Posts Tagged ‘commission’

#39 - Auction Houses

#39 - Auction Houses

Sir Anthony Van Dyck
Price: $4,080,349 incl bid premium

Rich people love auctions as much as the rest of the world. Name a product and there is an auctioneer that will sell it. Ask people what comes to mind when you say auction and you will hear eBay, perhaps Ritchie Brothers if you come from an Italian construction family or 4-H if you believe chewing grass while riding a tractor is a good day’s work. For the rich, the timeless auction houses of Christie’s and Sotheby’s are the only place to bid on rare items.

The difference between auctions that the wealthy attend and the fast-talking hawkers or electronic auctions that the rest of the world uses may seem as superficial as price but it goes much deeper than that. The rich love exclusive auction houses for the, well exclusivity of it. There is something intensely gratifying for the wealthy to sit in a hushed room surrounded by other sophisticated, educated, cultured and wealthy people. The sound of the gavel and the soothing English accent of the auctioneer make buying rare items with the flash of a numbered paddle worth the 10% to 30% premium that buyers part with as part of the “hammer price”. Yes, that’s right when you pay more than $6M for a little known Picasso, you can expect to give Sotheby’s as much as $1.8M for the privilege of owning it. On top of that, the house takes about 15% from the seller. Imagine that.

If you can get past the sheer volume of commissions you can better understand what bidders are really paying for. It isn’t about buying the art, but rather the peer recognition at cocktail parties and museum galas of your unspoken wealth and ability to pay extraordinary sums for products that will likely end up in a climate controlled vault. Remember, this is a world of exclusivity. Anyone can walk into a gallery in Chelsea to buy art or the local liquor store to buy wine but neither bestows the level of recognition from your peers as purchasing a Château Lafite-Rothschild Vintage 1982 from Christie’s for $186,643. So raise your glasses and toast the rich for their uncanny ability to lose touch with what things really cost.

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