The auctioneer's gavel comes down, and a painting that has sat in a private collection for forty years changes hands in under thirty seconds. The room exhales. Someone has just paid twelve million dollars for a canvas. Somewhere else in the room, someone has paid eight hundred for a work on paper by an artist whose name they looked up on their phone twenty minutes ago. Both of those transactions happened in the same building, on the same afternoon, governed by the same rules.
Art auctions are one of the most fascinating and least understood mechanisms in the art world. They are simultaneously the place where the highest prices in art history are set and a practical, accessible market for buyers at almost every level. Christie's and Sotheby's are household names, but they sell tens of thousands of lots per year across hundreds of sales, and the majority of those lots are affordable to buyers who are not billionaires.
Understanding how auctions work, what the fees are, what the estimates mean, and how to bid without making costly mistakes is the foundation of auction buying. This guide covers all of it.
A Brief History of the Major Auction Houses
Christie's was founded in London in 1766 by James Christie, who established it in Pall Mall and quickly built a reputation for handling significant estates and collections. The first sale of note was the estate of Sir Robert Walpole's collection in 1779. Christie's moved to its current King Street location in St James's in 1823, where it has operated continuously ever since. In 1999, Christie's was acquired by the French billionaire Francois Pinault, making it a privately held company.
Sotheby's is even older, founded in London in 1744 by Samuel Baker as primarily a book auction house. It expanded into fine art over the 19th century and made a strategic move in 1955 by opening a New York saleroom, positioning itself as the first major auction house to serve the growing American collector market directly. Sotheby's became publicly traded in 1977 and was taken private again in 2019 when it was acquired by Patrick Drahi's BidFair USA.
Phillips, the third major international auction house, was founded in London in 1796. It is now owned by Mercury Group and has positioned itself as the most contemporary of the three, with a particular strength in 20th- and 21st-century art, watches, design, and photography. For buyers interested in emerging and mid-career artists, Phillips often offers the most relevant sale content.
The State of the Auction Market in 2025
The auction market has gone through significant shifts since 2022. Christie's reported total sales of $4.3 billion in 2024, a 6% decrease from the previous year, while Sotheby's reported approximately $4.1 billion, down roughly 7%. Both figures reflect a broader cooling of the high-end art market after the exceptional highs of 2021 and 2022. The contraction has been most pronounced at the top: sales of works above $50 million have become rare, while the middle market (works between $50,000 and $500,000) has remained relatively stable.
Online-only sales have continued to grow as a share of total revenue. Christie's reported that 42% of its 2024 sales were online or hybrid format, and Sotheby's has invested heavily in its digital platform, with its online bidding system now handling the majority of lots sold. Phillips has similarly expanded its online presence, particularly in its New Now and 20th Century and Contemporary Art day sales. The shift means that a buyer in Tokyo can bid on a lot in a New York sale with the same access as someone sitting in the room, a fundamental change from even a decade ago.
The regional auction house sector has also seen growth. Houses like Bonhams, Heritage Auctions, and Doyle in the US, and Roseberys, Sworders, and Tessier and Sarrou in the UK, have reported increased participation from younger buyers entering the market through online platforms. These houses regularly sell original works by significant artists at prices well below what the blue-chip market charges for equivalent quality, making them the most accessible entry point for new collectors.
How an Auction Sale Works
Consignment and Estimates
An auction begins when a seller (the consignor) agrees to place a work with the auction house. The house's specialists examine the work, research its provenance and condition, and produce a pre-sale estimate. A range within which the specialist believes the work will sell. Estimates are informed by comparable sales at auction and by current market conditions, but they are not guarantees.
Alongside the estimate, the auction house and consignor agree on a reserve price. The minimum the seller will accept. The reserve is always confidential and is typically set at or below the low estimate. If bidding does not reach the reserve, the lot is "passed" (withdrawn unsold) and the buyer is not obligated to pay anything.
When you see an estimate of "$20,000 to $30,000," the low estimate (in this case $20,000) is typically close to the reserve. Works that sell above the high estimate are said to have "exceeded" their estimates. This is reported as a positive outcome. Works that sell below the low estimate but above the reserve are sold. Works that do not reach the reserve are passed.
