Buyers Premium

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Buyers Premium

Post by Celtic_Fan on March 21st 2014, 11:09 pm

Just wondering what level of Buyers Premium, people are used to at auction?

My local Auction House charges 15% + VAT
On some of the TV progs, I've seen as low as 10%.

But I've now seen something at Auction I was interested in, until I saw their Buyers Premium - 22.5% +VAT (27% including VAT) Big Shock
The item will have to go dirt cheap to be worth buying with that rate to add.

Is this the highest any ones come across, or is there any higher?

This must surely put off bidders, so the seller gets less for their items and the auction house gets less from the buyer and the seller.
Is it just me, or does this level or Premium not make sense!
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Re: Buyers Premium

Post by user9318 on March 22nd 2014, 6:10 am

I have bought items from Bonhams before and the buyers premium was at the time 30% plus VAT, that is the highest I have seen personally and highest buyers premium I have paid.

Locally, one auction room is 10% buyers premium, the others tend to be 15% round here.
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Re: Buyers Premium

Post by dantheman on March 22nd 2014, 7:25 am

in my experience it's not all about the percentage but also about quality of service

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Re: Buyers Premium

Post by Celtic_Fan on March 22nd 2014, 9:17 am

Well they don't offer a postage service. So what else is there in terms of 'service' for a buyer?
They sell the goods and take your money - that's about all any off them do.

I guess I'm not surprised some of the 'big' auction houses may be expensive. But I' would doubt it's justified, just that they can get away with it.
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Re: Buyers Premium

Post by big ed on March 22nd 2014, 9:46 am

It always seems extortionately high to me .
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Re: Buyers Premium

Post by Potty on March 22nd 2014, 2:47 pm

big ed wrote:It always seems extortionately high to me .

This Laughter

They are making a killing from the sales, I may not think it's justified personally but they are a business and people are still using them to sell their goods.

The Buyers Premium alone is not of that much important really, the thing to look at the the total of Buyers Premium and Commission combined (some even have insurance as an extra charge). For a lot of well know auctions this total percentage is staggering in my opinion. Shocked


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Re: Buyers Premium

Post by dantheman on March 22nd 2014, 3:27 pm

'quality of service' could be a world class contacts book, professional catalogues,online bidding and telephone bidding service,shipping service or they may even pick up the lots from your home

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Re: Buyers Premium

Post by Celtic_Fan on March 22nd 2014, 5:32 pm

dantheman wrote:'quality of service' could be a world class contacts book, professional catalogues,online bidding and telephone bidding service,shipping service or they may even pick up the lots from your home
Dan - most of those are services for the Seller (and could perhaps justify a higher rate for seller), not the buyer.
Even online or telephone bidding, helps THEM sell items and potentially achieve a higher price and so pays for itself with higher commission on higher prices (from both seller and buyer).
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Re: Buyers Premium

Post by dantheman on March 22nd 2014, 7:26 pm

Oh yeah Doh!

OK then

No online or telephone bidding facilities
No shipping service
& no catalogue so there's less competition from other bidders Laughter


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Re: Buyers Premium

Post by Celtic_Fan on March 22nd 2014, 8:48 pm

Nah, they need to do one catalogue - although they can email it to me Laughter

I just think the other 'services' pay for themselves.

As for shipping, so few do seem to actually offer any and this one at 22.5% don't.
For a shipping service I could accept a few % extra as that is valuable.
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Re: Buyers Premium

Post by dantheman on March 22nd 2014, 9:18 pm

I hardly ever buy at auction as the fees and delivery cost nearly half my budget so I can only make a token bid

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Re: Buyers Premium

Post by Potty on March 22nd 2014, 11:47 pm

Catalogue's are usually sold to the potential buyers Excellent

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Re: Buyers Premium

Post by NaomiM on March 23rd 2014, 12:50 am

I haven't bothered with auctions after putting 2 books in to a specialist auction where only one sold - for 40 - and, after costs, I came away with just a tenner. The unsold one I stuck on ebay and got my asking price - 100 - less ebay and paypal costs.
If I decide to sell anything in the future I'll stick it on ebay.

