All of the muddled misinformation and misinterpretations being dispensed this week by well-intentioned but insufficiently informed art-market journalists are beginning to set my teeth on edge.
In advance of tonight’s numbingly long Christie’s contemporary sale (85 lots, unless some are withdrawn), below is a timely corrective. It is intended to be helpful, not accusatory: I will not name the guilty, but for those of you who have been following the sales coverage, some of this may sound familiar:
PRESALE ESTIMATE: This is what it says it is—the auction house’s best guess (usually given as a low-to-high range) of the hammer price that an offering may bring. Depending on the level of the reserve price—the confidential, prearranged amount below which the consignor will not sell—works can (and frequently do) sell below the presale estimate. Therefore, the presale estimate is neither a “minimum” nor even an “asking price.”
COMPARING PRESALE ESTIMATES TO FINAL PRICES: I’ll sum this up in three words: “Apples to Oranges.”
When journalists compare the presale estimate (which predicts the price announced by the auctioneer at the fall of the hammer) with the final price (which includes the hefty buyers premium that is added to the hammer price), they create the false impression that the bidding has gone better than it actually has.
If, for example, you report that last night’s Rothko at Sotheby’s “sold for $46.45 million [the final price with buyers premium] against a low estimate of $40 million [the hammer-price estimate].” you give the impression that the sale was more successful than it actually was. The correct comparison would be between the $41.25-million hammer price and the $40-million estimate of hammer price.
In the sale of that Rothko, the buyers premium made the final price an astonishing $5.2 million more than the hammer price. So the apples-to-orange comparison is significantly misleading.
Sotheby’s recently upped its buyers premium, which makes the disparity between hammer and final prices even greater than it was at last November’s major sales. (So far, Christie’s has not followed suit with a fee increase.)
It’s even worse when journalists follow the auction houses’ self-serving practice of saying that an individual price or a sale total was within the presale estimate range when, in fact, it fell short of the low end of the presale estimate, if one compares hammer (not final price) to the presale estimate. Auction firms don’t routinely report hammer totals, but journalists can request them (as I always do), to give a more accurate picture of how a sale performed.
I’ve repeatedly hammered away at “hammer price”—most notably here in the Wall Street Journal, and here on CultureGrrl. Apparently, this is a lesson that needs to be repeated.
PERCENT SOLD BY DOLLAR: When a sale is “94.6% sold by dollar” (as was Sotheby’s sale last night), it does not mean that it reached 94.6% of its “target value” (whatever that means).
The sold percentage is calculated by this formula: Divide the total hammer price of all the sold works by the total hammer price of both sold and unsold works. (The latter are those for which the bids didn’t reach the level of the reserve.) If an auctioneer unsuccessfully tries to stimulate interest by calling out a succession of consecutive chandelier bids, beyond the last actual bid, this will reduce the sold percentage, making the overall results look less robust. (The meaning of “sold percentage by lot” is obvious to all: Divide the number of sold lots by the total number of lots offered.)
Now that I’ve got that off my chest, let’s get ready to see how Christie’s does tonight, with a sale estimated to bring “in excess of $500 million,” headlined by another Rothko:
Presale estimate: In the region of $45 million