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Understanding Auctions, Auctioneers & The Buyer’s Premium

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AuctionIn a time within the land when we witness the economic downturn I find it surprising to hear some auctioneers boasting of not charging a buyer premium. Auctioneers are supposed to be working for the seller but some may have been in the business so long that they lose sight of this and are more concerned about pleasing the customers (buyers) more than their clients (consignors). Maybe some auctioneers have gotten to the point that they have so much business that they are only concerned about the customers and not their clients. If so, shame on them! Auctioneers who don’t use a buyer premium are telling their clients that they should pay for everything – the commission, labor and advertising and every possible related expense to conducting an auction. Some Auctioneers are charging upwards of 35% PLUS advertising, labor and associated expenses. What does this leave a seller with at the end of the day? You are right, not much! Product drives the sale. Product is what the customers/buyers consume. The product will determine the price regardless of what it is because auctions deal in the reality of what anything is worth. Many people are skeptical and shy away of letting much personal property be sold at auction because of the loss they could suffer. A buyer premium helps alleviate the seller of their fears of greater loss by letting the person who benefits the most from it – the buyer. scalesIf you are the seller would you rather receive only sixty-five cents of every dollar less the advertising and associated costs or would you rather receive eighty-five cents of every dollar? The math is not hard to figure out. Buyers who want the product will pay true market value and bid with very little regard to the buyer premium. This is not just an opinion but a matter of fact from research studies. (Stay tuned for our complete report soon to be published.) Many prominent auction companies use very high buyer premium with some reaching upwards of 20+% You see the television shows on auctions. Even the popular Auction Kings at their auction house in GA use a 15% buyer premium. A buyer premium is fair and balanced between both clients/sellers and customers/buyers. Clients are more willing to let product go to auction knowing that they will not suffer as great a loss. I recently heard of an auctioneer boasting about how they will never use a buyer premium and finding every opportunity to try to belittle the buyer premium at an auction they conducted for a government entity. Why? Because the personal aspect of the sale is removed and there is little accountability since it is not personal assets they are selling. These auctioneers were obviously full of themselves and were really demonstrating that they have lost touch and have disregard for those whom they should treat with the utmost respect and gratitude – the seller/consignor, for without them, they would not be having the auction? Anyone would know that it would be really insulting to talk this way in front of a family who has entrusted you to be looking out for their economic best interests for an estate or business. One thing you can have the assurance of is that these auctioneers who boast in this manner have been in the business either way too long or not long enough to understand how they have lost touch with whom they are working and are ethically and morally obligated to advocate and represent. Fact is that today a person or family can not afford to suffer the loss of an auctioneer who refuses to use a buyer premium. It is really simple to figure out how much much more a family will pocket at the end of a day simply by the amount of the buyer premium. On average our clients make at Ten Percent (10%) or more than any of our competitors who do not use a buyer premium. Do not let an auctioneer get away with telling you that people will not buy what you have to sell if you have a buyer premium. These auctioneers are not being honest with you because studies have been conducted that have proven and the numbers don’t lie from the math that when an auctioneer uses a buyer premium that the people or company having the auction at the end of the day winds up with more money. The quality and quantity of the product is what determines the price, not the buyer premium. If you have what people want, people will come out to buy it regardless of a buyer premium