Rather than my filling you in on further details about last night’s Impressionist/modern auction at Christie’s (which I’ve already discussed here and here), I’m going to let the NY Times and Bloomberg do it for me.
And you can track the thoughts of the Wall Street Journal‘s Kelly Crow and Lauren A.E. Schuker in the newspaper’s new auction blog, On the Block.
But the most fascinating article, from my informed perspective, was a WSJ piece by the peerless Alexandra Peers, which describes a business practice that was news to me, and would represent yet another serious erosion of the auction house’s former role as disinterested broker between buyer and seller, with all participants on a level playing field.
Peers reports:
The financial arrangements underpinning these sales go beyond standard guarantees. In…third-party arrangements, dealers agree to place the first bid, or several bids, in exchange for a lessened buyer’s commission [emphasis added] if they win. Such deals are a welcome safety net for the seller—or for the auction house, if it’s the guarantor. But they’re controversial in that they give dealers a financial edge over private buyers. And they mislead the market. The price reported isn’t the one actually paid.
That this raises disturbing questions goes without saying. While the seller’s commission is now sometimes negotiated to zero, to help lure important consignments, the fixed buyer’s premium had previously been regarded as inviolable. If, as Peers asserts, the prices reported are more than actual prices paid (because of the secretly discounted buyer’s premium), there’s serious deception going on. Auction prices, publicly arrived at and reported, have traditionally been regarded by everyone, including the IRS, as the best gauge of fair market value.
Maybe we should now change that to unfair market value.
CultureGrrl
Lee Rosenbaum's cultural commentary
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