Consignment

How Does Art Consignment Work?

Consignment is the most common method by which collectors sell artwork through galleries and auction houses. In a consignment arrangement, the owner of a work, known as the consignor, places the work with a dealer or auction house, known as the consignee, who agrees to sell it on the owner's behalf. Crucially, ownership of the artwork does not transfer to the consignee. The consignor retains title until a sale is completed, at which point the consignee deducts their commission and remits the balance to the consignor.

Gallery consignment typically involves a dealer agreeing to display and actively market a work to their client base. The gallery's commission usually ranges from 30 to 50 percent of the sale price on the secondary market, though rates vary depending on the value of the work, the reputation of the artist, and the gallery's selling power. The consignment period is usually defined in a written agreement, often lasting three to twelve months, with provisions for renewal. During this period, the gallery may exhibit the work, include it in art fairs, or offer it privately to collectors.

Auction consignment follows a different model. The consignor delivers the work to the auction house, which catalogues it, photographs it, and includes it in an upcoming sale. The auction house charges the seller a commission, which varies but is often negotiable for higher-value works. The auction house may also offer the consignor a reserve price, a minimum price below which the work will not be sold. Some consignment agreements include a guaranteed minimum, where the auction house or a third party guarantees that the consignor will receive a specified sum regardless of the auction result.

Why Does It Matter for Collectors?

Whether you are buying or selling, understanding consignment is essential. As a seller, the consignment agreement is the most important document in the transaction. Read it carefully and negotiate terms, including the commission rate, the consignment period, the reserve price, insurance coverage while the work is in the consignee's possession, and the timeline for payment after a sale.

As a buyer, knowing that a work is on consignment can sometimes provide leverage, because the gallery or auction house is motivated to complete the sale and earn their commission. When buying from galleries, do not hesitate to ask about the terms under which a work is being offered. Transparency about consignment arrangements is a hallmark of reputable dealers.