve prices you still potentially lose out in seller fees that were borne upfront before the auction took place. This doesn’t occur when selling privately thus in most situations it makes sense to try and sell privately first and then fall back on an auction sale if necessary.
(4) Whilst different galleries and dealers operate different set-ups for handling consignment fees (the money you pay to the gallery or dealer upon successful sale of your work) it’ll all be provided upfront for your agreement and there is usually more room for negotiation than with an auction house.
(5) The amount you paid vs. the current market rate of the work is an extremely important factor in choosing the route for selling the work. Auction houses will typically make you agree to a reserve price, lets say its $25,000 on a piece of work you originally bought for $20,000 (they are basing this on fair market value, but likely downplaying it to make the lot more enticing for buyers to bid upon). They’ll entice you to agree to this by showing you a sale estimate with the top band being greater than the reserve, lets say its $45,000. Now lets assume your work actually sells for the reserve at $25,000. Now you have to pay the auction house 10% commission + listing fees of say $300, which reduces your profit to $2.2K (not very attractive).
(6) When you sell via auction, the potential buyer will undoubtedly have to pay something called a ‘Buyers Premium’ (see more information here: selling in action – what you need to know) which in effect can add 20-30% to the final hammer price on a sale. Depending on the auction house, the buyer may also have to pay value added sales tax, which continues to add onto the final hammer price. Any buyer will have to factor this into their decision on the hammer price, which means as a seller you’re potentially losing out on 20-30% of the price a buyer was willing to pay.
Lets say for example that your work sells in auction for a final hammer price of $60,000. Once you account for listing fees (c.$300) and seller commission paid to the auction (c.10% =$6,000) your take home will be $53,700.
Now lets consider this from the buyers side - they bought the work for $60,000 knowing that buyers premium (25%) and sales tax (7%) would be added on top, which inflates the final sale price to $79,200, so you only took home $53.7k of a potential $79.2k.
Of course selling privately incurs its own costs, but typically they will be far lower than selling via auction and you have plenty of wiggle room to negotiate.
There is still many reasons to go down the auction route however. Primarily the main benefit is around exposure, which ensures your lot gets seen by a broader panel of potential buyers, which in turn could cause the final sale price to be significantly higher than what may have been achieved privately.
Artists like Ai Xuan for example where demand is high, supply is low - his lots always perform exceptionally well in auction.
But if you are selling a work by a lesser known artist, or the work is small, not great quality, uses a non-favored medium etc then perhaps attempting a private sale first might be the best route.
Of course - in all of this, it requires that you are able to find a dealer who:
- Has clients who have an interest in the artist you're selling.
- Is willing to take the work on consignment from you.
- Can convince a client to purchase the work.
Buying art is always super easy, selling it for a profit later is really the trick we're all trying to master. You win some, and you lose some!