Apollo Collector Services can help you with arranging an auction guarantee. Selecting the most appropriate guarantee structure for a particular seller, and negotiating the finer contractual details with the auction house or guarantor can be a complex and intricate task. If poorly negotiated and badly structured, guarantee arrangements can result in lower than achievable returns for sellers with excessive fees being paid. Auction guarantees are:
- usually slightly lower than the published auction low estimate
- paid to the seller in full if no-one bids over that amount
- if the lot fetches a price higher than the guaranteed amount in the sale then the guarantor and the seller usually split the upside in a pre-agreed ratio, often 50/50
- some auction houses provide in-house guarantees but may also work in tandem with third-parties; guarantees can also be negotiated independently of the auction houses
Case StudyAn asset-rich, cash-poor family were required to sell their much-treasured Gainsborough after an HMRC investigation led to an enormous tax demand that they were unable to meet. In an attempt to secure the item for sale, two major auction houses both offered to provide price guarantees for the lot which eliminated any risk that the item would remain unsold.
The first offered a guarantee that would only secure payment 30 days after the sale date with a 50/50 split on any upside, but the family accepted a lower guaranteed price from the second auction house as they offered immediate advance of funds on consignment of the work and a 60/40 split on any upside in favour of the seller. Both offers were negotiated for the sellers by an experienced specialist intermediary.