The reserve price is the confidential minimum sum that a seller agrees with the auction house and below which they do not want the work to sell. A buy-in (literally, bought back) is what happens when the bidding fails to clear the reserve and the work remains unsold, staying the property of the seller. Unlike the opening price, which you see in the catalogue, buyers usually do not know the reserve. They are two sides of one coin: the seller's safeguard and its possible cost.
Major houses such as Sotheby's set the reserve no higher than the low estimate, and the auctioneer may bid on the seller's behalf up to that level. This is precisely where the familiar chandelier bid comes from. Czech houses know the reserve too: Galerie ART Praha calls it the owner's limit in its auction rules, and the room is alerted to it by a visible “R” that disappears as soon as the price clears it. If the bidding does not reach it, the work stays unsold.
A buy-in is not merely a technical note in the auction record. The market remembers a failure: a work that has been “burned”, in the trade's jargon, sells less easily the next time it is offered, because everyone knows nobody wanted it before. The share of unsold lots is also the flip side of the sell-through rate and hints at how healthy a sale was. And what happens to a work that does not sell? It can often still be acquired after the auction, in a so-called sale on consignment.
Do not confuse the reserve price with a third-party guarantee: a reserve merely prevents a sale below a certain line, whereas a guarantee ensures the work sells whatever happens. As long as the price is climbing below the reserve, you are not necessarily competing with a person, but with the auctioneer representing the seller. So stick to your limit and do not let the pace of the room carry you higher. An unsold work may still interest you, though; just ask the house in good time. Sometimes silence in the room is the best news a patient buyer can hear.
— Anna Pulkertová, founder of Art Part Club
Related terms: Opening price and estimate · Chandelier bid · Third-party guarantee · Sell-through rate · Sale on consignment
