Deadbeat Data

Public auctions are the primary source of sales data for the art industry and it's no surprise that their results have an enormous impact on prices.  

David Hockney, Two Sunflowers in Green Glass Vase, 1996, oil on canvas, 24 x 24 inches

When the hammer hits and the sale price gets logged, that sets expectations for the next time a similar  work by the same artist is up for sale. That sale price can establish an upward trend, a downward slide, and, of course, the dreaded "no-sale" which can quickly send an artist's prices, and even career, spiraling into oblivion.

While auction houses consider all sales final, it's not always the case.  Enter the so called "deadbeats" - those who bid on a piece of art, but never pay for it. That happens more often than you might think.  In Chinese-owned auction houses, for example, 90% of sales over $10 million end up as deadbeat sales. These deadbeat sales create lasting problems.

Sure, the original owner retains the piece. The auction house and any brokers lose their cut. No one's happy, but at the end of the day, they just try again next time and all is well, right?

Wrong. Don't forget, when the hammer hit, that price got logged. It became part of the primary source of pricing data for the art industry, which has no consistent way of handling deadbeat sales. All too often the recorded price never gets revised.   So the effects of a deadbeat sale may be felt months or even years after the auction.

Presumably, the piece would have sold for less if the deadbeat hadn't bid, so any data set including that price is skewed too high.

But what if the record is revised to a no-sale?  That could have a negative effect on the future price of that individual work, or on all works by the artist.   After all, if an artist’s work doesn’t sell, the work may be seen as undesirable.

Neither case helps establish the true value of the piece. That's why ARTBnk professionals scour our data to eliminate these and other types of inconsistencies.  And that's one reason why ARTBnk’s Real Time Valuations (RTVs) are accurate within +/- 10 percent, 80 percent of the time.

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