Posted By:
Fred CBarry and Jeff,
Thank you for the responses. I guess that Sothebys made some very bad predictions on the final hammer price of the art work. I still don't understand how they can get away with this practice if there are other stakeholders involved. This seems to be a very poor practice.
Barry, I just wanted to be sure I understand this. Sothebys (for example) would give $1K to a consignor and that would then be the final amount given to the consignor regardless of the final hammer on the art work.
Or
Would Sothebys provide the $1K advance and they would also provide the consginor more money if the final hammer was greater than the $1K advance fee.
I could almost understand a shared risk where the consignor accepts a fixed amount and the Auction House would either make more money or get "hammered" on the final realized price because it fell below the "guaranteed" price provided to the consignor. This approach seems very risky and in this case it will cost Sothebys quite a bit of money. I'd be pretty angry if I were a stock holder.