The global art auction market, valued at around $60-70 billion annually, relies heavily on a practice that many argue distorts the true valuations of artworks – third-party guarantees. Under this system, auction houses like Christie’s and Sotheby’s, which together turnover about $12 billion a year, pre-sell high-value lots to investors before the live auction even takes place.
While guarantees provide certainty for the auction houses and consignors, they undermine the concept of an open and transparent marketplace, where bidding determines an artwork’s value. If most of the top-selling lots have already been privately sold ahead of time, how can the public auction represent a fair valuation?
The two major auction houses defend guarantees as simply encouraging buyer participation. But when the guarantor, who has already committed to a minimum price, ends up as the actual buyer in many cases, you have to question…
