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Posted By: barrysloate

There are pretty much two ways a collectible or work of art can be sold- by auction or by direct sale.

In the spirit of an auction, the seller allows the object to start at a minimal level and sell for whatever the highest bidder is willing to pay. This works best for an item of great rarity that is in high demand.

A direct sale works best if the seller doesn't want to take any risk. Perhaps he fears some volatility in the market, or doesn't think the piece will catch the imagination of the buyers. In that system he sets a price, and if there are no takers he can either haggle a little or put it away for another day.

But what Sotheby's does is incorporate both systems at the same time. They try to attain the highest possible price and use any method possible to remove all the risk. This amalgamation clearly does not sit well with many bidders, but the auction house has been able to use it to their great advantage.