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Re: Buyers Premium

Post by big ed on March 23rd 2014, 7:48 am

I tend to just look at the studio pottery auction , but that's all , great stuff on them , the catalogues are good when you pick them up at fairs etc , I'll stick with Ebay for the time being , 20% roughly is what that costs .
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Re: Buyers Premium

Post by philpot on March 23rd 2014, 3:58 pm

Aren't we confusing Buyer's and Sellers premium here?
Naomi and Dan are in the last two posts are talking about Sellers premium. The OP is talking about Buyer's premium.
Its all horses for courses really. Bonhams.Christies and Sothebys are the three top auction houses in the world. Attracting top International bidders,superb marketing and high prices. Hence they get top stock,and top buyers,and the greatest premiums.
As for the buyer's premium. Well you got to look at the final price,hammer + commission and set your bid accordingly.

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Re: Buyers Premium

Post by Potty on March 23rd 2014, 4:25 pm

Commission and Buyers Premium are pretty much the same thing.

It's their "superb marketing" that makes it appear they are charging the Buyer, when in fact it's really all money taken from the seller.

Most buyers are not too daft and factor in the "Buyers Premium" into their bid, those who don't get a nasty shock when coming to pay...

When an auction is taking 40% or so from the sale, they need to be getting exceptionally high prices to make it worthwile for the seller, when compared to selling to the trade or something like ebay. But for the lower-mid (say sub 1000 lots) end of the market this is mostly not the case in my opinion.


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Re: Buyers Premium

Post by NaomiM on March 23rd 2014, 4:26 pm

The OP made the point that "so the seller gets less for their items and the auction house gets less from the buyer and the seller." I was just making the point that sellers get shafted by auction houses too.

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Re: Buyers Premium

Post by denbydump on November 24th 2017, 1:13 pm

Buyer's Premium. I remember, not that long ago, there were moves afoot to
outlaw the imposition of buyer's premium altogether. I guess the auctions
got their way, and we heard no more about it. So, why do they have it?

To start with, assume a lot is "worth" maybe 120 to a buyer.

A quick example calculation @ 20% premium. (both buyer and seller).

A hammer price of 100.
Buyer pays 120.
Seller gets 80.
Auction gets 40.

Example where there is no buyer's premium but, say 33.33% seller's premium.

Hammer price would increase to the 120, as there is no buyer's premium.
Buyer pays 120.
Seller gets 80.00.
Auction gets 40.00

Identical amounts, so is it just to encourage an "aution fever" scenario,
where the buyer(s) loses track of what the final price would be, unable
to do a running calculation during the bidding, so the price goes higher?

The same reason why we might buy something @ 3.99 but not 4.00?
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Re: Buyers Premium

Post by philpot on November 24th 2017, 3:50 pm

You forget 20% VAT of course. Plus the Online platform premium of 3-5% plus VAT.
The auction world and its charges are first and foremost set by the International auction houses Sothebys, Christies, and to a slightly lesser extent Phillips and Bonhams. Everybody bar none follows their lead.
There are far more buyers, than sellers with 'Quality' items. Quality for auctioneers of course meaning lots of /$$$$$$$$. This has become inevitable with the general rise in the wealth and purchasing power throughout the world in the past 30-40 years. So its a fairly straightforward case of econnomics. Limited supply/hugely excessive demand. Which side of the supply/demand equation do you load your costs/profits? The ever ongoing rise of the buyer's premium seems to indicate where that loading is taking place.

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Re: Buyers Premium

Post by Mordeep on November 27th 2017, 7:16 am

People get very confused at auction house practices. You really need to pay attention. As mentioned above fees for selling, including minimum charges per lot and final sale percentages can eat up a huge chunk of the final sale price. If it sells low enough it can often nearly wipe it all out. They are not the places to get the best prices for individual items unless it is a specialist sale and then only if the value of the item is already high enough to cover costs.

I use auction houses to buy stock to sell and to get rid of things I can't sell. If it is damaged but has a good name behind it, send it to auction. Ebay you will get pennies or get it sent back to you after sale. Auctions it is buyer beware with no returns or it sells to restorers who later pass off as perfect. With rare ceramics I often follow them from The Saleroom to eBay. Its how a lot of people make a living.

As for the differences between premiums they vary greatly between house and even the type of sale (general sales tend to be higher). There is also minimum charges that people often ignore, for example 5 a lot is common. So you 10 bargain is actually 10 + 5 + vat, so 16. If your selling a lot negotiate a lower rate. If your buying expect roughly 30% all in and take that into account on what your willing to pay.
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