Editor’s Note: This story originally appeared in On Balance, the ARTnews newsletter about the art market and beyond. Sign up here to receive it every Wednesday.A former executive at a global auction house recently shared an interesting statistic with me about what the industry calls the “middle market.” This term means different things to different houses, but generally it refers to lots valued below $1 million and collections below $5 million. This source told me that, across all auction houses, lots below $1 million attract (conceptually) 10 percent or less of the attention, 50 percent of the hammer price, and 70 percent of the earnings. But the problem that auction houses are facing, at all price bands, but particularly this one, is squeezed margins, as overhead rises and sellers demand a greater share of the profits. Complex financial deals—like enhanced hammers, where a seller gets a percentage of the buyer’s premium, or guarantees, where auction houses promise to pay a minimum amount no matter how much the object or collection sells for—used to be limited to the top of the market. But that type of deal-making is trickling down to the middle market, where there are even more participants and fiercer competition. These include Heritage Auctions, Rago/Wright, Bonhams, Freeman’s, and Doyle, as well as many smaller regional players like Vogt in Texas, Stair Galleries in New York, and Brunk Auctions in North Carolina, just to name a few. According to one leader at a regional auction house, smaller estates, once the purview of estate attorneys, are now “infiltrated with advisers and fiduciary go-betweens who are familiar with the top end of the market” and demanding aggressive deals. Meanwhile, another auction leader who focuses on trusts and estates, told me that Bonhams has largely vacated that space, except for celebrity estates, leaving it to Doyle and Freeman’s, which reported handling 131 trusts and estates last year, and the smaller regional firms. It’s not for lack of demand on the buyer’s side: Stair sold the decorative arts collection of Carole Harris last year for $4.5 million, three times its pre-sale estimate. According to Bank of America and ArtTactic’s 2026 US art market report, 94 percent of transactions at Christie’s, Sotheby’s, and Phillips in the US last year took place below the $1 million threshold. Artworks under $50,000 comprised 61.3 percent of total lots sold in the US at those three houses, significantly above the pre-pandemic average of 48.2 percent between 2015 and 2019. But the overhead costs associated with selling a $50,000 painting are essentially the same as a $5 million painting, while the profits, if any, are much less. Kat Brown/ARTnewsA couple weeks ago, Sotheby’s raised its buyer’s premium to 28 percent on lots hammered at or below $2 million, up from 27 percent on lots hammered at or below $1 million. This might help regional houses attract more bidders, since they charge lower fees in this price band. Rago/Wright’s buyer’s premium is 22 percent on lots above $1 million; Bonhams’s is 21 percent from $1 million to $6 million; Freeman’s is 21 percent on $1 million and above; and Doyle’s is 21 percent from $1 million to $4 million. Heritage does not have graduated buyer’s premiums, but does offer different rates for different categories. Their buyer’s premium for coins, comics, and sports memorabilia is 22 percent, while arts, entertainment, and historical collectibles is 25 percent.Yet another factor in all of this is third-party auction sites like Invaluable and Auction Technology Group’s trio of sites—LiveAuctioneers, Proxibid, and The Saleroom—taking a cut of those profits. These aggregators help smaller houses reach a wider bidder base, but since ATG consolidated control of the industry by acquiring Proxibid in 2020 and LiveAuctioneers in 2021, they’ve become “vultures preying on us,” the head of one regional auction house told me last year. Some auction houses are passing on the “third-party fee” to clients who choose to bid through those sites; at Heritage, that fee is 5 percent. The various middle-market houses have weathered these conditions with differing degrees of success. Last year, Heritage Auctions, headquartered in Dallas, achieved $2.16 billion in sales across 50 categories, their fourth consecutive year with a record-breaking haul. They are now the third largest auction house after Christie’s and Sotheby’s in terms of total sales, jockeying past Phillips and Bonhams for the position. Known primarily as a collectibles auction house, Heritage is benefiting from the boom in that category, as collectors transform nostalgia into an asset class. Last year Heritage’s top lots included a Superman No. 1 (1939) for $9.12 million and an Upper Deck Dual Logoman Autograph card signed by Michael Jordan and Kobe Bryant for $12.93 