What It Means When an Auction Lot Is Withdrawn
This past October, a mid-season modern and contemporary evening auction at Sotheby’s made headlines—not because of the $283 million profit from lots including works by Van Gogh and Giacometti, but because of what was absent from the sale. Just two hours before the auction was scheduled to commence, the Baltimore Museum withdrew two paintings by Brice Marden and Clyfford Still, as well as a painting by Andy Warhol that was scheduled to be sold privately. The museum had planned to deaccession the works—worth an estimated total of $65 million—to increase salaries for staff members during COVID-19 and acquire more works by non-white and women artists per a new diversity initiative. However, in the weeks leading up to auction, pressure from board members and trustees threatening to withhold nearly $50 million in donations in protest of the deaccessions began to mount, ultimately leading to what is referred to in art industry parlance as an eleventh-hour withdrawal, effectively removing the lots from the sale.
While the Baltimore Museum withdrawal was a newsworthy event due to its controversial circumstances (in addition to being a substantial portion of the sale’s overall estimates), the occurrence of withdrawn lots is not uncommon—in fact, it happens fairly regularly. According to art advisor and independent curator Nancy Chaikin, “There are at least a few at every major auction.” However, it is rare that the general public hears about it.
So what exactly does a withdrawn lot entail, and why are they not more widely publicized? Why would an artwork be pulled from auction, and what are the implications?
Why are artworks withdrawn from auction?
There are countless reasons why lots are withdrawn, ranging from condition issues and title disputes to a consignor having a last-minute change of heart.
Art advisor Susannah Pollen listed the most common legal reasons for a withdrawal as being concerns over authenticity; ownership disputes (typically within families, e.g., during divorce proceedings or if any other third party has any financial stake in the work); claims of stolen property (such as the withdrawal of four Greek and Roman antiquities withdrawn from an online Christie’s sale last June over speculation that they had been looted); illegal export issues; and the death of an owner after consignment. To address all potential legal issues that may arise, contracts between the auction house and the consignor are drafted up and signed before the auction.
A lot may also be withdrawn if the auction house anticipates that the work won’t meet the reserve price or the agreed-upon minimum that the consignor will accept for the sale. “A lot being withdrawn is less of a concern than if something was ‘bought in’ as it isn’t necessarily indicative of a lack of demand or interest,” said art advisor Alex Glauber. He explained that if a work goes up for auction and is unsold, it bears a stigma that is far more damaging to the work’s resale value than if it is withdrawn. Therefore, if there are any indications that the reserve will not be met, whether it be due to a catastrophic event such as a stock market crash or a simple lack of demand, an auction house will often advise the consignor to lower the minimum to ensure that the work is sold. If the consignor refuses to lower the reserve, the auction house will recommend that the lot is pulled from auction.
Todd Levin, a board member of the Association of Professional Art Advisors (APAA) and former business associate at Sotheby’s, noted that “auction houses typically have a good sense of whether the bidding is going to hit the reserve or not.” Drawing on his experience dealing with auction contracts at Sotheby’s, Levin explained that “the more expensive the lot is, the more likely it is that the contract will dictate that before the sale, if either party feels there is not adequate interest at the pre-auction estimate, they have the right to withdraw that lot with the consent of the other party at no penalty to the consignor.”
What are the repercussions of a withdrawn lot?
Because withdrawn auction lots are such a common occurrence, most potential situations are usually addressed in the pre-sale contract. Pollen explained that “auction houses have clauses in their ‘Conditions of Business’ allowing them to withdraw lots for any reason,” noting that “if an auction house withdrew a lot for a reason that was subsequently shown to be wrong and the consignor missed out on a successful sale, negligence and financial loss would be very difficult to prove.”
On the consignor’s side, there are protections for withdrawal if agreed upon with the auction house. However, if a consignor decides to pull something last minute against the advice of the auction house due to personal reasons, they will be on the hook for a substantial kill fee. In certain cases, however, if the consignor and the auction house have a financially lucrative relationship, it may be in the best interest of both parties to waive this fee.
Because of the potential complications, Pollen recommended that private consignors and trustees always consult an independent advisor who can mitigate risk at the contract stage, while also providing insight on sales timing and strategy.
How does the withdrawal affect the value of the work?
According to Levin, in most instances, withdrawals generally won’t show up on any public database, and even if they do, it likely won’t have any substantial effect on the work’s valuation for future sales. For example, if an artwork is withdrawn over a question of authenticity and is later determined to be authentic, it can usually return to auction with negligible damage incurred on its resale value. If the lot was withdrawn because of a title dispute between a couple amid a divorce proceeding, the withdrawal has little to do with the work itself, so the value will likely not be affected if the work is offered at auction down the line. On the other end of the spectrum, however, is if an artwork is withdrawn due to condition concerns or damage during transit. In this case, the work’s worth will have to be reevaluated.
Levin did, however, point out that as an advisor, he would never simply give anything the benefit of the doubt. “I do not take things off the basis of good faith,” he said. “I would do the research and use my 40 years of contacts to find out why the piece was withdrawn.” If a collector is looking to acquire a piece but there is concern over the nature of a previous auction withdrawal, art advisors can provide valuable intel on the details of the withdrawal that is unavailable to the general public.
In terms of the effect that a withdrawn lot might have on the value of an artist’s other works, the chances of decreased value are typically minimal—unless, as art advisor Alex Glauber explained, an artist doesn’t have a developed secondary market and the withdrawn lot was one of the first works to come to auction. “This doesn’t bode well for the suggestion that there is a robust resale market,” Glauber explained. But if a work by an established artist is withdrawn due to quality issues, for instance, another work by the same artist that is in prime condition would not be affected.
Should a withdrawn artwork be considered a red flag for future collectors?
While seeing that a lot was withdrawn from a sale might raise some eyebrows, it is generally not a cause for scrutiny—particularly in the current market. Since auctions have been held largely online over the past year, the frequency and terms with which works are being bought in and withdrawn have shifted. In Sotheby’s virtual contemporary sale back in May of last year, for example, there were 112 lots sold, five lots passed, and a staggering 27 lots withdrawn.
When it comes to auction withdrawals, however, Glauber points out that the collective memory is short. Particularly as the volume of the primary market continues to grow and the scale and frequency of auctions increase, collectors are not likely to be keeping tabs on this sort of thing. As a collector himself, Glauber explained that he is less prone to be spooked by something being bought in or withdrawn, provided that he is confident in his assessment of the quality and desirability of the work. Rather than become discouraged, said Glauber, collectors can always look to an advisor to provide insight on the nature of a withdrawal if there is any concern. There is always an explanation.