Registration and Bidding Numbers
To bid at a live auction, you must register with the auction house in advance. Registration requires proof of identity and, for larger sales, proof of financial capacity. You will receive a numbered paddle that you raise when you want to bid. At major sales, a team of specialists also takes phone bids from registered clients who cannot attend in person, and online bidding platforms have expanded access to almost any sale in the world.
Online auctions, which Christie's, Sotheby's, and Phillips all now offer as standalone events separate from live sales, have genuinely democratized access to the auction market. You can register, view condition reports, watch specialist videos about lots, and bid in real time from anywhere in the world.
The Buyer's Premium: The Fee You Must Factor In
The single most important thing every auction buyer must understand is the buyer's premium. This is a fee charged on top of the hammer price (the amount at which the auctioneer's gavel falls) that goes to the auction house. It is not included in the estimate.
As of 2026, the major houses charge approximately 26 to 28 percent on the first tier of the hammer price (up to roughly $500,000), with lower rates on higher amounts. On a work that hammers at $10,000, you will pay approximately $12,600 to $12,800 all-in. On a work that hammers at $100,000, you will pay roughly $126,000.
The premium is often overlooked by first-time buyers who bid to their budget limit without accounting for it. If your absolute maximum is $15,000, your maximum bid should be no more than approximately $11,800, so that with the premium your total does not exceed $15,000. Always do this calculation before bidding begins.
Sales Tax
Depending on where you are located and where the sale takes place, sales tax may also apply. Auction houses are required to collect applicable taxes, and this can add a further 8 to 10 percent in many US states. Factor this in as well.
Reading a Catalogue Entry
Auction catalogues (both printed and digital) are dense documents that reward careful reading. A typical lot entry includes the artist's name and dates, the title of the work, the medium and support (for example, "oil on canvas" or "bronze with original patina"), the dimensions (always check both metric and imperial), the date of execution, provenance (ownership history), exhibition history, literature (published references), and any condition notes.
Provenance is especially important. A work with a documented ownership history from its creation to the present sale is the most secure type of purchase. Gaps in provenance, particularly between 1933 and 1945, warrant careful research to ensure the work was not looted during the Second World War. The major auction houses have their own due diligence departments that screen for looted works, but a careful buyer should do their own research for any significant purchase. The Art Loss Register is the primary database for checking whether a work has been reported stolen.
Strategy for Buyers
Do Your Research Before the Sale
Attend the pre-sale exhibition if at all possible. All major auction houses hold public viewings for several days before the sale date, where you can examine the works in person, request condition reports (free of charge), and speak with specialists. Condition reports are essential. They describe any damage, restoration, or structural issues in detail. Never bid on a significant work without reading the condition report.
Set Your Limit and Keep It
Auction rooms are designed to create excitement and competition. The dynamic of multiple bidders pursuing the same lot can push prices beyond rational levels. Set your maximum price before the sale begins, write it down, and do not exceed it. Every experienced auction buyer has a story about the time they "got carried away." Most of them wish they had not.
Consider Bidding by Phone or Online
Phone and online bidding removes the heat of the room and makes it easier to stick to your limit. It also allows you to bid in sales at the other end of the world. Christie's, Sotheby's, and Phillips all have robust online bidding infrastructure that has improved significantly since 2020.
Look at the Estimates Carefully
Works estimated below $5,000 at the major houses, and almost all work at smaller regional auction houses, represent genuinely accessible entry points into the auction market. Regional auction houses regularly sell original works by significant artists at prices well below what the blue-chip market charges for equivalent quality.
For the broadest view of where auctions fit in the art world, and for guidance on evaluating art as a potential investment, see Art as Investment: What You Should Know Before Buying for Value. For the live fair context that sits alongside auctions as a route to buying art, read the guide on what happens at Art Basel and why it matters. And for understanding how auction prices feed back into how artists price their work in galleries, our post on how artists price their work explains the connection.
