Valuation · 7 min read
How Auction Pricing Actually Works — Reserves, Hammers, and Buyer's Premium
Auction results are quoted publicly as a single number, but that number is the tip of a layered pricing structure. Understanding the mechanics — estimate, reserve, hammer, premium, and post-sale settlement — is the difference between reading the market accurately and paying more than you intended.
Updated July 14, 2026
The estimate is a marketing range, not a valuation
The low and high estimate printed in the catalogue are the auction house's opening negotiation with the market. They are set to attract bidding while leaving enough headroom for a headline result. A reserve — the unpublished minimum the consignor will accept — sits at or below the low estimate.
Hammer price is what the auctioneer accepts — not what you pay
When the gavel falls, the number called is the hammer price. Every major house then adds a buyer's premium — a tiered percentage that typically runs between twenty and twenty-seven percent for the first tranche, stepping down at higher price bands.
On a hammer of one hundred thousand dollars, a twenty-five percent premium turns the invoice into one hundred and twenty-five thousand dollars before any applicable sales tax, resale royalty, or import duty.
Private sale after the hammer
When a lot fails to meet its reserve, it is bought in. In most cases the auction house then attempts a private treaty sale, usually within a defined window at or near the reserve. Buyers who track after-sale channels routinely acquire bought-in works below their pre-sale low estimate.
Why marketplace pricing differs — and often wins
A concierge-coordinated marketplace like LiveArt Marketplace surfaces comparables and quotes an all-in price. There is no separate premium, no post-hammer surprise, and settlement runs through a single verified rail.
Frequently Asked
Common questions
- What is the difference between a reserve and a low estimate?
- The low estimate is public and marketing-oriented. The reserve is confidential and represents the minimum the consignor will accept. The reserve is legally required to sit at or below the low estimate.
- How much is buyer's premium at major auction houses?
- Buyer's premium at major international houses currently ranges from about twenty to twenty-seven percent on the first tranche of hammer price, stepping down for higher price bands. Always confirm the current schedule before bidding.
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