ATG posed a number of questions to Art Auction Guarantee. Here is a summary.
Sellers
• Who assesses the work for
guarantee? Are they experts, and what are they looking
for?
AAG rely on the appraisal made by the
auction house offering the item in question as indicated on the
mandate of sale. Additionally, they take into account other
factors, such as in-house analysis of the item and comparables,
and/or external appraisals. "Where we feel the estimates are too
high, we may decide not to guarantee the piece and/or open a
dialogue with the auction house and clients to review the estimates
in detail."
• Is the guarantee set at the
auction reserve?
AAG offer two types of contract:
A) Guarantee at the reserve price: The
guarantee level is set around the reserve price (usually 10% to 20%
below the low estimate). The guaranteed amount is the net amount
the client will receive from us in the case the piece does not sell
in auction.
B) Guarantee above the reserve price: The
maximum guarantee is the median between the high and low
estimates.
• Does it cover additional costs, such as
lot fees, the auctioneer's insurance charge and/or other
expenses?
It does not cover catalogue fees, shipping,
insurance and other costs.
• What sort of premiums are sellers
charged?
A) Between 8 and 12.5% of the guaranteed
amount + 25% of the upside where the piece sells above the
guaranteed amount (net of vendor's commission).
B) For sellers who wish to guarantee an
amount above the reserve price, the additional option fee is 50% of
the difference between the reserve price and the guaranteed amount
(generally the median between high and low estimates).
C) Upside: 50% above the guaranteed amount
(generally the median between high and low estimates).
The above-mentioned fees and conditions are
valid for all pieces considered individually. Clients wishing to
guarantee the sale of an entire collection may be able to negotiate
individual terms and conditions.
• Are there any additional
charges?
"There is no additional/hidden charge on our
side."
• Under what circumstances does the
guarantee becomes void?
A) Failure by clients to guarantee
authenticity and title.
B) If the piece has been offered and
remained unsold in the last 18 months at any public auction.
C) If the guarantee contract has not been
signed and fees paid at least 30 days prior to the auction.
• Does the guarantee pay out in the
event that the buyer fails to pay for the work?
No, in that case the client should refer to
the auction house. "We may waive, in some cases, the fees for a
subsequent auction of the same piece, at our sole discretion."
• In the event that the guaranteed
work does not sell, how long after the sale is the guarantee paid
out?
The client must recover the piece and
deliver it to an approved storage facility (currently Christie's
Art Storage Services in New York, London and Singapore). The piece
is then photographed and verified. The payout is made by bank wire
within seven days after confirmation that the piece has arrived in
storage and is in good/normal condition.
AAG can also assist clients with shipping
and insurance.
Buyers
• At what point must a buyer take
out the guarantee on a work?
Any time during the 12 months following the
auction at which it was acquired. The grace period - during which
time the piece may not be reoffered at auction - of 24 months runs
from the signature date of the guarantee contract.
• Is the guarantee set at the hammer
price they paid for it or does it also cover all additional costs,
such as the premium and any sales tax?
The guarantee can be set either at the
hammer price or the hammer price plus buyer's premium paid when the
policy holder acquired the item. The pay-out is calculated on the
hammer price achieved at resale.
For example, if a piece was acquired for
$100,000 + 25% buyer's premium, the client can choose to guarantee
$100,000 or $125,000. If the piece resells at $90,000 hammer, the
first option would pay out $10,000 (the difference between the
current sale hammer price and the acquisition hammer price), while
the second option would pay out $35,000 (the difference between the
current hammer price and the acquisition price including buyer's
premium).
Sales tax and other charges are not
covered.
• What sort of premiums are buyers
charged?
Hammer guarantee: 5% of the acquisition
hammer price plus a 10% share of any upside if the item sells above
the guarantee.
Hammer plus buyer's premium guarantee: 7.5%
of the acquisition hammer price plus a 15% share of any upside if
the item sells above the guarantee.
• Are there any additional
charges?
There is no additional charge.
• Who can sell the
items?
The guarantee contract stipulates a minimum
of three auction houses that AAG pre-select for the resale of the
piece. A client may use another auction house with written
agreement from AAG, which is discretionary.
• If an item fails to resell and,
under the terms of the agreement, AAG acquire the piece at the
reserve, where does this leave the auctioneer, who usually retains
the right to re-offer the piece?
The AAG guarantee only activates once the
work is returned to approved storage and is then checked and
verified. In order for this to happen, the auction house will have
released the item from the after-sale or re-offer process.
Consignors should be able to negotiate terms and conditions on this
part of the process with the auction house in advance of
consignment.
• In the event that the guaranteed
work does not sell, how long after the sale is the guarantee paid
out?
The same arrangements apply as to
sellers.
• What is the period of
cover?
Past the 24-month grace period, there is no
limit in time.
• Under what conditions must the
resale fail for the buyer to qualify for a pay out?
Issues concerning authenticity and title may
affect payments in the same way as they apply to sellers opting for
guarantees. Also, condition: if the piece is damaged/ altered
during the 24-month grace period.
• In the event that the guaranteed
work does not sell, how long after the sale is the guarantee paid
out?
The same arrangements apply as to sellers.
Follow us on:
