Many auctioneers charge a buyer’s premium — for instance, if you bid $10,000 for an auction purchase, with a 10% buyer’s premium added, your total purchase price will be $11,000. However, what if the wording was slightly different in that the 10% buyer’s premium was included in the total purchase price? Is included the same as added?
I think we as auctioneers should be careful with our wording. If the buyer’s premium is included, would a buyer think it’s already there, versus to be added would indicate it’s forthcoming? I think so. A bid of $10,000 including a buyer’s premium would suggest to me $10,000 total, versus a bid of $10,000 with a 10% added is $11,000.
There are other terms involved here. For example, there’s “bid price (hammer price)” versus “sale price” versus “total purchase price.” Could the bid price be $10,000 including a 10% buyer’s premium constituting a sales price or total purchase price of $11,000? For that matter, could “to be included” be different than “included” or “including?”
We wrote about an auctioneer including a buyer’s premium — analogous to a seller’s commission — in order to make the seller think the buyer is paying the commission, when in fact the seller is paying it. https://mikebrandlyauctioneer.wordpress.com/2015/02/10/your-bidding-today-will-include-a-10-buyers-premium/. Wouldn’t more clear terms and conditions (and applicable fees) be better for the auction bidders/buyers?
Unfortunately, some might suggest the more confusing it is, the better. However, what other retailers or vendors are trying to make buying more confusing, rather than less? Other than auctioneers? I can’t think of any either. Needless to say, buyers are looking for easier, simpler transactions, not more complex.
Some auctioneers have published examples … such as “FOR EXAMPLE, your bid price of $10,000 plus a 10% BP would result in you paying a total of $11,000, payable at the conclusion of the auction.” This kind of thing would help. It would also help to not have this example buried on page 537 in 6 point type … so people would find it, see it, and possibly even understand it.
If I buy a car, and the salesperson tells me my purchase includes $1,500 in tires, I assume I am not paying extra for tires. If on the other hand, tires are added for $1,500 then I assume I’m paying $1,500 (extra) for the tires. So, if my bid includes a 10% buyer’s premium, then it’s not added? Or if a 10% buyer’s premium is added, then it’s not included? Seems reasonable to me.
Further, just because you disclose it doesn’t mean people understand it. I can tell you your total purchase price will include a 10% buyer’s premium, but that doesn’t mean the bidders understand it. In fact, I would suggest many probably don’t. Just because I say I understand (or click that I do) doesn’t mean I understand. We previously wrote about auction jargon generally and we can and should do better: https://mikebrandlyauctioneer.wordpress.com/2018/05/30/what-is-all-this-auction-jargon/.
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, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.