Selling art at auction - 2
However, it should be noted that the seller will incur costs whether the art sells or not. Besides the cost of shipping and insurance to the auction house, the auction house will charge the seller other fees in conjunction to the sale. These include marketing fees and insurance and handling fees. Most auctions also charge a buy-in fee, which is a fee that the sellers pays if the piece does not sell. Usually, the fee is between 3-5% of the reserve price. Finally, there are return shipping and insurance charges, the seller has to bear if the piece is returned. Thus, setting a high reserve put the seller at risk of not only not selling the piece, but also of significant auction charges, which will have to be re-assumed in subsequent auctions.
Payment for auction sales indicated on the consignment agreement with the auction house. In most cases, payment is usually received between 30-45 days of the close of auction. Of course, payment depends on the auction actually receiving payment from the buyer. It is rare that a buyer reneges on a purchase, but it does happen. When a buyer reneges on a payment, the auction house has little recourse to enforce payment. Legally, the auction is not the seller but an agent for the seller. So the only legal remedies for the seller is to initiate action against the buyer. In most cases, the seller has little practical recourse against either the seller or the auction house. Consignment agreements usually outline the policies of the auction house for such circumstances. As a gesture of good will, many auction houses will waive the auction fees and agree to offer the piece in subsequent auctions.
And there are even rarer situations, where the auction house fails to pay the seller even when they have received payment from the buyer. This may be a situation of fraud or a business failure of the auction house or the result of some legal action against the auction house or its owners. In these cases, the seller does have legal recourse against the auction house. And there are also instances were sellers have sought compensation from the buyers of the piece even when they have paid the auction house. Fortunately, these situations are rare especially for major auction houses and auction houses that have long established reputations. With this in mind, placing work at a relatively new auction house incurs additional risks.