During the FNB JoburgArtFair 2018, Strauss & Co Senior Art Specialist Dr Alastair Meredith gave an enlightening talk at the Strauss & Co Art Hub at Keyes Art Mile on ‘How an Auction Works’. As we all know, art is not just about aesthetics and can often be a sound investment, but as a new investor, participating in an art auction is sometimes daunting, not only in terms of choosing the right artwork but also in understanding the very specific terminology that is used. Creative Feel sat down with Dr Meredith to find out a bit more about art auctions, get some advice on bidding, and clarify basic auction terminology.
Creative Feel: Could you give us a brief background on art auctions? How long have they been in existence and how have they grown over the years?
Dr Alastair Meredith: What we know today as Sotheby’s was founded in London in 1744 by Samuel Baker, while James Christie established his eponymous London saleroom in 1766. It’s amazing to think that these auction houses pre-date the city’s local museums. The Dulwich Picture Gallery only opened to the public in 1817, for instance, and the National Gallery in 1824. It’s worth noting too that international salerooms in the 18th and 19th centuries were typically dominated by dealers as opposed to private collectors, and these dealers were helping to bolster major royal and aristocratic collections. Auction houses started attracting more private buyers in the 20th century, and the real fireworks started from the 1980s.
Locally, the first major art auction was held by Sotheby Parke Bernet in Braamfontein in November 1971 (in the space now occupied by the Wits Art Museum). A London auctioneer was in the rostrum, but the sale was driven by German émigré Reinhold Cassirer. Cassirer’s key protégé was a young Stephan Welz, who went on to dominate the auction scene after establishing Stephan Welz & Co. in association with Sotheby’s. After selling up in 2006, Welz came out of retirement in 2008 to found Strauss & Co, which quickly became the global leader in the South African art market. The company holds the records for nine of the ten most expensive paintings ever sold at auction in South Africa, and has pioneered online auctions in the country too.
CF: What have been some exciting auction highlights over the years, both internationally and for Strauss & Co?
AM: Major auction records have continued to tumble, here and abroad. Works by Picasso, Munch, Modigliani, Van Gogh, Rothko and Bacon have pushed prices through the $100 million ceiling, while eye-watering prices for living artists like Jeff Koons, Gerhard Richter and Damien Hirst remain headline news. We expect a new high mark for a living artist to be established when David Hockney’s Portrait of an Artist (Pool with Two Figures) goes under the hammer at Christie’s in November (its low estimate has been set at $80 million). These figures pale into insignificance, however, against the recent sale of Da Vinci’s controversial Salvator Mundi that fetched $450 million!
Strauss & Co has followed these record-breaking trends, and has set new marks for most major South African artists. Strauss & Co sold Irma Stern’s Two Arabs for just over R21 million, for instance, while Pierneef’s spectacular painting of Twin Peaks, Stellenbosch made R20 million last year in the company’s Johannesburg saleroom.
CF: Strauss & Co operates at the same standard as the international greats like Christie’s, Sotheby’s, Bonhams, etc., but how do you differ?
AM: A good number of Strauss & Co’s staff have international experience at Christie’s and Sotheby’s, so the company is modelled to some extent in their images. We certainly put the same emphasis on objectivity, honesty, transparency, accuracy and client confidentiality. Christie’s and Sotheby’s have an endless list of wide-ranging departments, of course, and while Strauss & Co handles a good number of international items, we tend to focus on South African art, decorative arts and jewellery. A defining difference between us and the other international heavyweights is our commission rate, which is typically at least half of what is offered elsewhere, both to our buyers and sellers.
Strauss & Co is also committed to education. As local collectors are usually starved of quality museum shows and exhibitions, we think carefully about how we present, curate and contextualise our sales. We have a year-long programme of lectures and talks under the banner of Strauss Education, and support a number of art-related charities.
CF: How do you go about valuing an artwork? And why do two works by the same artist sometimes differ greatly in price?
AM: Our role as an auction house is to suggest market-related low and high estimates for each artwork. In order to do this, we rely in the main on auction precedent. Essentially, when valuing a work we consider the results of similar examples that have appeared on the secondary market in the recent past. There are occasions, of course, when a specific work is singled out as a special example. A work might have a wonderful provenance, for instance, be of historical significance, or come from the moment in an artist’s career considered to be his or her best.
CF: What is provenance and how does it contribute to the value of an artwork?
AM: Provenance is the particular history of an artwork. Provenance might include where and why a work was produced, who owned it, where it might have been exhibited, what awards it might have won, or where it may have been illustrated. Provenance helps establish authenticity, but it also might give a work an exciting edge. A work with a headline-grabbing provenance, for instance, will more than likely generate more interest at auction. The best recent example is perhaps the David Bowie Collection that went under the hammer in London. The collection – which included a good number of South African works – caused enormous excitement, and prompted fanatical bidding.
CF: There is often the ‘belief’ that prices for an artist’s work skyrocket upon their death, is this true?
AM: This is quite often the case, but no, it’s not always true. Naturally, after the artist’s death his or her oeuvre is finite. As the artist can no longer supply works into the market, it might follow that prices increase. The reality is that artists are just as often forgotten after their deaths.
CF: How does one bid at an auction? And what is the difference between a telephone bid and an absentee written bid?
AM: Bidding at auction is as simple as raising one’s paddle! Of course, in order to be issued a paddle one has to register beforehand. This is a straightforward and quick process. A telephone bid is executed by a Strauss & Co employee on the telephone’s bidder’s behalf. An absentee bid – which is sometimes called a commission bid – is lodged with the auctioneer before the auction begins. It is the maximum amount one would be prepared to pay for a particular lot. This bid remains anonymous, and the auctioneer will bid up to this figure if need be. Should there be no other bidding, however, the auctioneer will sell the lot to the commission bidder at the lowest possible amount. Absentee bids are perfect for those who would prefer to keep emotion out of the process, or simply cannot or do not wish to attend an auction.
CF: What is the difference between an estimate and a reserve? Can an artwork sell for below the reserve price?
AM: The estimates attached to a work represent the broad and market-related range between which a lot might sell. The estimates are always published. The reserve price for a work remains confidential, but can never be set above the low estimate. The reserve price acts as the seller’s safety net, and the auctioneer can never sell an artwork below it.
CF: What are the costs to the seller of auctioning an artwork? Is there a fee charged if the artwork doesn’t sell?
AM: Our seller’s commission is set at 12%. This is the percentage deducted from the winning hammer price. VAT is also deducted, but is related to the commission only. There are no other fees whatsoever due to Strauss & Co. The commission covers the insurance of the artwork throughout the process, as well as the related photography, cataloguing, marketing and storage costs. Moreover, should a work not sell at Strauss & Co, the seller would not be charged a cent.
CF: What is the ‘hammer price’? Is this the final price that the buyer pays or are there other cost implications that they need to take into account?
AM: The hammer price is the winning bid. It is the figure upon which the auctioneer’s gavel falls. It is not, however, the final price paid by the buyer. The final price includes the buyer’s premium and VAT.
CF: Is there any advice you would give to someone who wants to buy at auction for the first time?
AM: We’re always trying to bust the myth that the auction world is opaque and intimidating. That couldn’t be further from the truth. Bidding will always set the heart racing, but buying art at auction is very simple and transparent. My advice would be to attend as many auctions as you can to get a feel for the atmosphere, the rhythm of the bidding, and the basic etiquette. Most importantly, ask questions! We are always happy to explain the entire process, and even more delighted to talk about specific pictures and sculptures on our sales. One should always bid on what one loves, but doing one’s homework will always stand one in good stead.