A dummy's guide to art auctions

It's nearly autumn and time for another season of art auctions beginning with Saffronart's Evening Sale of Modern Indian Art in New Delhi on September 10. This will be followed by international biggies Bonhams and Christie's auctions of modern, contemporary and classical (antique) Indian art, which will make way for Sotheby's in London on October 6. Ever wondered why people make 'bids' at these auctions? Or want to try a hand at bidding yourself? Keep reading.

Why do people buy from an auction? What about galleries?
Auctions and galleries service very different buyers and needs. Galleries are, generally, meant for recently-made works of art by practising artists. At auctions, you can hope to pick up important pieces of art by artists, who are no longer alive. Or early works by artists who're now acknowledged masters. For instance, it's only at an auction that you can hope to find a painting like Birth by a master like FN Souza, a painting that's large and a landmark in his career. It is from his solo exhibition at Gallery One in London in 1955 and showcases the artist at the height of his powers and also brings together many themes and icons that are characteristic of his canvases. Individuals, galleries or dealers, might offer other Souza paintings, but they'll never be able to command as much proof of their authenticity as Birth does.

Are you paying a premium at an auction?
Yes, you are. Auction houses charge what is called a 'buyer's premium', which is around 25% (it could be higher) of the 'hammer price', or the bid for which the 'lot' — auctioneers' term for artefact on sale — is sold. Why, you may ask, do auction houses charge such a hefty premium. Because they do the laborious task of sourcing the artwork, valuing it and preparing condition reports. Auction houses, generally, also check whether the artwork is indeed what it claims to be — that it isn't stolen, or ill-gotten. They also give the history of the work, print the catalogue, and market it among the interested, thereby ensuring the artwork fetches the best possible price.

What about the artists? Do they benefit from the high prices that their works fetch at auctions?
Depends. If the artist is alive and practising, he can hope for a high price. During the 2007-08 boom in the art market, a number of contemporary Indian artists — Subodh Gupta, Jitish Kallat, et al — were going for very high prices at auctions. Consequently, their gallery prices went through the roof too. But if the artist is dead, his family has little hope of benefiting from the boom — unless, of course, they possess some of his works and decide to sell/auction them.

How do auction houses source their wares?
Sellers, those who possess artworks, consign them to the auction house for sale.

What is the meaning of 'estimate' and 'reserve'?
Auction houses put out a price range that they believe an artwork would sell for. It's a rough calculation, decided after taking in factors such as the size of the work, the condition of the work, the past prices the artist has fetched at auctions and, most importantly, its aesthetic qualities. Often, 'estimate' is just that — an estimate — and works will go for lower or higher, depending on how many people are bidding for it. For example, at the Sotheby's sale in March this year, a self-portrait by Amrita Sher-Gil sold for $2.92 million, well over its higher estimate of $1.8 million. 'Reserve' indicates the price, usually kept confidential between the seller and the auctioneer, under which a 'lot' is not to be sold.