The art of winning auctions

Despite the air of exclusivity, you can often get better deals at auctions than galleries. You just have to know when to sit on your hands.

 

by

From the Dec/Jan 2010 issue of the magazine.

 

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Ah yes, the fine art auction, home of the tuxedo-and-caviar set, where old-money millionaires and new-money industrialists battle it out for Picassos, de Koonings and Klimts, each six-figure bid registered with the cultivated subtlety of a Japanese Geisha; the raised eyebrow, the crooked pinky.

It can, of course, be that way. Even now, various Canadian auction houses are advertising works of art with million-dollar valuations. And yet the air of moneyed exclusivity that attends fine art and estate auctions does the general public a disservice, preventing the casual art lover from considering auctions as places where quality artworks can be found at reasonable prices: a $4,000 painting to hang over the mantle, a $3,500 sculpture for the den.

“Even if the catalogues of high-end auction houses include million-dollar paintings, the majority of the items are far more modestly priced,” says Andrew Gibbs, Ottawa representative for Heffel Fine Art Auction House, the country’s most prominent auctioneer of Canadian art. Moreover, while a well-stocked art gallery might feature a couple dozen paintings by a smattering of artists, auction-goers can often choose from hundreds of paintings by scores of artists. “A typical Heffel auction might feature 200 items, many easily within the range of the middle-class art aficionado,” says Gibbs.

“Another advantage is that you’re paying market price. In other words, through the bidding process you’re paying exactly what the market will bear, rather than what a gallery owner arbitrarily decides a piece of art is worth.”

Duncan McLean, president of Toronto-based Waddington’s Auction House, Canada’s oldest auctioneer, concurs. “You tend to get good value buying at auction compared to retail. That’s probably the No. 1 reason auctions are popular with knowledgeable investors and art lovers.” For the uninitiated the arcane, vaguely James Bond-like world of the auction house can still be intimidating. And yet a little research and preparation is all it takes to remove the awe from auction. Here’s how.

What you want (baby I got it)
Keeping tabs on the various auctions taking place throughout Canada used to be a monumental chore, and one reserved essentially for professional collectors. No more, thanks to the Internet. “All reputable Canadian auction houses now list not only their schedule of upcoming auctions, but their entire catalogues online,” says Gibbs. “Photos are higher quality, write-ups are in-depth, all because auctioneers realize that they have to cater to Internet-savvy buyers.”

Estate or fine art?
Estate sales, where private art collections are sold at auction, most often after the death of the owner, can often yield better value than fine art auctions, due to the simple fact that more pieces have to be auctioned off at the same time. “Fine art auctions usually average 60 pieces an hour, or a painting every minute, whereas estate auctions might average 100 pieces per hour,” says Gibbs. “What that means in practice is that auctioneers can’t spend as much time trying to get maximum bids for each individual lot because of time constraints, so pieces can often be had for cheaper than at fine art auctions.”

Knowledge is power
“When you’re considering bidding at auction, the first step is to learn as much as you can about the artist or piece of artwork in question,” says McLean. “Get books from the library, go to museums, galleries and flea markets. Educate yourself. The more you know, the more likely you are to get the item you want at auction without overbidding.”

Says Gibbs: “People often think that because, say, a 1950s painting by [Québécois artist Jean-Paul] Riopelle sold for upwards of $1 million at auction, a similarly-sized Riopelle from 1970 might be worth the same. But it might only sell for $50,000 because it’s no longer from the period where Riopelle was cutting-edge avant-garde. So it’s vital to learn as much as possible not only about individual artists, but their most creative periods, and the styles for which they’re best known.”

Seeing is believing
Before each auction, catalogue items are usually made available for viewing, and despite the increasing popularity of on-line bidding, Gibbs strongly advises potential buyers to attend these previews. “I consider it crucial, actually. You can only learn so much from a photo, and often people will bid on paintings, only to discover that they’re much bigger, or much smaller than they thought. Or that their condition isn’t as good as they thought. There’s no substitute for seeing a piece of art live.” Prior to driving, or flying, to a preview, buyers should phone the auction house to ensure that their coveted piece is actually on display: occasionally, a lot will be withdrawn from auction, or will be unavailable for viewing, and you don’t want a wasted trip.

