Since Christie’s and Sotheby’s introduced the buyer’s premium in 1975 in England, and soon after (1977) in the United States, the buyer’s premium has been part of the auctioneering landscape in the United States.
Today, there is no state in the United States where the buyer’s premium is not found. Yet, auctioneers in Wisconsin are not permitted to charge a buyer’s premium — or are they?
Per The Wisconsin Department of Regulation & Licensing, Division of Professional Credential Processing, Wisconsin auctioneers may not call any percentage or additional fee charged to the buyer a “buyer’s premium,” but rather can only call it a “buyer’s fee” or “surcharge.”
The exact wording as stated by the Wisconsin Department of Regulation & Licensing is:
- What is meant by “buyer’s fee or surcharge?
- An amount of money, usually based on a percentage of the successful bid, charged to the successful bidder and either added to the successful bid to determine the final selling price or paid separately by the successful bidder in addition to the successful bid. Note: Wisconsin Auctioneers may not advertise a “buyer’s fee surcharge by calling it a “buyer’s premium.”
Why would this be? Why would Wisconsin insist that the words, “buyer’s premium” not be used to describe what every auctioneer in every other part of the United States describes as such?
While we think we know the answer to this question, it begs another question — is not the term “buyer’s premium” now so universally understood that prohibiting its use, and requiring another term, unnecessarily complicates an issue otherwise fairly understood?
The word, “premium.” per Collins English Dictionary – Complete & Unabridged 10th Edition. HarperCollins Publishers. 20 Jun. 2011. <Dictionary.com http://dictionary.reference.com/browse/premium> can mean:
- 1. an amount paid in addition to a standard rate, price, wage, etc; bonus
- 2. the amount paid or payable, usually in regular instalments, for an insurance policy
- 3. the amount above nominal or par value at which something sells
- 4. a. an offer of something free or at a specially reduced price as an inducement to buy a commodity or service. b. ( as modifier ): a premium offer
- 5. a prize given to the winner of a competition; award
- 6. ( US ) an amount sometimes charged for a loan of money in addition to the interest
- 7. great value or regard: to put a premium on someone’s services
- 8. a fee, now rarely required, for instruction or apprenticeship in a profession or trade
We wrote about the Buyer’s Premium some time ago. Despite arguments regarding the net effect of the buyer’s premium, it seems clear most bidders understand the term, and how the buyer’s premium is calculated.
This law in Wisconsin suggests that the term, “buyer’s premium” is deceiving or misleading [Chapter RL 123.02] and the term, “buyer’s fee” or “surcharge” is more clear and descriptive. We would disagree; if people understand what the words mean, then the actual words used don’t matter.
Would it make just as much sense to outlaw the word, “auction” as it suggests to some that one will get a deal, when actually buyer’s pay the highest price of anyone bidding? Of course not, as people understand what the word, “auction” actually means.
Auction law uniformity benefits consumers all across the United States as more and more people participate in auctions across state lines. Given that the terms “buyer’s fee” or “surcharge” are not misleading, it is generally believed that the term, “buyer’s premium” is equivalent, and would be fair and reasonable to use as it is in all other jurisdictions.
Is there a buyer’s premium in Wisconsin? Yes there is, but they just don’t call it that.
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.