There are many examples of this in U. The U. For many years, industrial auctions were based on straight commission without the addition of buyers' premium. In the last few years, most sales have been held with buyer's premiums, and a comparison can be made to recovery with and without the buyer's premium fees, subject to some adjustments for inflation.
Most believe that it is reasonable for the following to occur when comparing sales with and without buyer's premium:. For many years, auction guarantees were very popular. Auctioneers would, of course, charge additional fees for those risks. There were some strategies with these guarantees that caused a seller to accept one auctioneer over another. However, in many cases, that may not have been the best decision when considering the highest net result to the estate. Reputable auctioneers could negotiate a fair fee without additional points added for risk and, in most cases, this would result in a higher net result to the estate.
Now that buyers' premiums have become acceptable, there are various strategies used by auctioneers. For example, auctioneers may say that they will conduct the sale at no cost to the seller and will simply add in a percentage buyer's premium , which will be their fee. However, in most of these negotiations, expenses for advertising, promotion, set-up and evaluation of the items to the appropriate buyers, including all related travel expenses, are deducted from the proceeds.
There are some auctioneers who say that a portion of the buyer's premium will be returned to the estate. This results in other alterations of the sale agreement, such as a percentage of expenses being the responsibility of the estate.
In multi-million dollar auctions, auctioneers may negotiate a buyer's premium and absorb percent of the expenses. The seller must be careful that the buyer's premium is not excessive, thereby adversely affecting the net result. Some types of sales are more sensitive to buyer's premium percentages than others. If at all possible, engage an independent evaluator who is familiar with these types of sales and who has some advice on the strategy for fees and expenses that would allow the highest net results.
The seller must be careful on expenses. I think this is outrageous. This IS another way to nickel and dime people. Thank you. I can kind of understand if we are talking about a traditional auction house. But for an online auction? When I sell on any of my multiple platforms guess who gets charged when a purchase is made? So why are these online auctions any different?
I imagine that if the house did that, the seller would balk at the price. Clearly the buyers premium is intended to confuse buyers and get them to pay more than they intend, in the heat of fast bidding. It would be fairer to charge an entrance fee at the door so buyers would know what they are paying up front.
Buyers premiums are wrong, the auctioneer works for the seller not the buyers. So, as the agent for the seller they should pay them not the buyers. I agree with Dennis. We should not have to pay a premium for purchasing their customers product. Today I completed my last auction until the buyer premiums go away. Of course there were other fees associated with buying a vehicle.
No more auctions for me. Free enterprise however presumes a transparent transaction. Your email address will not be published. Very clear as to the terms, large staff to assist bidders, audible, precise auctioneer. The auctions are well promoted and heavily attended. Search for: Search. Recent Posts. Find An Auction. The museum, the auction house, and the gallery floor are often perceived to be places of elevated culture and, as such, in these environments it can be difficult to ask questions that seem uninformed.
Although auction house jargon may at first glance seem straightforward, the definitions, history, and the current functional reality of many auction terms are complex, necessitating numerous publications and even site-specific glossaries in order to help guide the individual making his or her foray into the auction world. Furthermore, where does it come from?
And when was it established? This new fee unsurprisingly caused significant outrage.
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