June 18 (Bloomberg) -- London art sales this month have estimates that are 70 percent lower than last year as auction houses abandon guaranteed prices, deterring sellers.

The number of high-value lots by artists such as Pablo Picasso, Andy Warhol, Francis Bacon and Richard Prince has dropped at evening Impressionist and contemporary auctions by Sotheby’s, Christie’s International and Phillips de Pury & Co. The auction houses expect to make at least 100.9 million pounds ($165 million) in total. The equivalent sales last year had a low valuation of 334.7 million pounds.

“Now that auctioneers aren’t offering guarantees, people are trying to negotiate private sales,” said Helena Newman, Sotheby’s London-based head of Impressionist auctions. “They’re saying, ‘This is what I want. If you can’t get it, I’d rather not sell.’”

The auction houses announced at the end of last year that they would no longer be offering minimum prices to sellers after several high-value guaranteed works failed in the last quarter of 2008. The companies still make occasional use of third-party guarantors to support individual lots.

Last year, six guaranteed works sold for more than 10 million pounds, led by the 40.9 million pounds at Christie’s for Monet’s 1919 “Le Bassin aux Nympheas.” No piece is expected to fetch more than 10 million pounds this time.

Sotheby’s and Christie’s latest catalogs -- physically reduced in size by 10 percent -- contain inserted letters promoting their private-sales departments. In 2008, Sotheby’s had private sales of $370 million and Christie’s had 267.6 million pounds, according to the companies’ end-of-year reports.

Lacking Confidence

“The catalogs are thin,” Richard Nagy, a London-based dealer in 20th-century German art, said. “People don’t have the confidence to sell good things at auction. They’re not going to risk it failing, and aren’t prepared to let things go at the prices the salerooms are putting on them.”

Christie’s and Sotheby’s auctions of Impressionist art on June 23 and 24 respectively carry low estimates of 37.75 million pounds and 26.75 million pounds. Last year, the equivalent estimates were at least 91 million pounds and 67 million pounds.

The star lot of Sotheby’s 27-lot Impressionist auction is the 1969 Picasso “musketeer” painting “Homme a l’epee,” estimated at 6 million pounds to 9 million pounds. The work is the only one with the “irrevocable bid” symbol, indicating a third-party guarantor will provide the first bid.

Christie’s 45-lot sale includes a 1969 Picasso “Homme a l’epee” that, like the Sotheby’s picture, was featured in the artist’s 1970 exhibition in Avignon. Estimated at up to 7 million pounds, this was bought by its seller at Christie’s in 2005 for 2.7 million pounds.

Speculative Buying

Estimates for contemporary-art auctions have contracted more. The average auction price of contemporary art has fallen 76.2 percent since May 2008, said London-based ArtTactic. In recent years, contemporary works had more speculative buying and re-selling than Impressionist pieces, said dealers.

Sotheby’s expects to make at least 19 million pounds from its June 25 sale of contemporary works, less than a third of what it expected last year. The 17.4 million-pound low estimate for Christie’s sale on June 30 is 78 percent down on 2008. Phillips’s minimum valuation of 5.4 million pounds for its June 29 sale is 82 percent lower.

“Over the last couple of years we could use guarantees to tease out high-value property,” said Cheyenne Westphal, Sotheby’s European chairman of contemporary art. “We could say a work would fetch $15 million and put a check on the table.”

Basel Dinner

Auction prices have fallen to a level with which buyers are comfortable, said Westphal, after hosting a dinner for collectors last week in Switzerland during the Art Basel fair.

Sotheby’s 40-lot London sale -- last year the company offered 75 lots -- includes a 1963 black-on-silver Warhol silkscreen, “Mrs. McCarthy and Mrs. Brown (Tuna Fish Disaster),” that is estimated at up to 4.5 million pounds.

Sotheby’s and Christie’s both offer canvases by Peter Doig. The 2000 Canadian landscape “Almost Grown” has a low estimate of 1.4 million pounds at Sotheby’s, while Christie’s is hoping for at least 1.5 million pounds for the cityscape “Night Playground.”

“The lowered estimate for the sale reflects the drop in values in the art market,” said Francis Outred, Christie’s European head of contemporary art. “It also reflects current price levels. Many estimates at auctions in November and even February had been set during the boom.”

Christie’s is offering 40 lots, 18 fewer than last June. No work is estimated at more than 2 million pounds.

Financial Stability

“Buyers seem to have become more confident over the last few months,” Outred said. “Now that equity and property markets have stabilized, they understand their own finances.”

Christie’s other highlights are the 1974 Gerhard Richter painting, “1025 Farben (1025 Colors)” and Prince’s 2003 painting “Country Nurse.” The Prince work, valued at 1.5 million pounds to 2 million pounds, is the only lot at Christie’s carrying a third-party guarantee.

At Phillips, a 2005 Prince photograph, “Spiritual America IV,” of the bikini-clad actress Brooke Shields leaning against a motorcycle, is estimated at up to 600,000 pounds.

“Sellers want to know what’s going on in the market,” Anthony McNerney, a London-based specialist at Phillips, said. “They’re reluctant to offer masterpieces without guarantees.”

Last year Phillips guaranteed 41 out of the 91 lots at its June sale, which fetched a below-estimate 24.5 million pounds.

This year a scaled-down catalog of 40 lots contains no symbols for guarantees, though Phillips does indicate a “financial interest” in six works. The most highly valued lot is Ed Ruscha’s 1989 painting “That Was Then This Is Now,” estimated at up to 800,000 pounds.

“The speculators have gone,” said McNerney, who formerly worked at Christie’s. “The first two questions I always used to be asked were, ‘How much is this going to cost me?’ and ‘What will this be worth in two years?’ I felt like a commodity trader. Now I have to talk about the art.”

(Scott Reyburn writes about the art market for Bloomberg News. Opinions expressed are his own.)

To contact the writer on the story: Scott Reyburn in London at sreyburn@hotmail.com.

Last Updated: June 17, 2009 19:00 EDT