Behind the scenes | The secrets of auctions: Why some works are worth millions

Key points to know

• Prices are influenced by rarity, artist fame, and personal events.

• Auction houses use strategies to increase prices.

• Provenance and prestige can cause the value of a work to skyrocket.

• Art is a speculative asset, with volatile prices.

• The hammer price does not include additional charges, thus increasing the actual cost.

In the hushed world of art, some paintings reach stratospheric prices, while others struggle to find buyers. What causes a work's value to skyrocket? A look behind the scenes at auctions, where strategy, emotion, and economic data collide.

The forces that dictate prices

The art market does not operate in a vacuum: it is influenced by a multitude of economic, social, and even emotional factors. Behind the impressive figures seen at auctions or international fairs lies a complex mechanism, in which rarity, the artist's reputation, cultural trends, and the personal circumstances of the sellers play a decisive role. It is this mix of forces, both global and personal, that shapes contemporary art prices.

Art reacts to the economy

Since 2020, the contemporary art market has seen a marked increase, with a 37% increase in the resale value of works. This dynamic is largely fueled by the arrival of new buyers with considerable means, particularly from the tech, cryptocurrency, and emerging markets sectors. These collectors, often young and seeking cultural recognition, do not hesitate to invest in strong pieces to assert their taste and social status.

Take Latin American art, for example: sales in this sector jumped 18%, a figure fueled by the growing enthusiasm of collectors based in Mexico City and São Paulo. These buyers, committed to promoting their cultural heritage, are helping to strengthen the international visibility of their region's artists.

The “3 Ds” of Auctions: Debt, Divorce, Death

Beyond overall economic trends, the art market is also profoundly influenced by personal events: debt, divorce, or death—dubbed the “3 Ds” of the market. These situations often trigger the sale of major works, sometimes long hidden from public view. Their sudden appearance creates tensions in the market, fueling covetousness and causing spectacular price increases.

Jean-Michel Basquiat is a prime example: after his untimely death, the value of his works exploded, rising 206%. Having become a legend of contemporary art, his image has been mythologized, and each appearance of his paintings on the market today sets new records.

The Hidden Strategies of Auction Houses

Behind the glamour of auctions and the hammering lies rigorous orchestration. Major auction houses like Christie's and Sotheby's leave nothing to chance: they master the art of staging and employ subtle techniques to maximize excitement... and prices. These strategies, often unknown to the general public, have a considerable impact on the outcome of sales.

A Digital Blueprint of Human Thought (2024), Digital Arts by Breaj

A perfectly measured staging

Christie's, for example, follows an unspoken but incredibly effective rule: the “three-bidder rule.” Before accepting a bid below estimate, the house waits until three bidders are actively engaged. This tactic reinforces the impression of competition, creates a sense of urgency, and, most importantly, gives the work a coveted rarity.

Sotheby's, for its part, has been refining its methods since 2019 by adapting auction thresholds based on the amounts. For works estimated at over $5 million, bid increments have been increased by 18%. This subtle, seemingly innocuous change helps accelerate price increases while making the process smoother... and more lucrative.

The secret role of the reserve price

Another invisible but essential lever: the reserve price. This is the minimum amount, secretly set between the auction house and the seller, below which the work will not be sold. Generally set between 70 and 80% of the low estimate, this threshold acts as a safety net for sellers, ensuring they won't sell a work at a loss.

The more systematic introduction of these reserve prices has reduced losses for sellers by 41%. But this security comes at a cost: it often involves higher commissions, between 3 and 5% extra. This compromise reflects the logic of the market: more protection, but also more fees—a balance between risk and control, perfectly mastered by auction houses.

Provenance, prestige and history: Value boosters

Beyond the artist's talent or the work's beauty, other factors can drive prices soar on the art market. Provenance, that is, a work's ownership history, plays a decisive role. Added to this is the prestige of its history—exhibitions, catalogues raisonnés, or even restitution stories—which can transform an "important" piece into a "historical" work. These intangible dimensions are among the most powerful levers of valuation today.

Lightness 006 (2014), Photography by Alessandro Passerini

The value of the previous owner

Owning a work also means inheriting a part of its history. And sometimes, this history can make all the difference. When a work belonged to a famous figure—whether a head of state, an iconic actor, or a major collector—its value can soar, buoyed by the aura of its former owner.

