Are pre-auction estimates purposely low? I think most of the time, they are indeed intended to be lower than what the actual auction sales price will likely be.
Large, well-known auction houses (and some smaller, lesser-known auction houses) publish catalogs listing items in upcoming auctions, and note presumably for the benefit of the bidders pre-auction estimates of value.
For example, Sotheby’s is selling a Karel Appel painting, and states the pre-auction estimate of value at $10,000,000. One would think that Sotheby’s actually thinks this Karel Appel painting will sell in their upcoming auction for about $10,000,000.
Yet, I think differently. I think Sotheby’s would prefer the headline: “Sotheby’s sells Appel painting for $13,000,000, $3 Million dollars in excess of pre-auction estimates,” over the headline (or lack of headline), “Sotheby’s paintings fail to meet pre-auction estimates, as Appel painting demands only $8.25 Million.”
Auctioneers and auction houses want the public to think they would be the preferred auctioneer or auction house to hire when they have something to sell. Which auction house would an art collector have a better recollection about? Would he prefer the one who “exceeded expectations” or the one that “didn’t meet expectations?”
Yet, this estimating prior to auction is a tight rope of sorts. If an auction house became known as consistently low on estimates, or exceptionally far off from true market value, that auction house might lose favor with some potential clients, as the auction house would seem uninformed, or not possessing the expertise that should be expected.
We wonder also if pre-auction estimates affect bidding. Do bidders use the pre-auction estimates to help decide how high to bid? Does a bidder think to bid in excess of the pre-auction estimate because at the last auction, paintings of similar nature demanded more than the pre-auction estimates? Or, if pre-auction estimates have not been met, does that negatively affect bidding in future auctions?
We can also not forget that the auctioneer or auction house has a client — the seller — who is likely aware of any pre-auction estimates. Does the auctioneer or auction house purposely lower the expectations of the seller, so the seller feels better when their item sells for more than they were expecting?
As auctioneers and auction houses always want to exceed expectations, it is difficult to not think that any indication of what to expect wouldn’t be a bit discounted.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He is Executive Director of The Ohio Auction School.
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