Here is the latest attempt by Sotheby’s to confound and confuse bidders, the irrevocable bid. If you are unfamiliar with it then read their rules on their key to symbols in their catalogue:
Lots with this symbol “” indicate that a party has provided Sotheby’s with an irrevocable bid on the lot that will be executed during the sale at a value that ensures the lot will sell. The irrevocable bidder, who may bid in excess of the irrevocable bid, will be compensated based on the final hammer price in the event he or she is not the successful bidder. If the irrevocable bidder is the successful bidder, they will be required to pay the full Buyer’s Premium and will not be otherwise compensated. If the irrevocable bid is not secured until after the printing of the auction catalogue, a pre-lot announcement will be made indicating that there is an irrevocable bid on the lot. (Effective for sales commencing October 20, 2008)
If you understand how it works you will recognize that Sotheby’s still operates with an emphasis on deception, fraud, and self interest to take advantage of both buyer and seller. This newest form of manipulation, like the secret reserve with a seller, requires deception on Sotheby’s part with a willing buyer. After all, bidders like me don’t normally have the advantage of inside information to secure a bid before we see a catalogue, never mind not knowing that your irrevocable bid somehow is above the reserve. My, did a little bird whisper in the ear of the irrevocable bidder what that reserve was? Was that bird Sotheby’s?
The ultimate carrot that Sotheby’s employs in this sham method is compensating the rivalry between unsuccessful irrevocable bidders. This whole process is like the dealer “ring” in reverse, where a “ring” member buys the item and gets compensated by an amount over the final price as hammered out in the “ring”. I believe the government came down quite hard on dealers for acting in this manner as a form of auction price manipulation. Where does Sotheby’s get off with such blatant kickbacks in the bidding process?
Finally, as an affront to the irrevocable bidder, they start the bidding below what amounts to their guaranteed offer. Bidders are being abused with sham biding not only by the reserve, but cajoled to bid over that price point, to a second undisclosed price point. Can you imagine a real property public auction operating this way? A disclosed irrevocable offer above the seller’s minimum acceptable price is where the bidding should start.
As the close of 2008 can’t come soon enough, the antiques industry, as well as most forms of commerce, has been dealing with financial and economic challenges that were never quite expected to play out as rapidly as we are now seeing. In an age when we now aspire to see transparency and honesty in business transactions, Sotheby’s has dared to take it up a notch, in the wrong direction. Will this be a new precedent in the auction format, like the buyer’s premium, secret reserve, and other conflicts of interest?