A telling example: a Turner painting that was part of Winston Churchill's collection sold for 47% above its estimate. Here, it was less the subject of the work than the prestige of its former owner that electrified the auction.

The power of traceability

A well-documented work, with clear and verifiable traceability, reassures buyers—especially institutional investors and major collectors. Studies show that a painting that has been the subject of recognized exhibitions or is included in a catalog raisonné sells on average 58% faster. Traceability, beyond the security it offers, also confers greater artistic legitimacy.

In the highly sensitive context of restitution—particularly of works looted during the Holocaust—the history of the work becomes an emotional and symbolic factor, which also impacts prices. In 2022, a Gustav Klimt painting, returned to the heirs of a Jewish family looted during World War II, sold for $42 million, far exceeding initial expectations. The work has thus become not only an artistic asset, but also a historical and moral testimony, whose value far exceeds that of the "pure" market.

Amore e Psiche (2017), Cavallaro & Martegani, Acrylic on Canvas, 80x100 cm

Art as an asset: risks and speculations

Increasingly considered an asset class in its own right, art now attracts investors seeking diversification, returns—and sometimes prestige. But unlike traditional assets like stocks or real estate, the art market remains poorly regulated, emotional, and subject to fads, making it particularly volatile. Behind the spectacular records also lie real risks, illustrated by sudden and unexpected drops.

The Basquiat Lesson

Jean-Michel Basquiat remains the perfect example of the fusion of artistic genius and market phenomenon. In 2022, one of his major works sold for $110.5 million. This stratospheric price was explained by several factors: the rarity of the piece, the posthumous notoriety of the artist who became an icon of contemporary art, and the prestigious provenance—it belonged to musician Lars Ulrich, drummer of Metallica.

But the following year, the tide turned. The Basquiat market declined 18%, a reminder that even the most bankable artists are not immune to a downturn. Collector enthusiasm can wane as quickly as it flares up, and speculative buyers can accelerate the decline.

The Berrío effect

Another telling case is that of María Berrío. Propelled to prominence in 2021, the Colombian artist reached a peak with a work sold for $2.3 million. Her colorful, narrative, and symbolically charged style had attracted numerous collectors, particularly in Asia and the United States.

But in 2023, the situation changed. The price of his works fell by 71%, with some selling for around $667,000. This sudden reversal epitomizes the excesses of short-term speculation in contemporary art. "Flipper" collectors, motivated solely by the potential for quick resale, can artificially inflate an artist's price—until the market abruptly corrects this bubble.

What's behind the hammer price?

When an auctioneer proudly announces a work's “hammer price”—that is, the final amount sold at the end of the auction—this figure can seem impressive. But it only reflects part of the financial reality for the buyer… and sometimes for the seller as well. Between commissions, additional fees, and discreet after-sales, the market truth is often much more nuanced than the spectacle of the auction room suggests.

The true cost of a purchase

A hammer price is never the actual amount paid by the buyer. Added to this amount are so-called "buyer's premium" fees, which vary depending on the price range. Let's take a concrete example: for a work sold for $2 million, the buyer will actually have to pay $2.49 million, due to the escalating commission system applied by major auction houses.

Here's how it breaks down:

• 25% fee on the first $500,000 (or $125,000)

• 20% on the next 1.5 million (or $300,000)

• 12% on amounts beyond (in this case, no amount concerned)

These fees cover logistical, legal, and insurance costs, but they also contribute to the auction house's profitability. And for uninformed buyers, they can be an unpleasant surprise.

Emanation 1 (2024), Annemarieke Van Peppen, Sculpture - Fabric, 35x26 cm

Post-auction sales

Not all works presented at auction find a buyer at the public sale. However, this does not mean that they remain unsold. Behind the scenes, a parallel market is active in the days that follow. Approximately 32% of initially “unsold” works end up being sold privately within 60 days of the auction.

These sales typically close at lower prices, on average 22% below their initial reserve price. For patient or well-informed buyers, this represents an opportunity to acquire a work at a more advantageous price—away from the hustle and bustle of the auction room. For sellers, it's a way to prevent the work from remaining “burned” on the market, by finding a discreet but effective solution.

Art is an emotional market… but a calculated one

Behind every record lies a clever mix of storytelling, data, and staging. Investing wisely in art requires tracking trends, understanding auction mechanisms, and analyzing artists' career paths . Because yes, a work of art can inspire dreams—but it can also be a high-risk investment (or speculative) strategy.