Back in the 1970s and 80s when the buyer’s premium was first introduced there was outcry and boycotting, but ultimately the market was forced to toe the line and return to the salesrooms because then, as now, they had the goods. The premium, which began in the major rooms, was set at 10%. Many salesrooms around the world resisted the temptation to improve their bottom line, believing instead that it would destroy their business.
And while they were arguing against the premium and steadfastly refusing to succumb to the increasing market norm, the rest of the world was already preparing for a premium increase. First it slid up to 12%, then quickly jumped to 15%. The market cringed. By this time just about every salesroom in the world was charging a premium of sorts. A few of the reluctant participants announced a token 5% premium while most of the other late starters opted for a 10% charge. The majority of the salerooms, however, went with the 15% flow, recognizing that if Sotheby’s and Christie’s could get away with it, so could they. And they did.
The 15% premium held for a while, then, with the collusion scandal that hit Sotheby’s and Christie’s in New York a couple of years back, Christie’s quickly tried to distance themselves from the disaster by raising their premium to 18%. Sotheby’s then raised theirs a suitable time later. 18% then became 20%. And the market cringed again. Now most of the major rooms around the world are charging, or set to charge, 20%.
In Canada, Sotheby’s and Ritchie’s now charge 20% on amounts up to $50,000 and 15% thereafter. Waddington’s have just announced that they are now charging the same as of June 2, 2005. By extension we assume that Joyner Waddington’s is also now at 20%. It can, one feels, only be a matter of time before the other leading salesrooms across the country raise their rates to 20%. For most of Canada therefore, it means buyers’ will now be paying an additional 35% or more on top of the hammer price for the privilege of buying at auction!
How high can the salesrooms go with the buyer’s premium before the market says enough is enough? Will we obediently pay 25% and 30% in order to secure the items we are after? Or perhaps even 50%? Just exactly where is the ceiling? As long as the economy remains buoyant and the salesrooms continue to control the market as they currently do, we might well find out sooner rather than later.
All of a sudden the unexciting, unemotional ‘good old days’ of paying dealer prices, buying over time, and being allowed to take a work home to see if it ‘fits’ doesn’t look so bad after all, does it?