Auction? That’s no way to sell a precious painting.
On the rare occasion that greatness met scarcity at the art auctions, even previously less celebrated artists shone, including Jacques De Tonnancour. The excellent De Tonnancour landscape (1960) featured above is offered for sale at Galerie Walter Klinkhoff
High buy-in rates and oversupply hammer spring Canadian art auctions
Did you see this written by Globe and Mail art writer James Adams describing the May 27, 2011 Joyner Waddington’s Canadian Art auction?
“A hefty 35 per cent of its offerings – 89 lots – went unsold on Friday, and those that did sell more often than not went for prices at or slightly above their reserve ….”
(Toronto Globe & Mail May 28, 2011).
And the previous day Mr. Adams wrote about the Sotheby’s Toronto auction sale:
“There wasn’t much joy among Sotheby’s Canada managers and employees at the conclusion of the company’s spring sale of important Canadian art Thursday in Toronto. Sotheby’s had 198 lots up for live bidding at the Royal Ontario Museum, carrying a total pre-sale estimate of between $4.7-million and $6.9-million. By the time Hugh Hildesley, the New York-based chair of the company’s Canadian advisory committee, hammered down the last lot of the evening, he had managed to sell only about 135 of them for a total of slightly more than $4.02-million. And this included the commission that Sotheby’s charges on the hammer price of each successful bid (20 per cent on the first $50,000 of the hammer, 15 per cent on the balance).”
Adams continued: “Clearly something was out of joint. Or more aptly some things, namely paintings by some of the biggest brand names in Canadian art – Tom Thomson, Lawren Harris, Jean-Paul Riopelle – that were expected to realize, at the very least, a total of more than $1.3-million but ended up being declared unsold.” (Globe & Mail May 28, 2011).
That’s a “buy in” rate of about 32%!
In selling at auction, the consignors accept all the risks and are agreeable to gross commissions charged by the auctioneer of 27% – 30% of, insurance premiums of 1½ % (for four months) and even 4% of the reserve if the work is unsold. It is a business arrangement we private treaty art dealers could only envy!
I think that these independent summaries endorse our opinion that the auction venue proves to be too risky, too expensive and with little upside potential. Show us at Galerie Walter Klinkhoff an outstanding work of art and we’ll pay you that selling price less 15%- 20% so fast that it will make you dizzy! You want a bit more? Then consign the work to us and we’ll get it done efficiently and discretely, netting you a bit more.
Regardless of alternatives offered and despite the financial risk, if the potential sellers of fine works of art are by nature gamblers, they will elect to go the auction route to sell. But if the lure was that upset price, such was not the outcome of these forays!
One of the auction sales had an unsold rate of 15%, another almost 32% and yet another close to 35%! What then happens to all those unsold works of art?
Do not think that if you are unable to sell at auction to your expectation that the private treaty option with an art dealer is still generously available to you. No! The market likes “fresh goods” and a work of art either recently sold at auction or unsold at auction is a “tainted” work if re offered in the market within the memory cyberspace offers. So, if you are unsuccessful selling at auction or purchase at auction to re-sell be it in 5 days, 5 months, or even 5 years, you should not anticipate a great amount of enthusiasm. Interestingly, if you purchase from an art dealer, because this is not highly transparent and because it is not a retrievable transaction in cyberspace by a public, your risk is limited. Actually, even if you are unsuccessful selling through a private treaty art dealer, the auction option is still available to you.
I qualify my comments with the acknowledgement that they are written in the spirit of competition, that being the virtues of fixed-price private treaty sales versus those of selling at auction. The majority of what we at Galerie Walter Klinkhoff do is the sale of rare and precious works of art. It is very much a supply driven market and therefore the competition between our respective venues is to get the supply.
(Think about this; for many Canadians the most valuable asset we own is our house. Notice that some auction houses have a brand selling residential real estate. Are their houses sold at auction? No, it’s too risky, right? So, why would it be otherwise with selling fine art?)
Back to art …. Having recently attended a quartet of auction sales of Canadian art, each a very well presented and heavily promoted event, I have arrived at certain conclusions, or maybe just simply observations. The temporary abundance of works of art all coming to the market within the time frame of a couple of weeks (“auction season”) creates an oversupply of works by a limited number of artists. Of the selection offered, generally speaking, I think it safe to say that the prices are on average lower for paintings by artists where there are numerous lots by the same artist in the market in that two-week auction “season”. In one sale of Fine Canadian Art aloe, there were eight artists whose cumulative offerings represented 70% of the entire sale! Their results I do think confirm my opinion that a significant supply even in one sale negatively impacts prices at that sale. That particular house combining the success of its sister sale which benefited from the availability of five rare and valuable paintings, (only one of which sold for a price in excess of its high estimate), the gross sales were within its estimated range and approximately 39% lower than their performance the previous year.
Consignors to auction do not have to concern themselves only with how many works by “their” artist is in the one sale, but more in the group of several auctions taking place in the same season. In advance of the publication of catalogues one cannot know the extent in quantity and quality of the supply competing for the attention of collectors.
Sure, if for example you have the best Lawren Harris of the lot of the numerous auction sales and a great one too, as we witnessed, you’re ok. But how about the sellers of the other 15 Harrises? You, the potential consignor, cannot know the pool of competition before all the catalogues come out.
In a potentially interesting development, the online sale of one auction house, featuring 250 lots, concluded literally as Sotheby’s began their live sale. I have no doubt that this took some steam out of the latter. An employee at one of the competing auction houses commented to me that this scheduling conflict was no accident. Joyner-Waddington’s added to what I suggest is a temporary oversupply by bringing to our relatively small market an additional 350-plus lots offered on line only a few days after their own live sale! Although it is fabulous for the aggregate of the auction house, I believe it to the disadvantage of the individual consignors.
Generally speaking, where the quantity of supply was largest the prices were lowest. Carr, Cullen, Dallaire, Harris, Jackson, Milne, Morris and Thomson did not enjoy a good Spring 2011 season, while Morrice, Borenstein, De Tonnancour, Kurelek and Fred Taylor shone.
For you potential sellers of fine works of art, if you are by nature gamblers, no matter how much money we propose to get you or pay, you will elect to go the auction route despite the proven risks. But the more I reflect on and study the contemporary evolution of our market place, including the abundance of supply of a limited number of artists’ work during the brief time frame the Canadian art auction season defines, the more I am convinced that the evidence is clear that the astute and knowledgeable sellers of fine, precious, and rare works of art are well-served financially and without risk by working with or selling to a fine art dealer like ourselves and other honourable fine art dealers.
If you are considering the sale of a precious work of art we invite you to contact us at email@example.com or 514 288.7306 for a confidential consultation.
Copyright © Galerie Walter Klinkhoff, 2011
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