Issue #234  9/18/2017
Auction News: Big Three Houses Increase Buyer's Premiums Again; Sotheby's Kills off Buyer's Premium for Online-Only Auctions, and Launches New Contemporary/Post War Photography Sale

By Alex Novak

The big three auction houses are raising most of their buyer's fees once again.

Sotheby's was first up this time with its increases. As of November 1, 2017, Sotheby’s Buyer’s Premium for live auctions excluding Wine sales will be: 25% up to and including $300,000, 20% from $300,000 to $3 million, and 12.9% above $3 million. For Sotheby’s Wine auctions, the Buyer’s Premium will be: 23% in New York and Hong Kong and 19.5% in London.

The only bright spot for bidders—sort of—was that Sotheby's finally conceded that the buyer's premiums for strictly online auctions wasn't working well, and the company announced it was totally eliminating them for those sales, although the company was quick to note that online bidders in its regular auctions would still be subjected to the normal (and now increased) buyer's premiums.

David Goodman, a Sotheby’s Executive Vice President of Digital Development and Marketing, noted that "Online-only sales have emerged as our best tool for attracting first time buyers, and we see those new clients subsequently participating in other areas of our business at a meaningful level," reporting that one out of five of those bidders went on to participate in live auctions, where price points are typically higher. The average price point for an online-only auctioned item is just under $10,000, but there have been some low-six-figure sales as well, according to the report. Last year, Sotheby’s held 16 online-only sales and is on pace to hold twice that number this year, still far fewer than the 100-plus online sales Christie’s plans to have held by year-end. Sotheby’s will continue to charge a seller’s commission for online-only sales.

I have criticized this buyer's premium from the first early attempts by Sotheby's to launch an online auction in 2000, because typical online bidders weren't used to buyer's premium after eBay launched its site without them. Naïve buyers, who were not used to such add-on fees, were incensed then and now. As Sotheby's itself noted, 45% of its online buyers were new to Sotheby's and its fees. After Sotheby's move, now such bidders will only be incensed by the insane packing/shipping charges, which affect all three big auctions houses, particularly Sotheby's and Christie's. These simple fees add on four--if not five—figures to a typical auction bill, astounding buyers. The elimination of the buyer's premium does mean that Sotheby's online sales should see higher hammer prices though for buyers, although it will take some people time to adjust.

Christie's new buyer's fee structure, which echoes Sotheby’s changes, means that prices up to $250,000 will be charged the highest amount of 25%, while totals over $4 million will incur a 12.5% fee, up from 12 percent. Unlike Sotheby’s, Christie's will—at least for now--continue to charge fees for online sales, so remember to add on that 25% fee when you are bidding there.

The Buyer’s Premium structure at Phillips auctions will be changed to: 25% of the hammer price up to and including $300,000 (or £180,000/CHF 250,000/HKD 2 million); 20% of the portion of the hammer price above $300,000 (or £180,000/CHF 250,000/HKD 2million) up to and including $4 million (or £3 million/CHF 4 million/HKD 30 million); 12.5% of the portion of the hammer price above $4 million (or £3million/CHF 4 million/HKD 30 million). No word yet from Phillips about its online buyer's fee.

Also recently announced by Sotheby’s is its first dedicated sale of postwar and contemporary photographs on September 28 in New York. Sotheby's indicates that the launch reflects a growing audience for work that "no longer appeals primarily to highly specialized collectors," or, in other words, it's aiming for the decorative market with this auction, much like its competitors at Christie's and Phillips have already done with their mainstream photo auctions.

With 49 works from the Ames Collection, the 94-lot sale carries a total pre-sale estimate of $2.1–3.1 million and includes works by Thomas Struth, Matthew Barney and David Hockney.