Every field has its specific terminology, and auction houses are no exception. Whether you're an aspiring auctioneer, an interested bidder, or simply a curious spectator, understanding auction terminology will help you understand and navigate auctions more confidently. Here are some essential terms to help you understand the auction process from beginning to end.
Absentee Bid
A method of bidding for those who cannot or do not wish to attend an auction. Absentee bids are also called “written,” “commission” or “order” bids and may be placed by filling out and submitting an Absentee Bid Form, or online.
Appraisal
A formal evaluation of the fair market and/or insurance value of a given property. Fair market value represents what the auction house believes an item would bring at auction. Insurance value reflects what it would cost to replace an item. A Valuations department conducts appraisals by comparing a piece with similar, recently sold works, but no appraisal is definitive. You do not need a formal written appraisal in order to obtain a presale auction estimate.
Artist Resale Right (or Droit de Suite)
According to the European Union’s Artist’s Resale Right Directive, which has been adopted by the United Kingdom, living artists and artists who died within 70 years prior to the date of the sale are entitled to receive a resale royalty each time their artwork is sold by an art market professional in the European Union or United Kingdom, subject to certain conditions.
As Is
Almost all property for sale at auction is offered “as is,” meaning that the property is sold with all existing faults and imperfections.
Bid 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. The figure is generally rounded up or down at the auctioneer's discretion.
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 amount above the hammer price that is paid as part of the total purchase price.
Cataloguing
Factual information about a lot offered for sale, such as the name of the artist or maker, a detailed description of the object, the year of its creation, its provenance (history of its ownership), major exhibitions in which it has appeared and publications in which it has been documented.
Consignor
The owner who is transferring property to an auction house to act as agent on his or her behalf for sale.
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Designation
The consignor of a lot is sometimes identified through a designation line, which appears at the beginning of a catalogue entry. The designation, which appears at the discretion of the consignor, may identify the current owner by name or through a descriptive title, such as “Property of a Distinguished European Collector.”
Estimate
Each lot is given a low and high estimate, representing the opinion of experts about the range in which the lot might sell at auction. Estimates are based on the examination of an item and recent auction records of comparable pieces. Published in online and printed catalogues, an estimate provides prospective buyers with an important preliminary guide to value and is generally the basis for establishing the reserve price.
Fair Market Value
A term frequently used by appraisers referring to their judgment and opinion about an object’s likely sale price if offered 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.
Fair Warning
A warning sometimes given by the auctioneer that the hammer is about to come down on a lot. The fair warning offers one last chance to increase the bidding. If there are no subsequent bids, the auctioneer’s hammer falls and the sale is completed.
Gavel
Another name for the auctioneer’s hammer used to close the bidding.
Guarantee
In rare cases, an auction house will guarantee to pay a consignor for a lot, regardless of whether the bidding at auction reaches the reserve price. The guarantee may be provided by the auction house, by a third party or jointly by the auction and a third party. Third parties providing all or part of a guarantee benefit financially if a guaranteed lot is sold successfully and may incur a loss if the sale is not successful.
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, but does not include the buyer's premium.
Knocked Down
An auction house term for the hammer coming down and ending the bidding, as in, “The lot was knocked down at $1 million.”
Lot
An individual object or group of objects offered for sale at auction as a single unit.
Paddle
An object displaying the number assigned to a bidder when he or she registers at the auction. To place a bid, simply raise your paddle until the auctioneer acknowledges you. If you win the auction, your paddle number is recorded alongside your bid. To pay for your purchase, you will need to bring your paddle to the Payments counter.
Provenance
An important part of the authentication process, provenance establishes the chain of ownership back (if possible) to the date an item was created. Provenance can significantly impact the value of an object.
Reserve or Reserve Price
Never formally disclosed, the reserve price is the confidential minimum price agreed upon between the consignor and the auction house. Reserves must be set at or below the low estimate, and if bidding ends before the reserve is reached, the property will not be sold.
Seller’s Commission
A commission paid by the consignor to the auction house, which is deducted from the hammer price.
Valuation
A detailed description and current value of property prepared by the auction house’s staff. Valuations, which differ from auction estimates, are used for a variety of needs, including charitable contribution, collateral loans, estate taxes, estate planning and insurance.
Mainstream auction terminology tends to be consistent regardless of the company, whether a traditional auction house like Sotheby’s or an online model like Artsy or Paddle 8. However, many terms can be specific to a certain business, and help you navigate buying, selling, or analyzing any given situation. See the full glossary of terms at Sotheby’s here to learn more about specific terms like LiveBid and Lot Symbols.