As Gail accumulated more and more items from her auction buying, she contacted an auctioneer about selling some of her collection. Her auctioneer agreed to sell Gail’s consignments and the auction was scheduled for Saturday. Gail was being charged 29% commission by her auctioneer.
Gail arrived at the auction just as it was getting underway. The first of her items sold well, and Gail was overall very pleased with the layout and crowd. However, the 4th or 5th items of hers sold, apparently, to the auctioneer. The auctioneer’s assistant carried those items over behind the barn, as they both sold to #10 — the number everyone at the auction knew was the auctioneer’s number.
Gail didn’t give it much more thought, as the auction continued. Once it was over, Gail went home and more-or-less forgot all about it. A few weeks later, she received her settlement and all her paperwork looked in order.
However, she did note that she was charged the 29% commission on all items — even items #4 and #5 which the auctioneer purchased. She wondered … should she pay commission on property the auctioneer purchased?
And as such, our question today.
Let’s say someone else besides the auctioneer purchased items #4 and #5. Should Gail pay commission on those items then? Almost certainly, as her contract outlines. So, why does it (or should) it matter if the auctioneer was the purchaser?
In either case, her net proceeds are the same, no matter the purchaser — so it appears her position is not injured due to the auctioneer’s actions.
Further, if the auctioneer didn’t bid that final (or preceding) bid(s), her position would have been lessened accordingly.
Therefore, unless the auctioneer somehow depressed bidding, allowing him to purchase items #4 and #5 for less than he otherwise would have been entitled, the auctioneer’s bidding benefited Gail. 29% of $1,000 is $290 dollars, leaving Gail a net of $710 no matter who purchased her items.
Of course, it is prudent — and likely required — for the auctioneer to disclose to the crowd that he or she reserves the right to bid. State laws must be checked as well, as at least one state (Pennsylvania) prohibits auctioneers from bidding while bid calling.
Finally, Gail wondered if because the auctioneer was earning 29%, does that mean he actually only paid 71% of the purchase price? The simple math says so, but upon further review, the auctioneer would have that 29% in his pocket otherwise.
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.