million. But don’t discount Heritage in fine and decorative arts. They also sold Norman Rockwell’s So You Want to See the President (1943) for $7.25 million, and a Fabergé cloisonné punchbowl for $750,000. Nick Nicholson, Deputy Chairman, Decorative Arts, and Aviva Lehmann, Deputy Chairman, Fine Art, Heritage Auctions. Photo courtesy of Heritage Auctions.Heritage announced earlier this month that American art specialist and 13-year Heritage veteran, Aviva Lehmann, who led the house to its biggest American Art sale ever last year at $14.76 million, has been named deputy chairman of fine art—a big step for the auction house, where 12 of the 13 managing partners are male. Meanwhile, Nick Nicholson has been promoted to deputy chairman of decorative arts. These appointments indicate Heritage’s intention to go after these markets in a meaningful way. According to the Bank of America report, buyers in the western US, anchored by California, accounted for the largest share of the country’s fine art purchases in 2025 at 35 percent, fueled by the high volume of purchases under $50,000, followed by the southeast region, fueled by Texas and Florida, at 28 percent. For lots above $1 million, the share of buyers in the western region increased from 15 percent in 2020 to 31 percent last year.The Rago/Wright network, which comprises five houses, reported $130 million in sales last year—their highest total ever. Rago, based in New Jersey, and Wright, based in Chicago, merged in 2020, then added LA Modern Auctions and Toomey & Co. over the next couple years. With these mergers came more resources and larger teams, which has enabled them to compete for higher-value property. Their focus, according to CEO Richard Wright, is tightly curated auctions and single-owner sales. They focus on collections in the roughly $500,000 to $1.5 million range, like Donald Hecht’s collection of George Ohr ceramics, which more than doubled its estimate to make $1.08 million last year, and the Michael Jefferson collection of art and design, which made $1.5 million. Without a trusts and estates department, they often sell collections assembled by former clients, a testament to their strong reputation. Although known primarily for design, Wright reports they are growing in fine art and will sell more than $50 million in that category this year. They’re also expanding their collectibles division under wunderkind Travis Landy, who joined in 2024 to launch Landry Pop Auctions under the Rago/Wright umbrella.Bonhams and Freeman’s have had bumpier roads, with high turnover in their upper ranks. Bonhams, which reported $970 million in sales last year, is poised for a reset. Last fall Epiris, the private equity firm that previously owned the Britain-based auction house, handed over ownership to its primary creditor, Pemberton Asset Management. As the Financial Times outlined, Epiris’s debt payments had ballooned as the art market declined in 2024. Then-CEO Chabi Nouri, who had previously led luxury brand Piaget, was apparently not the right person to steer the ship through that storm. The handover to Pemberton involved a near-total decapitation of the house’s previous leadership, except for Switzerland-based chairman Hans-Kristian Hoejsgaard. The new UK-based CEO Seth Johnson joined from billionaire Michael Spencer’s family office, IGPL. Bonhams lost a lot of talent throughout the turmoil but, according to one employee, the vibes are “cautiously optimistic” about the new leadership. With its new 42,000-square-foot Manhattan flagship, Bonhams is positioning itself to compete for higher-value property and collections. But everyone in the auction industry is wondering about the end game for Pemberton, a financial firm that ended up with this asset on their books but isn’t in the business of running auction houses. Meanwhile, Freeman’s recently completed its rebrand after the 2024 merger of Chicago-based Leslie Hindman Auctioneers and Philadelphia-based Freeman’s, under the ownership of executive chairman, Jay Krehbiel. They reported $119 million in sales last year, led by the sale of historic Americana related to Abraham Lincoln for $7.9 million, the highest total ever for a single auction in the company’s history. Whether they can keep the momentum going remains to be seen, after the recent resignation of CEO Alyssa Quinlan after three years, to join financial services company Northern Trust. According to Freeman’s, Krehbiel is guiding the business on a day-to-day basis. The middle market is in a time of transition as smaller houses consolidate and find their niches in a crowded field, but ultimately all compete for many of the same consignments. But there’s no doubt the demand is present from the buyers’ side, if the houses can just figure out how to keep their margins from shrinking amid rising costs and aggressive deal-making.