I’ve heard this question 100’s of times in auction school, and otherwise when I speak to virtually anyone about my profession. How are you paid? What do you get paid? When do you get paid? We’ll address the “how” in this article.
There are two parties to an auction. On the one side, there is a seller who typically owns the item, or otherwise represents the title holder. Then, on the other side, there is a buyer who upon, “sold” agrees to take title.
For hundreds of years, and many still today, auctioneers solely charged the seller. This is done in several ways, including:
- Commission. Auctioneers charge the seller a commission, which is typically a percentage of the gross sales. For example, an auctioneer charging the seller 15% on the gross proceeds of $25,000 would earn $3,750.
- By the hour. Auctioneers charge their seller a fixed rate by the hour. If an auctioneer is selling cars for a car auction, and charging $150 per hour, he would earn $750 for 5 hours of auctioneering.
- Flat rate. Auctioneers charge their seller a single, fixed rate for their auctioneering services. For instance, an auctioneer charging a $1,000 flat rate would earn that fee regardless of the auction gross proceeds.
- Salary. Auctioneers may be employed by a seller who might be conducting auctions on some regular basis. For instance, if a police department had an auction every Saturday of surplus or confiscated items, the department might employ an auctioneer full time, and pay him a salary.
- Commission with minimum. Auctioneers charge the seller a commission, which is typically a percentage of the gross sales, or a minimum fee, whichever is greater. For example, an auctioneer charging the seller 15% or $1,000 would earn $1,500 for a $10,000 auction, but earn $1,000 for a $5,000 auction.
- Fee + expenses. Auctioneers charge either by the hour, a percentage, flat rate, or otherwise, plus expenses. These expenses could be for additional staff, advertising and marketing, hotel, meals, travel, setup, cleanup, etc. These expenses could be paid up-front, and/or following the auction.
- Net profit. An auctioneer as the seller owns the property being sold. Therefore, the auctioneer is paid the difference between the price of procurement and the sale price. Such as, an auctioneer might purchase some antiques and collectibles for $700 and resell them at his auction for $2,100. His pay, minus expenses, would come to $1,400.
Then, beginning in 1975, Christie’s and Sotheby’s introduced the buyer’s premium in England, and soon after (1977) in the United States. This allowed the auctioneer to have the buyer supplement his income with additional commission.
While it may be that technically the buyer’s premium belongs to the seller, and not the auctioneer — unless the seller agrees to pay the auctioneer this fee — which would be almost universally the case — the buyer’s premium allows the auctioneer to earn additional income.
- For instance, an auctioneer could charge a seller 15% of the gross proceeds, and also a 12% buyer’s premium. For an auction totaling $20,000 in bid prices, the auctioneer would earn $3,000 in seller commission, and $2,400 in buyer commission, for a total of $5,400 (or about 27% of the auction total.)
- Or, depending upon the exact wording of the agreement between the auctioneer and seller, the auctioneer could earn this 15% on the auction total including the buyer’s premium. If so, the seller commission would be 15% of $22,400 ($3,360) plus the $2,400 in buyer commission, for a total of $5,760 (or about 29% of the auction total.)
Auctioneers are paid in a variety of ways and are generally not required to disclose their method of compensation nor amounts to the public, unless their auction involves entities such as government, a court-order, or the like. However, it is held that a buyer’s premium must be disclosed prior to bidding for it to be enforced upon a buyer, and of course, the seller and auctioneer must agree to any fee arrangement prior to the auction.
Auctioneering, not unlike a number of other professions, is typically seen as something one cannot do themselves (such as a dentist, surgeon or optometrist.) Because of this, auctioneers are paid a premium as contrasted to occupations where the public feels they can do it themselves (lawn care, cleaning jobs, and the like).
Too, auctioneering often involves valuable assets, which have to be carefully and skillfully marketed and presented to maximize proceeds. For these reasons, many auctioneers are paid rather handsomely.
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 serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.