Auction vs private sale

What is the difference between an auction and a private sale?

An auction is a public sale where the price is made in front of an audience and a record remains, whereas a private sale takes place quietly between seller and buyer, out of public view. Auctions are only the visible tip of the market, the part you see in the papers; the rest happens behind the scenes.

How does it work in the market?

Auctions make up roughly a tenth of all trade in art, and they are written about most precisely because they are public and measurable. The remaining nine tenths of trade happens privately, off the public record, where prices are simply not discussed. Most art therefore changes hands quite differently from how most people imagine.

Why does it matter?

Because this is the source of the market's so-called grey area, where the data is simply missing and a work's value is harder to establish. When a large share of transactions happens with no public record, there is nothing to go on for many works and finding your bearings is markedly harder. Isn't it better to know that what is visible is only a fraction of what is happening?

Can you give an example?

A private sale can fetch considerably more than the saleroom, but it requires finding the right collector, one who genuinely wants that work. Such a transaction then never comes to light publicly, so the world may never learn of a record price. The same work might pass once through a noisy auction and another time vanish into a quiet private sale.

What should you watch out for?

Precisely because private sales are not public, treat auction results as an indicative sample, not the complete picture of the market. With works that circulate mainly outside salerooms, count on value being harder to establish and figures being incomplete. Patience and healthy curiosity serve better here than one striking number.

— Anna Pulkertová, founder of Art Part Club