Buying at auction with your eyes open.

Buying wine at auction is the most direct route to bottles that have left the retail market: mature vintages, whole cellars from a single owner, cases sent to the sale by the estate itself and large formats that merchants rarely hold. It is also the most direct route to somebody else's storage mistakes. Three things separate a good buy from an expensive lesson: reading the lot description properly, knowing the true cost once the fees are added and setting a limit before the sale rather than during it.

Hong Kong is a good place to learn. The city removed its duty on wine in 2008 and has since become one of the world's major wine auction centres. The principles below apply in any saleroom and online.

Why buy at auction

Merchants mostly sell what they can buy on release and restock. Auctions sell what collectors and estates decide to part with, which is why older vintages turn up there. A single-owner sale can offer a run of vintages that share one cellar and one history. Some estates consign wine directly from their own cellars. Large formats, made in small numbers, often surface only when a collection is sold.

What you give up is recourse. A good merchant will usually replace a faulty bottle. At auction, lots are commonly sold as is, with any condition report given as the house's opinion. Do your checking before the hammer falls, because afterwards there is little you can do.

Reading a lot description

A lot description compresses a great deal into a line or two: quantity, format, wine and vintage, then a string of condition notes, the packaging and sometimes a statement of origin. Every house publishes its own glossary and they differ, so read the one for the sale in front of you. These abbreviations are common:

• Fill level. bn (base neck), ts (top shoulder), hs (high shoulder, which some call upper shoulder) and ms (mid shoulder). Burgundy-shaped bottles are measured in centimetres below the cork. What is acceptable depends on the wine's age: what fill levels tell you sets out the scale.
• Label. bsl (bin-soiled label), nl (nicked label), tl (torn label). Cellar marks are usually harmless. A wine-stained label is a different matter: the wine came from somewhere and it may have been this bottle.
• Capsule and cork. cc (corroded capsule), sos (signs of seepage) and notes of a raised cork. Seepage and a raised cork both suggest heat at some point in the bottle's life and deserve a question.
• Packaging. OWC means original wooden case; OC or OCB means original carton or cardboard box. An original case suggests the bottles have stayed together. It does not tell you where the case was kept.
• Format. Check it every time. Six magnums and twelve bottles hold the same volume, yet they are different purchases with different estimates. Above the magnum, the names of the big bottles mislead: a Jeroboam holds 3 litres in Champagne and 5 in Bordeaux (4.5 in older Bordeaux bottles).

The statement of origin deserves the most attention. Ex-château means the wine has come to the sale straight from the estate's own cellar, the strongest claim a catalogue can make. Fresh labels and capsules are normal on such bottles, since estates may dress old stock specifically for the sale. From a single private cellar tells you that one history covers the whole lot. It does not tell you what that history was, so ask. Where a lot carries no statement at all, assume the least favourable story and bid accordingly.

The standard provenance checks apply to every lot. Famous names in old vintages and large formats deserve the extra scrutiny set out in how to spot fake wine.

What buying wine at auction really costs

The hammer price is not the price. On top of it comes the buyer's premium, the auction house's commission, which is substantial and varies from house to house. Some houses charge a lower rate above set thresholds, some add tax to the premium and some charge extra for bidding online. Then come the costs that are easy to forget: card or transfer fees, storage if you are slow to collect, delivery and, for wine leaving Hong Kong, the duty and taxes of wherever it lands.

The estimate printed beside each lot is the house's guide to the likely hammer price and usually excludes the premium. A lot may also carry a reserve, the confidential minimum agreed with the seller, which is normally set at or below the low estimate. Neither figure tells you what the wine is worth to you.

All of this is set out in the terms of sale, which are worth reading before you register. They state the premium, when and how you must pay, how long you have to collect before storage charges start, how long you have to raise a problem and what the house does and does not guarantee.

Questions to ask the specialist

Specialists expect questions and their answers often reveal more than the catalogue. Ask by email so the replies stay on file.

1. Where has this wine been stored, for how long and at what temperature?
2. How did the consignor acquire it: on release, from a merchant or at another sale?
3. Did your team inspect the lot or is the description based on the consignor's information?
4. Can you send photographs of the fill, the labels, the capsules and the case markings?
5. Has any bottle been recorked, recapsuled or topped up? By whom?
6. Is the case original and has it been opened?

A vague answer is still an answer. If nobody can say where the wine spent the last ten years, price it as a wine that spent them somewhere warm.

Setting your ceiling and bidding

Decide what the lot is worth to you as an all-in figure, including the premium, delivery and storage. Then work backwards: take off delivery and storage, divide what remains by one plus the premium rate and the result is the highest hammer price you can bid. If the premium is tiered or taxed, use the full rate that applies at your price. Write the figure in the catalogue margin before the sale starts.

Set your ceiling at home with the premium included and let the lot go when the room passes it.

You can bid in four ways. In the room, you see who is bidding and feel the pace, which is also the danger. On the telephone, a member of staff bids for you in real time, which suits a handful of lots. Online, you bid live through a web platform, so test your login and connection well before your lot comes up. A commission bid, left with the house in advance, is executed on your behalf up to your maximum and only as far as competing bids and the reserve require. For a first sale it is the most disciplined option, because the ceiling is fixed before the adrenaline arrives. Register early, since new bidders may be asked for identification and financial references.

Choose the kind of lot as carefully as the wine. A mixed lot bundles several wines or vintages, sometimes the odds and ends of a cellar. It can be an economical way to taste widely, but you buy the weakest bottle along with the best and each may have its own history, so read every line. A single-vintage case in its original wooden case is easier to judge, to store and later to sell, which is why it draws more competition.

After the hammer

Pay promptly and collect promptly. A case that spends a day in a car boot or a weekend on an office floor can lose more than the saving you made at the sale. Collect in an air-conditioned car or book temperature-controlled delivery and take the wine straight to a cabinet or to professional storage. Let it rest before you open anything, especially old bottles that have just travelled.

Check the lots on arrival against the description, photograph anything that does not match and raise it within the time the terms allow. Then keep every document: the catalogue page, the condition report, your emails with the specialist, the invoice and the delivery note. That file is the next chapter of the wine's provenance and the first thing an insurer or a future buyer will ask for. Documenting and insuring a collection explains how to keep it.

For a first sale, keep it small. Watch one auction before you bid in one. Then choose two or three lots of wines you already know, view them in person or by photograph, ask your questions in writing and leave commission bids at the ceilings you set at home. If you would rather have mature wine found and checked for you, our sourcing service can take on the search.