Private sales at auction houses: irrelevant

By Felix Salmon
May 20, 2009

Mick Weinstein, commenting on Marion Maneker’s art-market chart, asks whether the auction totals include private sales. The short answer is that no, they don’t; the longer article is that it’s important not to get snowed by auction houses desperately trying to point to any bright spot amidst the gloom. Wait until they reveal hard numbers, and in general don’t trust anything they say which isn’t backed up by verifiable facts. Especially when the bright spot being claimed by Sotheby’s is that its private sales “have not declined at all”. If Sotheby’s private sales are flat, and its public sales have imploded, you can see why its share price has cratered.

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Felix is right. Private sales at the auction houses are not relevant. The private market–dealers–is much larger than the auction market. But since there is little pricing information, the private market works off a price structure set in the sales. That’s why prices at the sales are much more important than the volume.

To answer Mick’s other question, the auction houses do not apply their fee structure to private sales. But I don’t think there is a standard fee for private sales. Though the marketing costs for the auction house are much smaller.