Welcome to the intriguing realm of the art market, where a deep understanding of its terminology can unlock a world of insights. In this blog, we will explore key concepts that navigate us through the art market’s intuitive, speculative, and relatively compact landscape. By familiarizing ourselves with terms such as provenance, bought in, white glove, hammer price, and more, we can gain valuable knowledge about the art world’s news, events, major sales, and the overall behavior of the market.
To ensure accuracy, the definitions provided in this guide were sourced from the esteemed Sotheby’s Institute of Art Buying and Selling Art at Auction online course, completed by one of our knowledgeable art experts. Let’s begin our journey by exploring these essential art market concepts:
- Lot: An artwork offered for auction in a round of bidding. While typically a single work, a lot can also encompass multiple pieces grouped together.
- Evening Sale: A more exclusive auction event where pieces sold hold higher prestige compared to Day Sales.
- Estimates: The price range the auction house anticipates a lot will achieve. These estimates, printed in the auction catalog, serve as a guide for buyers and are determined by factors such as medium, rarity, conservation status, and market records.
- Estimate on Request: For high-value or “trophy” lots, estimates are provided exclusively by auction house specialists to assess demand and maintain price flexibility. Buyers must inquire about this estimate from the department.
- Reserve: The confidential minimum amount at which a lot can be sold. Only the seller, auctioneer, and negotiating specialist possess knowledge of this figure, usually set at 20–30% below the low estimate. In the absence of a reserve, the lot can be sold for its low estimate.
- Hammer Price: The winning bid for a lot, signified by the auctioneer lowering the hammer. Taxes and premiums are not included in this price.
- Price Realized: The hammer price plus the buyer’s premium.
- Aggregate Price: The total cost of the artwork, including the hammer price, buyer’s premium, local taxes, export/import taxes, insurance, and transportation.
- Buyer’s Premium: An additional surcharge added by auction houses to the final price, typically ranging from 10–20% of the hammer price, depending on the bid amount.
- Guarantee: A predetermined amount of money that the auction house promises to pay the consignor, irrespective of whether the artwork sells at auction.
- Provenance: The documented history of ownership, tracing the artwork’s path from the artist’s studio to its current owner. Provenance assists in establishing the piece’s authenticity.
- Bought In: Refers to a lot that did not sell, either due to receiving no bids or failing to meet the reserve price. A lot that goes unsold at auction is colloquially referred to as “burned,” requiring a minimum two-year wait before reattempting to sell or potentially lowering the price for a private sale.
- White Glove: An auction where every lot on offer is sold, signifying a highly successful event.
- The 3 D’s: The three most common situations prompting art auctions: death, debt, and divorce.
- Primary Market: Artists directly sell their works to collectors or through galleries.
- Secondary Market: Involves the resale of previously acquired artworks. Resales occur through auctions, dealers, or galleries.
By equipping yourself with this comprehensive art market terminology, you’ll be well-prepared to dive deeper into the art world’s nuances. Stay tuned for our upcoming Cubic blogs, where we will continue to explore captivating aspects of the art market and let the adventure begin!
