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How to Sell Wine at Auction (and Why You Probably Shouldn’t)

If you’re wondering how to sell wine at auction, you’re not alone. Fine wine auctions can be difficult to understand. We’ll take a look below at how to sell wine at auction, what happened when JF Tobias tried to sell wine at auction with Sotheby’s, and why fine wine brokers are almost always the best option.

 

Step 1: Contact the Auction House

There are several fine wine auction houses, the best-known being Sotheby’s, Christie’s, and Bonham’s. Several online wine auction sites, such as Wine Auctioneer, remain a good option for lesser value loose bottles.

Contact your chosen auction houses with the list of wines you wish to sell at auction. For this purpose, JF Tobias created a typical investment grade portfolio, including Lafite Rothschild and Chateau Margaux. We contacted Christie’s and Sotheby’s, and as Sotheby’s were the quickest to reply, we decided to sell with them.

 

Step 2: Understand the Estimates

To provide a valuation and estimate, the auction house will ask for provenance and current storage location. They will then provide you with a high and low estimate, and suggested reserve price.

We told Sotheby’s that ours were held at London City Bond, and bought en primeur. You can see the estimates that Sotheby’s sent below. Which are we likely to achieve if we sell wine at auction?

To understand this, we replaced the reserves with the market price, as the wines are certainly worth a lot more than the worst case scenario of the reserve price. This allows us to see how the estimates compare to the market price; the price that the wines can be bought for on the open market.

how to sell wine at auction

Step 3: Check Auction House Commissions and Charges

What is confusing here, and less than transparent, is what these estimates mean in practice. How much are we likely to achieve if we sell wine at auction? To understand this, we need to understand auction house commissions.

At the same time as you receive the estimates, you will receive the commissions. Sotheby’s told us the following:

 

  • Commission: 6% + VAT instead of their standard terms of 10%
  • Liability for loss/damage: 0% instead of 1% + VAT
  • These charges are deducted from the total hammer price and paid 35 days following the auction.
  • Transfer to Sotheby’s account at Octavian, Corsham: at your own expense.

 

This looks pretty good on paper. The commission has dropped to 6% + VAT from 10% + VAT, with 0% for insurance. Unfortunately, this isn’t transparent either. There are two different commissions at a fine wine auction, and they have only told us about one.

 

Step 4: Double Check Buyer’s Premium!

When selling wine at auction, always double check the buyer’s premium. This is the commission a buyer will have to pay, as a percentage on top of the winning bid. And whilst the buyer must pay this, it directly affects the total amount you will receive.

Once you know what the commissions are, you can work out from the estimates how much you are likely to receive. After questioning Sotheby’s, the buyer’s premium was revealed to be 21% + VAT. Sotheby’s also confirmed that the estimates do not include buyer’s premium, or seller’s commission.

Read more about both commissions and how buyer’s premium directly affects what you will receive, here.


Step 5: Ask: Will they Perform Well at Auction?

It is a good idea to ask yourself before selling wine at auction: how easily are these available elsewhere? Whilst exceptionally rare wines often perform well, for portfolios like ours, openly available, people will be unwilling to bid above market price. Once you know how rare your wines are, you can factor in commissions.

With buyer’s premium at 21% + VAT, for a bidder to buy the wine for the same price they could from a merchant, a bid would have to be 21% + VAT below the wines’ market price.

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Step 6: Understand How Much You Can Expect to Receive

If we look at the estimates given by Sotheby’s, and compare these to the market price for the wines, we see a logic as to their calculation.

The high estimate has been worked out as 6% above market price. If you take this estimate and deduct seller’s commission, you land back at market price. This looks a fantastic deal if you are not aware that a buyer’s premium will also be charged.

The low estimate has been worked out as 20% below market price. In other words, the market price minus buyer’s premium. In actual fact, it would be slightly less than this, as buyer’s premium is 21% + VAT, rather than 20%.

The low estimate is then the price that you need to check when selling wine at auction, as this is the price someone will reasonably pay, just to achieve the same price they could if they bought the wines on the open market. The reality is that the final selling price will almost always be lower than this.

The low estimate will also need deducting seller’s premium at 6%. When including the total commission charges, they come to nearly 30%, leveraged across both buyer and seller.

  • (Market Price – 21% Buyers Premium) = Winning Bid – 10% Sellers Commision = Total Amount to Seller

 

Step 7: Understand Other Charges, and Payment Details

Whilst Sotheby’s dropped insurance costs to 0% for our portfolio, smaller sized collections can expect to pay 1% + VAT on top of the sellers premium. You will also have to pay for delivery to the auction houses account, which will normally be a small fee, depending on where your wines are stored. At JF Tobias, all of these costs would have been covered at our own expense.

In terms of payment details, Sotheby’s is fairly typical of what you can expect at a wine auction. They will pay out 35 days following the auction, once they have received funds from the buyer.

 

How to Sell Wine at Auction, and Why You Probably Shouldn’t

The process of selling wine at auction seems relatively simple, but the commission structures and charges are not always transparent. It is important to check the buyer’s premium, as well as the seller’s premium, as this can change what looks like a great deal, into one that is not.

If you are asking yourself how to sell wine at auction, you should also ask yourself why you probably shouldn’t. At JF Tobias, we believe in the transparency of values. Use our free valuation tool to find out the live market price for your fine wines, and the total amounts you could receive if you sell wine with JF Tobias.

GET A FREE ONLINE WINE QUOTATION NOW

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JF Tobias

JF Tobias