Posted by Clint Dixon (Curator of Antiquities) on Saturday, July 08, 2006 at 1:18PM :
I just noticed Rob Blair's post and that of Joe's from the previous Forum. Anyone else notice that these auctions have "buyer's premiums"? Some auctioneers that consider themselves “upscale” have been charging buyer's premiums for some time now. These are usually topnotch collector’s auctions. Now Power-Wagons are found being sold at auctions with buyer's premiums.
Where I come from, the whole idea of an auction goes something like this: The seller is the employer who hires the auctioneer as employee to sell whatever. The auction brings in a total dollar amount, say $1,000,000.00. The employer (seller) then pays the auctioneer (employee) a previously agreed upon fee for their services. This can be anywhere from 10% to 25% of the total sales depending upon the type of merchandise being sold and the amount of work needed to get it ready and to the auction block. Well, auctioneers overhead has risen because of fancier equipment, more elaborate accommodations for the auction location, additional workers, etc., etc., and they also want a bigger piece of the pie. Now they have the seller about tapped out as far as the fees they can charge, so they have resorted to charging the customer (buyer) a fee for the privilege of winning the bid (buyer's premium).
A few auction companies local to me have tried this with mixed results. Here is what usually happens. Sellers have to take into account what the overall price of the goods is going to cost them (winning bid plus buyer's premium). So now they are willing to bid a lesser amount to get that great buy. Before they may have bid $5000.00 for a good Power-Wagon, now they may be willing to bid only $4350.00 for the same truck because they know that with a 15% buyer's premium tacked onto the cost, they will still owe the auctioneer $5,000.00. This really hurts the seller because they do not get a piece of the buyer’s premium and now have to settle for lower bids on their items.
Some people will not even play this game (me included). This results in lower numbers of customers at auctions, less competition between bidders, lower bids, lower fees paid to auctioneers by sellers because the total income from the auction is lower, and increasing percentages charged to the customers for buyer’s premiums. I don’t know if this is called double dipping, or burning your candle at both ends. Just give me a good old-fashioned farm auction any day. I’ll stand in the rain with mud to my knees, eat cold hot dogs, and probably bid in amounts greater than it would normally take to by the same piece at a flea market because: 1) everyone is kept honest, 2) more of my money is going into the pocket of they guy who owns the stuff, 3) it is just plain fun.
Thanks for the opportunity to vent.
Junior
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