The Greek historian Herotodus described an auction that took place in 500 BCE Babylon, which makes this bid-driven process verifiably ancient. At times, the jargon of the auction industry seems like a product of antiquity, too. It’s typical to feel lost in the lingo, but that doesn’t mean you should. We’ve constructed a glossary of essential auction keywords to help you navigate, whether you’re buying or selling your art collection.
Appraisal: A formal assessment of the value of an item. Appraisals are typically done for specific purposes, which include insurance, estate planning, charitable donation, gift taxes, and loan collateral. While the values provided in an appraisal are never definitive, it is important that they come from experts, who are typically certified. The value provided in an appraisal will generally either be fair market value -- the amount that the expert believes a work would achieve in an auction setting -- or insurance value -- what the work would cost to immediately replace.
Benefit auction: An auction whose proceeds go to a cause or institution, as specified in the auction description.
Bid: An offer of a specific price for a lot in an auction. Typically, bidding occurs in an auction room when the auctioneer reaches the lot in question. The bidder raises their auction paddle to signal that they are making an offer at the current level. When multiple bids are placed at once, the auctioneer has the discretion to decide which to accept. Alternatively, bids can placed in advance as absentee bids (bids in the book), or they can be placed while on the phone with a representative in the auction room through a phone bid. Artsy also allows a user to set a maximum bid, which is the maximum amount a user would be willing to bid on a lot. Artsy will execute the bids on behalf of the user up to the maximum specified.
Bought-In and Passed (synonyms): A lot is bought-in or passed when the bids on it do not meet the reserve price. The work remains unsold and is returned to the owner.
Buyer’s premium: The amount above and beyond the hammer price that an auction house charges the winning bidder, calculated as a percentage of the hammer price. This premium goes directly to the auction house, not to the consignor.
Condition report: A report written by an specialist that provides insight into the current physical condition of a work of art.
Consignment: The act of a consignor putting an object into the care of a person or institution, a consignee, for the purpose of selling the item. The consignee generally charges the consignor fees for sale-related expenses like photography, as well as a commission on the final sale price. Artsy’s Consignment service matches users looking to sell art with auction houses and galleries that are interested in taking works on consignment.
Estimate: Auction estimates are expressed in ranges, with a high and a low end of each estimate. This is the price range within which the lot is expected to sell based on knowledge of auction results of comparable works.
Fair Warning and Final Call (synonyms): These are terms that the auctioneer may use to signal that the hammer is about to come down on a lot. It provides bidders with a warning that they have a final opportunity to make a bid.
Hammer price: The winning bid for a lot in an auction, at which the auctioneer’s hammer (or gavel) comes down. Note that this price does not include buyer’s premium or taxes to be paid.
Live auction: An auction that is held in the traditional format, in an auction room, where bids are simultaneously accepted from bidders in the room and online. Through Artsy, bidders are able to enter maximum bids (see Bid) or bids in real-time, to be executed in the room by Artsy.
Provenance: Provenance describes the history of ownership of a lot. Ideally, this can be traced back continuously to the point at which the work was created by the artist. This information is one component of authentication of a work. Provenance can also affect the value of a work, especially if an owner was a prominent collector or institution.
Reserve: The minimum price at which a work can be sold at auction. This price is agreed upon between the consignor and auction house in advance of the auction and is kept confidential from the public. The reserve must be set at or below the low end of the auction estimate.
Saleroom notice: Important information about a lot that is discovered after the publication of an auction catalog. This notice is generally released in advance of the auction as well as in the saleroom.
Seller’s commission: The percentage of the hammer price that the auction house charges the consignor for the service of successfully selling their art. This commission is typically negotiable for high-value works. Note that consignors are typically also charged for sale-related expenses, which can include photography and shipping of works.
Online-only auction: As the name suggests, this format of auction is hosted purely online; there is no live saleroom component. On Artsy, the image, description, condition report, and estimate of each lot is available online, and bids are accepted within a specified window of time. At the end of this window, the highest bid wins and is considered the hammer price.
Specialist: An expert in a specific category or field of art collecting. Specialists have extensive knowledge of art from a historical perspective but also in the market context.
Underbid: A bid that is lower than the winning bid of a lot. This term is often used even more specifically to refer to the he highest bid under the winning bid.
Valuation: The process of determining the market value of a work of art, conducted by an art market expert. Valuations are typically done for the purposes of financial and estate planning.