Auction houses and "fees"

Auction houses and fees

When a masterpiece sells at auction, the headline-grabbing figure isn't always what the seller takes home. In fact, auction houses often claim nearly 50% of the sale price in fees. This staggering margin has many in the art world calling for greater transparency.

enormous fees in auction houses

The numbers can be eye-popping. If a painting sells for $10 million, the auction house might take $4.9 million, leaving the seller with $5.1 million. These fees come from both the buyer and the seller. While buyer's premiums are widely known, seller's commissions are often hidden from the public.

This system can be a hard pill to swallow for artists and their estates. In 1976, artists and lawmakers pushed back with the California Resale Royalty Act, ensuring creators benefit from their work's appreciation over time. However, a 2018 court ruling struck down this law, leaving U.S. artists without federal protections.

Greater transparency is a first step. Some advocate for auction houses to clearly disclose all fees upfront. Others suggest a more equitable model, where seller's commissions decrease as sale prices rise.

The art market is a multi-billion-dollar industry, and auction houses play a crucial role. However, the current fee structure has many questioning if the math is too good to be true – for the auction houses themselves.

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