Tales from the saleroom
Steve Woolnough reports on stories and items from inside the auction houses
Steve Woolnough tackles the thorny subject of pre-sale estimates in our look inside the world of auctions.
An aspect of auctions that regularly causes debate is the matter of estimates and, particularly, how they are decided upon. An estimate is a value band between which the item is expected to sell and is provided as a guide for potential buyers. It is set by an auction house when negotiating with the consignor. Legally, it is a criminal offence to declare an estimate below the agreed reserve price but there is no obligation to disclose what this reserve is to potential buyers, although the lowest figure in the banding is likely to be slightly above the minimum price the consigner will accept. In practice, as many consignors do not know the value of an item, or indeed, often what the item is, they rely on the expertise of auction houses to provide a fair assessment of value based on its condition in the current market. This is where issues start to arise.
The dominant factor is the amount that the consignor is prepared to accept as the reserve rather than any external pricing considerations. Then, there is the matter of the auction’s knowledge of the item being consigned, which particularly with auction houses who do not specialise in militaria or chose not to employ a specialist to assist them, may be questionable, as incorrect identifications are far from unusual. Also, when outside experts are used, their objectivity can seem debateable. I have seen items given what appeared to be very low estimates by such people who have subsequently bid for them in the saleroom at prices far higher than the estimates they themselves provided. There is also the matter of auction houses not undertaking appropriate research for items sold as comparables, resulting in items commonly seen at auction being given widely differing estimates. It should also be mentioned that individual auction houses will have a better idea as to the likely demand in their area, so an identical item could correctly have different estimates based on where it was being sold. For unusual or rare items, there may not be sufficient past sales on which to base any judgement, meaning in effect that the auctioneer is simply providing a best guess. Finally, there is the deliberate ploy of quoting a low estimate (the so-called, come and buy me estimate), with the aim of attracting bidders who may not otherwise be enticed by a more realistic figure but consequently in their competitiveness to outbid a rival, drive the price up. It is considered that this action increases the likelihood of achieving a higher price than would occur if a more accurate estimate was provided. Conversely, if any item is rare but not heavily collected, there may be a higher estimate (and therefore reserve), forcing a likely sole bidder to pay higher than would occur if a lower but more appropriate figure was stated.
Many people contact auction houses challenging the accuracy of estimates but this is a somewhat superfluous exercise as, due to their being based around the negotiated reserve, it will not be changed after the auction listing has gone public. The auction house will also state that any estimate is only their opinion and of course anyone can hold a differing one.
Ultimately, estimates are often little more than a sales technique, so the best option is for buyers to do their research and form their own opinion as to value. The internet is obviously excellent for this but remember, it is the sold price that matters, not what an item is being offered for.
As a final thought, the impact of Covid lockdowns on the demand for collectables has been huge, with auction prices often massively exceeding expectations, placing further doubt on the validity of estimates. The impact on prices from the easing of lockdown measures is another variable to consider, and your estimate on the effect of this is just as valid as mine. ■