Sotheby’s announced the change on February 1 (ATG No 2629) which included it abandoning its current three-tiered buyer’s premium structure and switching to a simpler two-tiered format. The new rates will be 20% on the hammer price up to $6m/£5m, and 10% of the hammer price above $6m/£5m.
Key changes for sellers includes the introduction of a uniform seller’s commission rate of 10% on the first $500,000/£500,000 of the hammer price per lot.
There will be no seller’s commission on the portion of the hammer price above $500,000/£500,000.
Sellers of higher value consignments will not have to pay any commission at all where the low estimate is above $5m (£4.5m). When it is between $20m-50m/ £18m- 45m sellers will also receive 40% of the buyer’s premium in addition to the hammer price. For lots estimated at above $50m/£45m the arrangement is ‘bespoke’.
The changes come into effect in May.
Rival auctioneers will be waiting to see how this move impacts vendors’ decisions on where to consign their top value lots in particular.
However, the reaction from the wider market, particularly bidders, generally welcomed the reduction in buyer’s premium.
‘Got a bit absurd’
Old Master dealer Johnny van Haeften told ATG: “I was a bit surprised by these changes but am of course pleased that there is not such a big discrepancy between the buyer’s premium and the seller’s charges.
“For so long the onus has been on the buyer who naturally factors in the premium when calculating their bid. It was getting a bit absurd, particularly when you add in the Overhead Premium, so the reduction is very welcome.
“Personally, I would hope that others will follow suit… but let’s see what happens.”
David L Mason, chairman of London gallery MacConnal- Mason said: “I was very surprised. It strikes me as an aggressive move and I wondered what may have sparked it.
“I’ve always regarded the buyer’s premium as a sleight of hand; it’s immoral to take from both sides – both buyer and seller. It’s a direct conflict of interest. So I’m not sure I’d say this is a welcome move for buyers; I’d welcome the abolition of the premium in its entirety.”
Plenty of comments from dealers, collectors and auctioneers were also published on social media.
Fabergé and objet de vertu collector Ahmed El Minawi said: “Finally! This bold move could be the start of a domino effect across the industry.”
US historian, collector and silver specialist listed as Hampton DeVille described it as “bold, unprecedented, and with many unknowns. I don’t think buyers will be 100% sold on ‘your money goes further’ strategy.”
He added: “Most collectors have a final price in mind for a work which is always inclusive of buyer’s premium – it doesn’t matter if that BP is 0% or 30%. Since they’ll also charge a 2% performance fee if a lot sells for over the high estimate, does this mean the end of conservative estimates, which generally lead to more spirited bidding?”
What’s your opinion of the buyer’s premium change? Email firstname.lastname@example.org
A further selection of comments from dealers and auctioneers responding to Antiques Trade Gazette’s Instagram post
Book specialist Tom Lintern Mole: “So, so impressive. Let’s hope other salerooms follow suit.”
Jewellery specialist Sarah Duncan: “Wow! Did not expect that! Very strategic that they waited a month into the new year to announce it. I’m celebrating any move that makes auction houses more approachable and user friendly.”
Art Deco and Arts & Crafts dealership Design Gallery in Kent: “A major shift! How to capture the market for sure.”
Oak dealer Daniel Hadden: “Very refreshing. Now the provincial houses must be fretting as they can’t justify 35% without Bond Street rates to pay.”
Auctioneer David Elstob described the move as “bold” while some auctioneers defended buyer’s premium fees.
Duke’s senior valuer and auctioneer Michael Roberts: “This is interesting and I wonder what the effect (if any) this will have on provincial salerooms whose diet is of largely sub £1000 objects (which the main London rooms won’t touch).
“I know it’s fashionable to deride the 40% auction rip-off that auctioneers are allegedly enjoying but with the market for mid-range traditional antiques falling, it is tough to make a profit out of processing this type of object on a commission basis, factoring in overheads.
“Selling multi-million pound artworks à la Sotheby’s is one thing, trying to sell that Georgian bureau for £200 and make a profit out of it is another.
“I’ve been involved in the management of three auction firms so far in my career and believe me when I say there often isn’t much in the kitty. Reducing commissions each end will be tough for many small firms. Yes, you can make a profit, but you’ve got to be tight on your numbers and all elements of the team from valuers to porters absolutely on it. Anyway that’s my 2p worth.”