Auction Terms You Ought to Know - William Verdult

Appraisal
A formal evaluation of the fair market and/or insurance value of a given piece or group of property. Fair market value represents what we believe an item would bring at auction. Insurance value reflects what we believe it would cost to replace an item. Since an appraisal is made by comparing the object at hand with similar works that sold recently, an appraiser must know the market well.

As Is
Sotheby's offers all property for sale at auction "as is," meaning that the property is sold with all existing faults and imperfections. We encourage potential buyers to inspect each item carefully before bidding.

Authorship
The identity of the creator, period, culture and source or origin of an object as outlined in our catalogue lot description.

Bought In
If there are no bids on a lot, or if bidding does not reach the reserve price, the lot is "bought in," meaning it is left unsold and remains the property of the owner.

Buyer's Premium
The additional amount above the hammer price that is paid to the auctioneer as part of the total purchase price.

Consignor
The owner who is transferring property to company and or auction houseto act as agent on the owner's behalf for the sale at auction.

Fair Market Value
A term used frequently by appraisers referring to their judgment and opinion about an object's likely sale price if offered for sale by a willing seller to a willing buyer. Since the auction process is open to all bidders, a sale at auction is considered to be a measure of Fair Market Value.

Hammer Price
The winning bid for a lot at auction. It is the price upon which the auctioneer's hammer falls, determining the sale price and does not include the buyer's premium (or tax, if applicable).

Increment
The amount by which the auctioneer increases the bidding. In general, the auctioneer will request bids of about 10% higher than the previous bid. If, for instance, the bidding opens at $500, subsequent bids of $550, $600, $650, etc. would follow (the figure is generally rounded up or down at the auctioneer's discretion).

Knocked Down
An auction house term for the hammer coming down and ending the bidding. As in "The lot was knocked down at $1,000."

Lot
An individual object or group of objects offered for sale at auction as a single unit.

Paddle
An implement given to each bidder at Sotheby's at the registration desk. The paddle displays the number assigned to the bidder when the bidder registered for the auction. When you want to place a bid, simply raise your paddle until the auctioneer acknowledges you. If you win the auction, your number is recorded alongside your bid. To pay for your purchase, you will need to bring your paddle along to the Purchaser Payments counter.

Pass/Unsold
Terms used by the auctioneer when an item fails to reach its reserve at auction.

Pre-Sale Estimate
The price range within which an auction lot is expected to sell. We base this estimate on our examination of the item and our knowledge of the prices achieved by similar objects. Pre-sale estimates are generally published in the catalogue. Since the market fluctuates regularly, however, estimates sometimes change before the sale date. The pre-sale estimate provides prospective buyers with an important preliminary guide to value and is generally the basis for establishing the reserve price.

An estimate is not to be confused with an appraisal, which is a formal written document used for insurance, estate and tax purposes. As with the appraisal, estimates are our best judgment and opinion, but are not a guarantee that the item will sell for the specific price.

Provenance
The history of ownership of the property being sold. This can be an important part of the authentication process as it establishes the chain of ownership back (if possible) to the time the piece was made. An interesting provenance can add to the a piece's value.

Reserve Price
The confidential minimum price agreed upon between the seller/consignor and the auction house, below which the property will not be sold. Reserves must be set at or below the low end of the pre-sale estimate.

Seller's Commission
Consignors pay a selling commission that is deducted, along with any agreed upon expenses, from the hammer price.

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