Under the Hammer
Auctions are open to all, but there are many extra costs for the buyer and the seller.
There is nothing elitist about an auction. Anyone with cash to spare or goods to sell is welcome in a bidding room. Christopher Elwes, managing director of the auction house Bonham’s in Singapore. Say: “Public auction are open to anybody who has an interest. An auction is a shopping experience. We try and make it as easy and as simple as we can.”
Window-shoppers can wander in but those planning to buy need to register at the auction room beforehand, giving bank account details.
For the new comer to the auction room, forget all those old clichés of people scratching their ears and ending up with an unwanted item they cannot afford. Auctioneers are well aware of what a real bid is.
There is no reason to be physically present at the auction or at the pre-auction view. Get hold of the auction catalogue in advance. Major international house such as Sotheby’s and Christies begin work on their catalogues some there to six months in advance. The catalogues are available to byers about one month beforehand. Additionally, house periodically publish magazines containing general information on what is coming up in the year ahead.
Auction catalogues contain detailed descriptions and illustrations. Most importantly the catalogue will give an estimate of the price the item is expected to fetch.
If an item takes your fancy and you really cannot be presented there are two options. You can instruct the auctioneer to buy on your behalf. That means leaving a written commission bid. The forms for that are in the auction catalogue. You need to stipulate the maximum price you are willing to pay for the item. The auctioneer will operate the bid for you, and is obliged to buy as cheaply as possible on your behalf.
Alternatively, you can bid over a reserved telephone line “You will be able to bid as near live as possible, you will hear the auction going on, staff will relay the bidding back to you and then you say “yes” or “no” “, says Elwes but he adds that this method depends on the type of auction and is generally reserved for bidders targeting the more expensive lots. The facility is free.
Sellers should get their goods evaluated at an auction house. Auction houses have specialized teams responsible for different items. Evaluation services are usually free. If the item is worth selling, the auction house will suggest where it would sell best. Chinese antiques, for example, are currently riding high in the United States, but do not sell as well in Hong Kong.
The house will recommend a selling price and will negotiate a reserve price with the seller. The item will not be sold under that price and the figure remains confidential. Negotiations then follow on presentation of the item in the catalogue.
Items for sale must be left with the auction house some there months before the sale. If the value of the item fluctuates between the evaluation date and date of the auction, the house will contact the seller to renegotiate the terms of the sale, but items are rarely by economic vagaries, unless there is a major political upheaval. The Gulf War, for example, sent prices of Persian carpets through the roof.
While evaluation of an item may be free, a seller can expect to pay other charges. Insurance for an item generally costs one per cent of its value, as fixed by the auction house. Items sold carry a vendor’s commission, which is calculated as a percentage of the selling price. The percentage varies but for goods selling for up goods selling for up to S$1,000 (US$700) commission is around 15 per cent. As the selling price increases, auction house tend to lower their commission rates.
The seller will also have to bear the costs of transporting the item along with illustration costs in the catalogue. And be warned : once the item has made it into the catalogue, auction houses generally charge a hefty 20 percent if it is withdrawn.
For the buyer, the price at which the harmer falls is unlikely to reflect the full cost. The major addition will be the buyer’s premium-generally 15 per cent at international auction houses. In addition, there are government taxes. All goods are subject to the taxation policies of the country in which they are sold. That means Value Added Tax in the United Kingdom, for example, and Goods and Services Tax in Singapore, country running at thee percent. The tax can be applied in different ways, again depending on the country. It may be applicable on just the buyer’s premium, or on the total price.