If you look through art auction catalogues these days you might be forgiven for wondering what the low and high estimates represent, particularly on the higher end of the spectrum. Traditionally the low estimate was generally considered to be the absolute-rock-bottom-price-I’m-prepared-to-accept-as-a-seller. Now this has become the price that is slightly-more-than-anyone-would-sensibly-pay-as-a-buyer. Consequently a lot of items now have their sales negotiated later (at least nine in the contemporary art auction according to figures released by Webb's), usually for a price below or just tipping the low estimate. And the high estimates? They seem to be a figure that is plucked from some parallel universe for the entertainment of the crowd.
You might wonder why auction houses bother with high estimates at all when they are at such variance with the price paid. For instance, last week at Webb’s most items came in under the low estimate. A couple of the big items just made it to the low estimate like Fomison's Hill Top Watcher and Shane Cotton’s painting Blackout movement which was high estimated at $300,000 a $100,000 or 33% more than the knockdown bid received on the night. But, by the time the buyer’s premium ($25,000) and GST on the buyer’s premium ($3,125) were added the auction house were able to call it a “record price.” Low is definitely the new High.
Image: Auction bidder negotiating the buyer’s premium on the way to a record bid.