Art Auction Estimates Mean Little –

Art Auction Estimates Mean Little –

calculatorWhile looking through the real-estate section of a newspaper the other day I realised how much more useful those listings were that included information (date and price) regarding the last time the property was traded as well as the estimated price. There is no doubt that it is in the best interest of the auction house to provide an estimate because with an estimate the auction house is, in essence, able to dictate to the buyer what they think they should be getting for the painting regardless of whether that estimate reflects the current market value. Basically what I am getting at is that auction houses do not have to justify the estimate that they place on a work and as such are able to manipulate the perceived value of a work by providing highly inflated estimates.

If the auction houses were to include date that each work was last sold and the price that it sold for it would mean that they would have to actually justify the estimates that they put on works and would therefore not be able to get away with unrealistically high estimates. Auction houses can also use low estimates to make the sale price look far higher than it really was by setting the estimate below what they know the work should sell for. As an example of the way that the previously traded price can have a major impact on the way the value of an artwork is perceived and how the estimate is not as useful as people may think let’s pretend that Cezanne’s La Cote du Galet à Pontoise is about to be sold at auction. Let’s say that the estimate for La Cote du Galet à Pontoise was set at US$4million – US$7million and sold for US$8 million dollars which would seem like a successful sale. For starters the estimate should be more like US$7million – US$10million and if one was to look at the sale history of this work one would find that La Cote du Galet à Pontoise came up for auction at Sotheby’s in 1996 and sold for US$11 million then came up again for auction at for auction in 2000 at Phillips de Pury & Co where it sold for US$8.5 million. Doesn’t look like such a great buy now does it. The moral of the story is don’t rely on auction estimates to determine the value of a work of art and always look at the date and price of the last sale.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

5 Responses

  1. I agree. It would be great to have a centralized database of all art sales that everybody can use. This would keep sellers and buyers honest.

  2. I was just thinking about this very topic and how much swing currently going on in the art market.

  3. “Basically what I am getting at is that auction houses do not have to justify the estimate that they place on a work and as such are able to manipulate the perceived value of a work by providing highly inflated estimates.”
    This is a great sentence, it really is, and I agree with it for the most part. However, they do have to internally justify the estimates within the actual auction house for what revenue they are projected to receive from any given sale. Not to mention the undisclosed reserves that are there to uphold.Thereby, I don’t think that the specialist are conniving little strategist that try their hardest to pull the wool over our eyes. It is in their best interest to try to predict as close as possible what the actual sale will achieve.
    Every case is unique and there are no hard and fast rules or standard formulas for appreciation or depreciation of art. Valuation is always open to subtle and mysterious anomalies and variables; after all it is an art and not a science. All one ever has when assessing arts potential value is soft statistics and the opinion of someone with a reputation for being familiar with any given genre.
    I honestly do not envy the position of the current “valuers” at the auction houses because the art market is “readjusting” in a big way and they do have their own “art of predicting” reputations to uphold. Besides which, if you are a collector that is actually really interested in a piece, you’ll do your research and or have it done for you before you bid, so the estimate won’t be your deciding factor.

  4. Hi Nikki,

    Thanks for the comment. It is definitely in the best interest of the auction house to predict what the sale price of an artwork will be however the auction houses use many different tactics that mean that they are really dictating what they want an artwork to sell for as opposed to predicting what the market will value it at.


  5. Estimated prices do not dictate what something will sell for at auction, bidders do. Some times estimates are intentionally low in order to encourage bidding. It is not in the auction houses interest to inflate the estimated value of an item because that will discourage bidding. Smart bidders do research before auctions and don’t solely rely on an auction houses estimate. Reserves are not allowed over the low estimate. Some auctions have no reserve. If an item does not meet the reserve, the consignor still has to pay the auction house commission (buy back). There are several centralized databases on the internet for previous art auction results, they charge a subscription. Generally, most auction results are considered wholesale prices in the trade since most of the bidders are dealers.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: