Since it’s inception in 2011, Art Auction Guarantee (based in Los Angeles and London) has been providing traditional third-party guarantees. At the upcoming Art Basel Miami Beach 2012, the company will launch it’s new service, offeringguarantees to buyers as opposed to sellersfor works in the $10,000 to $500,000 range.

According to AAG’s website, their objectives are to:

Offer our clients (being private individuals, dealers/ galleries, art funds and/or auction houses) the peace of mind of obtaining a minimum amount agreed upon in advance from the buy/ sell of a piece of art:

Either as a guarantee for a price paid when buying an art piece (either in auction or privately)

Or as an auction guarantee for a piece that a seller will present in auction.

Blouin Artinfo reports on how this service works:

AAG charges clients a fee of 5 to 7.5 percent of a work’s acquisition price in exchange for a guarantee. If a collector decides to sell the guaranteed artwork at auction two or more years after purchasing it and the work fails to sell above its reserve, AAG will buy it back for the same price he or she originally paid. (Inflation, exchange rates, and auction house fees aren’t factored into the total.) If the work sells above the original acquisition price, AAG receives 15 percent of the profit and the collector keeps the rest.

“It’s a competitive rate,” noted Aquizerate. By comparison, most third-party guarantors take at least 50 percent and as much as 80 percent of the upside. To entice dealers to recommend the service to their clients, AAG will be offering them approximately 1.5 percent of its initial fee and a small portion — approximately 5 percent — of the resale profit.

However, skepticism remains regarding the comfort level the company can offer in it’s services.

According to Jeff Rabin, co-founder of art investment firm Artvest Partners.

“I don’t know what they own or the scope of their guarantees. But if all their clients try to cash in at once, they might be forced to go into bankruptcy and liquidate. And if that happens, what happens to all the people they guaranteed?”

Founder of AAG, Arnault Aquizerate, says that he:

is planning to approach investors at the beginning of next year to provide an additional backstop, but “for the time being we have not had the need to invite in our shareholding structure any private investors or investment bank.”