In a recent story, I suggested that “professional” sellers and buyers were more sensitive to auction participation expenses. In other words, a seasoned, professional seller would be more likely to desire a lower commission and a seasoned, professional buyer might seek lower buyer’s premiums.
However, meaning sensitive to these costs doesn’t mean they avoid them, nor pick the lowest cost no matter. Seasoned, professional buyers and sellers additionally seek value while considering costs. As such, if you’re an auctioneer I want — I’ll likely pay the price and if you have a property I want, I’ll likely pay the price.
However, there is definitely pressure from seasoned, professional sellers to have their auctioneer shift costs to the buyers (buyer’s premiums) and definitely pressure from seasoned, professional buyers to have the auctioneer shift costs to the sellers (seller commissions.)
Given auctions begin with a seller, those costs are predominately being shifted to buyers who are left with little say in the matter — where they can pay it or choose not to participate.
Further, as the value of the property increases, there is heightened demand from auctioneers to assist (and thus more demand than supply) which means auctioneers become more competitive to secure the consignment.
Which brings us to our second point — unseasoned, so-called amateur sellers and buyers are not particularly sensitive to participation costs as they are generally unfamiliar with the process and less attentive to customary practice and industry standards.
We authored, “The State of the United States Auction Market — 2018” as can be read here: https://mikebrandlyauctioneer.wordpress.com/2019/09/25/the-state-of-the-united-states-auction-market-2018/. It appears to us that profesional sellers and buyers are typical particpants in over 50% of the auction marketplace.
In summary and loosely speaking, professional sellers want to sell at auction (repeatedly seek out an auctioneer) where non-professional sellers maybe hire an auctioneer they need once, and occasionally twice or three times. Professional buyers typically buy to resell and regularly attend auctions, where non-professional buyers maybe attend one auction of interest, or a few if convenient.
In other words, it may be simply “want” versus “need.” Professional sellers and buyers want to sell/buy at auction, and non-professional sellers and buyers more likely find themselves needing to sell/buy at auction.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.