As I browse auction results frequently, I see auctioneer’s all over the United States posting auction sale prices realized. Many dedicate a section of their website for this sole purpose, or list what is for sale, and just below what they have just sold.
This is done, generally, to attract clients wishing to sell their items for similar prices. If Julie has a Roseville Blackberry vase to sell, and sees that Auctioneer William set a record of $1,150 for the same vase, Julie’s quite likely to contact William about her vase. Makes perfect sense, and this is a good service provided by auctioneers for the public.
Yet, I wonder why since Christie’s and Sotheby’s introduced the buyer’s premium in 1975 in England, and soon after (1977) in the United States, that we still today see “This sold for … including the buyer’s premium?” Since that time, 1,000’s of auctioneers have started using a buyer’s premium, to augment income and offset decreasing seller commissions.
Most who I have asked this question have noted, “Well, that way we know that the seller actually didn’t get that amount … the auctioneer got their commission. If we just say, ‘It sold for $1,000,000’ we don’t know if the seller got that entire $1,000,000 or if it included commission.”
Really? We don’t know if the commission is included in the sale price? What did we do prior to 1977 in the United States, assume auctioneers worked for free? If in 1967 a $1,000,000 painting sold at auction, did the seller get a net of $1,000,000? I’ll bet not.
Real estate auctions commonly use a buyer’s premium. If a house sells traditionally via a real estate broker, for $231,000, does the seller net $231,000? The commission comes out of the sale price. Now, if an auctioneer auctions a house for $210,000 plus 10% for a total of $231,000, can we assume the auctioneer’s commission comes out of that $231,000? I think that’s fair.
The other argument is that the buyer’s premium is different, “Because the buyer’s paying it. Otherwise, the seller pays the commission.” I think rather, we could argue the buyer pays the commission in either case, as it’s the buyer who’s paying for the purchase. Or, if you insist there’s a difference, then the seller does pay it, after receiving it from the buyer.
I would submit it’s time to start saying, “It sold for whatever, (whatever the buyer paid)” and forget about noting if a buyer’s premium was included, or not.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He is Executive Director of The Ohio Auction School.