But the auction houses’ reliance on third-party guarantees to source and sell big-ticket artworks, particularly at Phillips and Sotheby’s, does raise the question of how much that $25.6 million for the Richter represented a “true” market price. Values can be inflated when auction houses offer competitive guarantees to secure major consignments. These guarantee can then be transferred to a third party, who will either buy a work at a sale, or be rewarded for their unsuccessful bidding. More recently, some third-party guarantors — called “irrevocable bidders” at Sotheby’s — have also been paid fees if they are the purchaser. These confidential arrangements, denoted by symbols in the catalog, can have the effect of deterring bidding in the salesroom.Do third-party guarantees deter bidding?
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