What Auction Guarantees Solve — and Obscure

In the last couple of years, major auction houses have seemed to rely more heavily on auction guarantees to keep top-tier sales moving in major art hubs like New York and London. For the contemporary art market, the guarantee has started to look less like an exception and more like infrastructure—closer to structured finance than pure price discovery. But, why would the art market guarantees be rising now?

An art market guarantee—whether underwritten by the house or a third party—would effectively promise a minimum outcome for a consignor, insulating a headline lot from the embarrassment (and price damage) of failing on the night. That logic appears to be scaling: Bank of America’s art market update reports that in H1 2025, about 45.5% of Post-War & Contemporary evening-sale lots were guaranteed and 73% of value was guaranteed—both new highs, and the value share was up 13% versus 2024.  

Ultra-rare Artworks and Macro Climate

One driver is the macro backdrop: higher interest rates and inflation have risen the cost of borrowing against art and reduced the “easy liquidity” that supported aggressive bidding when money was cheap.  At the same time, trophy supply appeared thinner. Artnet’s analysis of 2023 auction data notes that only six works sold for more than £40m that year, versus more than 20 in 2022—signaling fewer ultra-rare consignments coming to market.  When fewer trophy collections surface, auction houses feel pressure to “win” the best lots with stronger terms—meaning bigger or more frequent guarantees. The investment case has also cooled at the very top end: the Art Basel & UBS report indicates that works sold at auction above £8m fell 45% in 2024, while lower-tier dealers saw turnover rise 17%—a pattern consistent with risk-off behaviour concentrated in the high end.

Impact on Auction Market Dynamics

In the light of increasing auction guarantees, the impact is a more loss-averse, curated auction ecosystem. If the most valuable lots are increasingly guaranteed, the public theatre of bidding might mask a market that is quieter underneath: outcomes would skew toward “sold” and toward prices near estimates, because a large portion of supply is effectively de-risked before the gavel. Bank of America also points to a market dynamic where guarantees, private sales, and third-party backing help auction houses “derisk” amid uncertainty—useful for stability, but potentially limiting transparency. The result resembles a selection-bias problem familiar in capital markets: the best-supported “blue-chip” names get airtime, while weaker segments are filtered out, leaving the headline tape looking healthier than broad conditions.

Emerging Artists, Transparency & Trust

The rise of auction guarantees suggests a contemporary art market increasingly optimised for certainty rather than discovery. By backstopping outcomes, Sotheby’s, Christie’s and Phillips can limit balance-sheet risk in an inflationary environment while curating and projecting stability at the top end.

Yet this risk-managed structure raises questions about what remains unseen: the real performance of the mid-market and emerging artists, and whether selective support masks weaker demand in art investments.

As finance logic becomes embedded in art market mechanics, pressure may grow for greater transparency. The challenge ahead is whether the art market can balance risk control with genuine visibility and trust for artists, museums and collectors.

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*The views expressed in this article are solely personal opinions and should not be considered as investment advice.

*Disclaimer: Unless otherwise stated, all images featured in this article are AI-generated for illustrative purposes. They are not based on, affiliated with, or reproductions of any existing copyrighted images or artworks.

Cenk Usel

Art Market Professional