Adds McLean: “The auctioneer’s in-house experts are usually made available at the previews, and are able to answer questions about a painting’s condition, provenance, restoration, what it sold for in past auctions, and what it’s likely to sell for during the current auction. Don’t be shy. Take advantage of their expertise. That’s what they’re there for.”


Get to the church on time
First time at auction? Get there when the doors open, usually at least a half-hour before the bidding starts. And sit up near the front to get a clear view of the artwork and ensure your bids are seen and registered by the auctioneer.

As for when you bid, that’s up to your individual preference, says McLean. “At the end of the day, the only bid that matters is the last bid, so it doesn’t really matter whether you’re involved in every step of the bidding process, or jump in at the very end,” says McLean. Gibbs agrees, with a caveat: “For some people, there’s a temptation to hold off until the very last second and launch a final bid as the hammer comes down. That’s cutting it too close. If the auctioneer doesn’t register that last-second bid, you might lose a piece you really wanted.”

The sky’s not the limit
Don’t go crazy with the cheque book. Decide in advance the maximum you’re willing to bid on any given lot, and stick to it; don’t get caught up in the excitement and emotion of a heated bidding war. “It’s OK to go one or two bids over your pre-set maximum,” says McLean. “It’s not okay to go 20 bids over. That’s a recipe for disaster, especially if you discover you can’t pay for your purchase. Once you’ve won an item at auction, you own it and you’re legally required to pay for it. There’s no ‘Oops, I didn’t mean it’ in auctions.”

Live to fight another day
“One of the mistakes I see most often,” says Gibbs, “is people succumbing to impulse buying. They take the time to preview a number of items, and carefully select three or four that they want. Then the auction starts and they don’t win any of them. But they don’t want to go home empty-handed, so they end up bidding on items they haven’t researched, and when the items show up at their door, they’re like, ‘Eww, why did I buy this thing?’ Don’t do that. Remember, there’s always another auction.”

The psychology of the bid

Keeping your paddle in your pocket, or suddenly bidding a bundle, can save you big money.

As with the proverbial iceberg, a great deal of what goes on at auction is hidden from view, taking place well below the surface. Buyers who don’t want to get frozen out of the bidding or, worse, hopelessly manipulated into paying more than necessary, should understand a little about the psychology of the bidding process, as well as the various tricks and techniques auctioneers and experienced buyers use to tip the scales in their favour. In his 30-year career, Rock Fournier, owner-operator of Laval, Que.-based Groupe Fournier Auctioneers, has seen it all. Here are a few of his most valuable tips.

Befriend the auctioneer
Knowledge is power, and it behooves the savvy buyer to research not merely the items in the auction catalogue, but the style and reputation of the auctioneer. “If you’re a regular bidder, and you have helped the auctioneer by bidding up lots in the past, he might be disposed to help you win certain items by bringing the hammer down early.”

It’s like the third time you buy a car from the same dealer: your relationship is different from the first time, and you’re more likely to get a deal.

Fools rush in
Usually, the auctioneer will start the bidding low and work toward higher and higher bids. But occasionally he will work in reverse, starting the bidding at, say, $100,000, then dropping to $80,000, then $40,000. It’s a psychological trick designed to establish
a high price tag, after which $40,000 seems like a relative bargain. “Sometimes, though, I’ll be surprised by a hand going up at $80,000, and he’ll make a sale at an unexpectedly high price,” says Fournier. The lesson? Premature bidding—heck, premature anything—is bad. Try not to get too excited.

Jump bids can work
If bids are increasing in increments of, say, $100, and you jump the price up by $500, it sends a clear message to other bidders that you’re serious, and rivals are left with the impression that you can’t be outbid. The end result is that your massive overbid actually ends up saving you money. But here’s the rub: the auctioneer himself might read your jump bid as the sign of a highly motivated buyer. He can then keep the bidding going even in the absence of other legitimate bidders. How? By using a “shill,” or plant, whose role is to bid up undervalued items. Or by pretending to have a phone bid, or an email bid. Which brings us to Fournier’s final lesson: you don’t control the action. Ultimately, the auctioneer does. “So decide in advance how much money you want to spend, and don’t exceed your maximum.”

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