Private sales in auction houses are thriving for three key reasons
In recent months, private sales in auction houses have increased, mainly because in-person public sales are no longer possible. While the floors of the auction rooms remained empty, collectors continued to purchase works of art from Sotheby’s, Christie’s and Phillips, especially online.
According to Sotheby’s, the company has received more than 150,000 pageviews by more than 40,000 visitors on the private sale pages that Sotheby’s has created since the start of the pandemic. David Schrader, global head of private sales for the auction house, noted that there is “more demand than supply.”
Since the start of the crisis, Christie’s has made a third of its private sales of post-war and contemporary art (by volume, not by value) through its website, as opposed to one-on-one relationships. -head between clients and specialists. Christie’s private sales in the first quarter of 2020 increased by 120% compared to the same period last year.
It is not just individuals who profit from private sales either. Institutions can hire auction houses to search for missing works in their own collections. In 2019, Christie’s negotiated 27 private sales to institutions.
At Christie’s, Phillips and Sotheby’s, private sales have always existed. From the earliest days of auction houses, they have negotiated private transactions. Adrien Meyer, global head of private sales at Christie’s, noted that in the 18th century, the auction house privately sold Catherine the Great’s jewelry in one go. He said such sales, while still private, have likely become more visible because auction houses have created “a more formal structure” around private sales over the past decade. Christie’s only appointed its first private sales manager, Marc Porter, in the last decade, and just overhauled its private sales department last year. In 2017, Sotheby’s and Phillips both hired their very first private sales managers: Schrader and Miety Heiden, respectively.
Private sales are important to Christie’s, Meyer said, because they allow auction houses to meet customer needs in a different way. “Auctions are driven by sellers,” he said, adding that buyers generate 80% of his team’s private sales.
With their newly defined structures in place, auction houses can create achievable goals with specific leadership. While private sales “rarely represented more than 10% of Christie’s turnover” before Meyer’s arrival, his mission is to increase that number to between 20 and 30% in the next three to five years.
Schrader takes a different take on how auction houses have learned to stop worrying and love private selling. “It’s something that we traditionally thought was cannibalistic and actually synergistic,” he said. “People who search privately and at auction do more business overall. Collectors want to buy the best items, regardless of the channel.
Private sales also allow consignees to sell works “out of cycle” or outside the traditional auction house calendar. Instead of selling during the main spring or fall auction weeks, they can strike a deal whenever they want (if, of course, they find a buyer). This can be a strategic move for a shipper with work related to a large auction lot.
An “off-cycle” sale can also be beneficial if a seller wants to make a quick sale. Schrader gave a few examples: Maybe your kid is going to college, or you’re buying a house, or you just don’t want a particular piece of art in your house anymore. In these cases, quick insurance of liquidity may be more interesting to you than seeing how the public spectacle of an auction goes. Given these practical concerns, it is perhaps not surprising that a significant portion of Sotheby’s private sales in 2019 occurred at prices below $ 300,000 (although, as the house noted auction, “the greatest value was derived from sales in the price range of $ 1 million to $ 5 million.”).
Private sales also create price controls. Auctions, by definition, award art to the highest bidder, and can create happy surprises and disappointments on the day of the auction. Private channels, on the other hand, can establish clear parameters for the price of a work. Prizes will not be dragged down by lengthy auction contests and auction excitement, but sellers do ensure their works reach an approved value.
Finally, private sellers are immune to the potential embarrassment of auctions. Failure to auction a work tarnishes its reputation, making it harder to sell – publicly or privately – anytime soon. If a work is not sold privately, it is possible to keep this information secret.
While private sales have clear advantages for sellers, from a broader industry perspective, they could be seen as direct competition for resellers whose business is partly or wholly based on secondary market sales. “Private sales at auction houses operate essentially like aftermarket merchants,” said Heiden, vice president and head of private sales at Phillips.
Yet Heiden, Meyer, and Schrader took issue with the idea that there is a conflicting relationship between gallery owners and auction house specialists. “Some of our best customers are dealers,” Schrader said. “We work pretty well with a lot of them. ”
Heiden noted that Phillips sometimes works directly with galleries. If a client is looking for the work of a particular artist, the auction house can go directly to the artist’s gallery. Phillips has also coordinated private sale exhibitions with galleries. Heiden has already organized an exhibition and sale called “California Minimal” with Corcoran Griffin, a gallery in Los Angeles that was not present in New York. “More and more the lines between auction houses, dealer and gallery are blurring, and we all collaborate when it makes sense,” Heiden said.
Sotheby’s “Gallery Network” is the most recent evidence of an olive branch extended by the auction house to gallery owners. At the end of April, Sotheby’s announced partnerships with eight major galleries in a digital marketplace. The number has now grown to 11, with each gallery listing specific works of art for sale (and their prices) on Sotheby’s website. It remains to be seen how successful this strategy is in boosting sales.