Passion Pays. The world under the hammer

Are you a high-flier, jet-setting across continents, signing multi-million dollar deals, having a legacy collection of curios, antique furniture, fine art and automobiles? If the answer is in the affirmative, read further as we give you an insider’s view to the world of auctions.

Auction houses are dime a dozen across the globe to satisfy your craving for the antiques. Reputed auction houses such as Sothebys and Christie hold regular auctions all over the world, including India. They are touted to be a better option to shops as they bring in transparency, genuineness as well as credibility to the table.

The primary role of the auction house is to market the product — be it art, antiques or other objects of interest. Usually, the product that is taken on board by the auctioneer, at least the reputed ones, is of high merit. More importantly, they offer an instant and ready-made supply of potential buyers. “There are things one would find in auctions, which would not be found in a shop”, says Hemant Srivatsa, partner at Murrays & Co.

Typically in an auction house, many buyers meet to bid for an art or an antique furniture that is put on sale by a seller. The product goes to the one who bids the highest price.

If you are looking for a curio, art, antiquitie piece or furniture, there is no better place to go to than a reputed auction house. However, as a seller, you might be tempted to ask, can the auction houses be by-passed to save on commissions?

“The auction house, which sells similar products regularly, is in a better position to evaluate the products”, says Hemant. “From the seller’s perspective, it provides a transparent mechanism to sell goods.”

“Also, an auction provides the seller access to a worldwide market of collectors through a single source” , says Alain Squindo, Chief Operating Officer, RM Sotheby’s. “While there are fees involved, including a seller’s commission and entry fee, a reputable auction company will also provide a concierge level service”. However, the flip side is that in the process hammer price could be a bit higher, say experts.

In India, typically, a bidder does not need any registration to attend auctions. However, specialist’s international auction houses typically charge an entry fee. Products for sale are open for inspection a few days prior to the auction date.

Information is also available online. Connecting with clubs and forums can help buyers get a grip on the market perception.

Additionally, going through the results of successful auctions which are published online by reputed auction houses could help get a sense of market dynamics and trends. While physical presence is not required, auction houses often encourage you to get a feel of the auctioning atmosphere.

For those with a busy schedule, bidding through the telephone is a convenient option.

“If the bidder is successful in buying the item, he would have to pay a deposit immediatelywith the balance payable within a day or two, as set out in the terms of the auction”, says Hemant

When the bidding begins, the basic law of demand and supply applies. If a product is in demand, price tends to rise and vice-versa.

Just as in the stock exchange, you can set a price at which you want to trade; in auctions, there is a reserve price below which the lot cannot be sold. Auction houses usually assist the seller in setting this minimum price. And then the bidding happens, with the hammer going down to the highest bidder.

Subsequently, the auction house deducts a commission from the price and then pays the seller the balance. In certain cases, the buyer’s premium may also apply. That is, on top of the final bid price, the buyer has to pay a percentage to fully settle his purchase. This is normally retained by the auction house to cover its costs.

In addition, the buyer is responsible for paying any tax levies such as VAT and so on. So, do factor in these as they will bump-up your final price.

“Price is what you pay. Value is what you get”; this famous quote of investment guru Warren Buffett, applies as an underlying investing rule in auctions as well. Value of art, antiquities and automobiles sold through auctions are affected by the originality and quality. Provenance or documentation supporting the product can nudge values higher. For instance, a bill of sale, or a letter supporting the product can lead to higher bids than one without. So any record supporting the originality is a plus.

However, bidders need to be aware that warranties do not apply for most auctions.“At most we guarantee the product to the extent it is described with regard to material, make, age etc.” adds Hemant.

Each product that is offered for sale is catalogued and arranged into lots. A lot consists of each item that goes under the hammer. Such products are often insured and shipped to the site of the auction house.

In western countries, popular auction events are held at scheduled times of the year and can take months of preparation for the auction house. “Each of our catalogues is limited to a select number of vehicles, within which we try to include the best examples available from each collector car category. Each potential consignment is vetted to ensure its correctness and authenticity”, says Squindo.