An app to conquer the warranty segment
Three art companies with different business models propose to auction houses to expand coverage to the lower end of the market
4' min read
4' min read
Guarantees are a tool that tends to eliminate the 'competition' that takes place during an auction both in the auction room and online. The market already knows the verdict. The fact that a work of art has already been 'adjudicated' before the final allocation by the auctioneer makes the spectacle less interesting and limited to the 'guarantee' players of irrevocable bids and the price tamed to the seller's wishes. Despite the reduction in the number of guaranteed lots at auctions over the past year, it should be remembered that guarantees are an instrument used, above all, at the top end of the art market.
In a report last October, ArtTactic noted that guaranteed lots were down 22% year-on-year for evening sales of postwar and contemporary art in the first half of 2023, but accounted for over 54% of evening sales of the same segment in the first half of last year (by hammer value).
A recent article on the website of the American ARTnews points out that despite the elitist nature of guarantees, interest is not lacking and some companies have decided to collaborate to launch a pilot project to make the guarantee segment more transparent and democratic, two attributes that however do not reflect the art market. Not least because no disclosure is ever made of the agreements underlying the guarantees.
Before going into the details of the project, it should be remembered that auction houses can offer guarantees in two ways. One in direct form: the auctioneer itself is obliged to buy the work, having negotiated a minimum price with the owner. The other type is the third-party guarantee, where the auction house involves another party to share the guarantee or take it over entirely. There are collectors and dealers who are known to often be third party guarantors, whether they actually want the artwork or use this arrangement as a financial vehicle. In any case, the seller is guaranteed a certain price, regardless of the outcome of the auction. Depending on the agreement, if the lot is sold at a higher price, the third party guarantor may receive a percentage of the final price.
The protagonists
.On the one hand, a London-based technology startup The White Glove, which advertises itself as "the first online marketplace that connects sellers and guarantors", has launched a pilot project with London-based Forum Auctions, an auction house specialising in rare books, manuscripts, limited edition prints from 1500 to the present day, Banksy prints and other works on paper, acquired by Gurr Johns, an art market consultancy, in 2021.
