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How the art market works: auctions, galleries, private sales and guarantees

How is art bought and sold? New work by living artists is first sold by galleries, on the primary market. Every later sale is the secondary market, handled by dealers, by auction houses in public sales and by auction houses privately. In 2025 dealers sold $34.8 billion of art, public auctions $20.7 billion and private sales at auction houses just under $4.2 billion, out of a global total of $59.6 billion (Art Basel and UBS Art Market Report 2026).

Key takeaways

Two markets, one object

A painting usually leaves the artist's studio through a gallery. That first sale is the primary market. The gallery sets the price, chooses the buyer (often with a waiting list, and a preference for collectors who will not flip the work) and takes a commission; the split with the artist is private and varies.

Everything after is the secondary market. For Modern and Post-War masters, almost all trade is secondary: Picasso died in 1973, Warhol in 1987. Prices are set by resale.

The trade is split this way too. Among fine art dealers surveyed for the 2026 Art Basel and UBS report, 52% worked only in the primary market, 9% only in the secondary market and 39% in both. Dealers working in both made 58% of their 2025 sales by value on the secondary side.

Auction houses: Christie's, Sotheby's, Phillips

Three houses set the public prices for blue-chip art. Christie's projected 2025 global sales of $6.2 billion, of which $4.7 billion at auction and $1.5 billion in private sales. Sotheby's reported preliminary consolidated sales of $7.1 billion for 2025. Phillips, smaller and stronger in Contemporary art, reported $927 million, up 10%. These are company figures, not audited market data.

For Modern art the concentration is extreme: Christie's and Sotheby's handled 63% of 2025 auction sales by value. And the very top is in one city. All ten most expensive lots sold at auction in 2025 were sold in New York, and the US held 78% of the value of the global $10 million-plus segment (Art Basel and UBS Art Market Report 2026).

The calendar matters. Evening sales in New York in May and November carry the trophy lots; London, Paris and Hong Kong follow. A seller who misses the right sale can wait six months.

How a lot sells: the house publishes an estimate, the seller agrees a confidential reserve (the price below which the work is not sold, usually no higher than the low estimate), and the auctioneer takes bids in the room, by phone and online. The hammer price is not what the buyer pays. On top comes the buyer's premium, which at Sotheby's and Christie's is now 28% on the first $2 million.

Guarantees and irrevocable bids

Most of the big lots you read about were sold before the auctioneer opened the bidding, at least partly.

A guarantee promises the seller a minimum price whatever happens on the night. Sotheby's marks these lots with a circle and states plainly that it has a direct financial interest in the outcome. If the house does not want to carry all that risk, it lays it off to a third party, who commits in advance to buy the lot at a set level. Sotheby's calls this an irrevocable bid and marks it with its own symbol; if nobody bids higher, that party buys the work.

Why would anyone do that? Because if someone else wins, the guarantor is paid, usually a fee or a share of the buyer's premium. And sometimes the guarantor wants the painting at that price anyway.

For you as a buyer, three things follow. A guaranteed lot will sell, so the result says less about depth of demand than a price reached by open competition. The underbidder may be someone with a financial stake. And the published price includes the buyer's premium, so a guarantor who wins may in practice pay less, net of the fee. Read the symbols in the catalogue before you bid.

Private sales

Christie's and Sotheby's both run private sales departments, and dealers have always done this. The seller sets a price, the house or dealer shows the work quietly to a few buyers, and the sale happens with no public result.

The 2026 Art Basel and UBS report puts it well: in weak markets sellers turn to private sales because they want control over price and timing, confidentiality, and less risk of a failed auction. Private sales at auction houses fell 5% in 2025 as public auctions recovered.

The cost is transparency. A private sale leaves no public price, so it does not show up in auction databases or in price indices. Two buyers of the same painting can have paid very different amounts and nobody else will know.

Fairs, advisers and the rest

Art Basel, Frieze, TEFAF and the other big fairs are where dealers sell much of their stock in a few days, often with works reserved before the doors open. Art advisers act for buyers, check provenance and condition, and negotiate; their fees are agreed privately.

Before any purchase of a major work someone has to do the dull part: title, provenance through the war years, export licences, the condition report, and whether the catalogue raisonné committee for the artist accepts the work.

Where Unicorn Art Club fits

Unicorn Art Club buys on the secondary market, at auction or privately, one work per artist through a dedicated vehicle, after its in-house experts have checked provenance, condition and value. The exit, planned between 3 and 7 years and decided by Unicorn Private, uses the same two routes: auction or private sale. To see where an artist's works have been sold recently, and by which house, Unicorn Art Watch publishes results with sources, for example artwatch.unicorn-club.com/artists/pablo-picasso.

Risk

Investing involves the risk of losing capital.

Frequently asked questions

What is the difference between the hammer price and the price paid?

The hammer price is the winning bid. The buyer then pays the buyer's premium on top (at Sotheby's and Christie's, 28% on the first $2 million of the hammer in 2026), plus any taxes. Published auction results usually include the premium.

What is a reserve?

The confidential minimum price agreed between seller and auction house. If bidding stops below it, the lot is not sold (bought in). The reserve is not published and is usually not higher than the low estimate.

Do guaranteed lots sell for more?

Not necessarily. A guarantee ensures that the lot sells, at or above the guaranteed level. The final price depends on whether other bidders compete.

What is Phillips' Priority Bidding?

Introduced in 2025, it lowers the buyer's premium by 1 to 4 percentage points, depending on the tier, for bidders who leave a binding written bid at or above the low estimate at least 48 hours before a live auction (Grossman LLP, May 2026).

Related guide

Sources

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