The “Chandelier” in the Phantom of the Auction

By Hanna Feldman

In the elusive, exclusive world of art auctions, there is a practice called chandelier bidding which is little-known by outsiders and widely used among auctioneers. (No it does not refer to bidding on a chandelier).

What is it? Many may assume that an auction begins with a legitimate bid in the room, but auctioneers instead frequently employ “nonexistent bids . . . —usually with their gaze fixed at a point in the auction room that is difficult for the audience to pin down—in order to create the appearance of greater demand or to extend bidding momentum for a work on offer.”

Why is this practice in effect? Depending on whom you ask, chandelier bidding is used to add drama to auctions and conceal the reserve price, or it’s a way to manipulate buyers into bidding higher prices on items. The reserve price is a term of art meaning the lowest price for which a consignor had agreed to sell her property at auction. As Debra Force, owner of Debra Force Fine Art and a former director of Christie’s American paintings department stated in an interview with ARTnewsletter in September 2007, “The auctioneer has to start the bidding somewhere. People don’t start bidding right away, and you need to build up momentum.” Or, as Steve Schindler puts it in The Art Law Podcast (May 2018), the auctioneer has to “warm up the room.” Chandelier bidding also allows auction houses to conceal the reserve price, which helps free up the bidding by not revealing what the seller’s minimum selling price is. If a work fails to sell above the reserve price, then it is disclosed as BI or bought in and the work is considered burned. Both auctions and sellers want to avoid being burned because, per a 2017 Artsy article,  the work’s value decreases and now there is a “public record of a lack of interest in a particular piece.” This is the conventional wisdom regardless of whether actual bidders bid on the work below the reserve price and thus demonstrated interest in the piece. A 2008 study by Oxford professors Alan Beggs and Kathryn Graddy analyzed auction sales by Christie’s and Sotheby’s between 1980 and 1990 and found that burned works yielded 30% less than their “un-scorched counterparts.”