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Buyer's Premium at Farm Auctions

R

Ralph Bauer

Well-known Member
Just a true story to share: went to a farm auction last fall here in SW OK. As it turned out new start up auctioneer, it was a young man's(guessing mid to late 20's) first, though family has been selling Real Estate for many years. NO note in the flyer or paper ads, just a handwritten note taped to the registration trailer window informing registrants of a 10% buyer's premium to "help defray the auction cost" (...and increase his net profit). Asked ladies in it about the note, they "didn't know anything about it" so I asked the auctioneer himself. He said that they taught him that in auctioneers school in Dallas,TX. I told him that I see that practice near DFW, metro markets and nearby, but it does not fly here very well in the country, at least he should put it on the ad flyer under "terms" so folks can decide if they attend or not. His reply was that there's got to be a buyer's premium, and folks around (SW OK) will have to get used to it. "Just bid 10% less and you won't overpay....!" he advised.....Duhhhh!???
Haven't seen another auction of his, but I sure will remember our conversation!!!!
 
Around western ny you wont see an auction without at least a 10% premium have seen 14%,15% and even 20%.just got to figure it in to your spending cap!. bill
 
I usually don't attend auctions if there is a buyer's premium. Most auctions that I see that have a buyer's premium are for secured crediters.
 
I don"t see it as a way for the auctioneer to increase his profit. Traditionally the SELLER paid the auctioneer"s commission. So it"s the seller who now gets more money, having no expense. Either way- it should be well publicized in all advertising.
 
Here in England, buyers premium is usually 17.5%. Never been to a sale without a buyers premium. Guess he ahs been to an auction in Europe and seen the idea, thought he would try it at home.
 
Several of the more established auctioneers charge a percentage of the sales as their fee (and of course a set amount for the PR/ads/flyers etc. =fixed cost. That's usually entered as an approx. amt. in the contract and detailed billing done after the auction and deducted from the total proceeds out of the sellers share.). They explain that as their motivation to do the best job possible for the seller in the auction, with both profiting. I only knew of one auctioneer many years ago in a different state that set a flat fee for himself to conduct the auction, he has long since passed away.
 
Bankers here used to clerk the sale for 1-2% of the selling price, now the auctioneer does the clerking.
 
Interesting, never heard of bankers doing the clerking. Here it is usually the family clan and close friends that starts with getting mileage for delivering flyers, sorting, guarding (night) the site, drive the truck/load clerk, bid taker on the floor, etc....
I never had those experiences myself, except the one I talked about, but have seen several situations in my line of work (ADR/mediation), mostly billing practices, contract issues, etc....)
One thing for sure is that depending what part of the country/world your in, it is almost always done a little different!
 
I have not been ot an auction in years that did not have a buyers premium, I like auctions and there are not that many choices that are within striking distance and have what I want to buy.
Zach
 
Seller still has to pay, too- so now BOTH are paying.

One of the problems, at least around here, is the decreased number of farm sales, making it hard for the auction companies to hang on. The local livestock auction does several machinery consignments sales a year, and still a (very) ocassional farm sale.
 
I've only been to one farm auction where the sale bill said anything about a buyer's premium... Apparently, there were so many complaints that it was dropped - I bought a tractor there, but only wrote a check for the amount I bid - nothing added to it. There are still enough auctioneers around that competition is keeping the buyers premium away, I think.
One consignment sale that I've contributed to before has a fee scale of 25% (!) on item up to something like $100, 15% $101 to $1000, 10% $1001 to $10000, and 8%(?) for $10001 and up. With those rates, they don't need a buyer's premium.
Most of the online auctions around here have a buyer's premium, usually 10%, and it's clearly stated under the terms of sale.
 
We have an family auction company here in cenral NY, evans auction service been in business 96 years. I've been to auctions his father before him had. He always announces at the beginning of the auction "No buyers premium never has been never will be" I look forward to their auctions this year. When I get to old to play with my toys these guys will be having my auction.
evan sauction service
 
When I was at the county part of my duties was conducting the annual surplus auction. I would solicit proposals from Licensed auctioneers to conduct the sale. My request for proposals required any response to include commission percentage, projected advertising expenses and who paid for them, amount charged on credit card transactions and who paid and if their was a buyer's fee and how much. I required this so I could compare the proposals and choose the one that was in the best interests of the county. Because of insurance requirements it was unusual for me to get more than one proposal. Last year I got two proposals, one from an new auction company that wasn't owned by an auctioneer (he hired them) and the auctioneer that had done our sale for the last 5 years. Bottom line on general surplus merchandise I paid 20% commission, 10% on motor vehicles with no buyer's fee. One year the sale was really good and the auctioneer slid a boat and our lawnmowers into the vehicle category, giving up about $500 in commission. Both auction companies that submitted proposals for a sale with out a buyer's fee, If I asked for a buyer's fee I was told it would reduce our commission rate. The new auction company on the block warned me the other folks "would always add a buyer's fee" and I should stay away from them because "buyer's fees are unethical" yet in the previous 5 years the company we used never even proposed a buyer's fee. So buyer beware and know what you're agreeing to as a seller or buyer.
 
here in colo.,some auction companys put there is no buyers fee, most of them don"t have, some do,i don"t buy from they, paying taxes is enough.. it"s like buying a car from a dealer with their $399 fee, [they didn"t do any thing special for that 399], just a fee..
 
I've been to them both ways. no problem for me either way. as long as terms are announced.
I'm guessing when the auctioneer charges sales tax....you fellows must stay away then also!!
 
I used to refuse to attend any auctions with the "buyer's premium" but it's getting near impossible to do. Here in NY almost all of them are doing it now.

MacFaddens had his big Spring tractor auction yesterday in Sharon Springs, New York. First time I ever noticed that he's somewhat doing it. On-line, absentee, and bidders paying with credit cards pay it up to 10% - but cash buyers do not have to - yet.
 
I don't think you can compare sales taxes with buyer's premiums. Yes, they are fruits, but apples and oranges, so to speak. A large number of folks here, myself included, are farmers and ranchers with legit tax exempt ids. We don't get charged taxes on farm related things. And the other group that does have to pay taxes (to a third party, the gov.) on everything, knows that when going to an auction there will be taxes. Just my thoughts, Ralph in Oklahoma.
 
Been to one auction that had bidders fee. Know the auctioner, says he does that to keep the riff raff away. But we show up anyway just buy anything.
 
around here, its anything under $200 has a buyers premium.. anything over does not...
its due to the cost of sell all the "smalls" that take time but dont bring much..

If you were to take it to a consignment house they would get that much or more..

however if you sell if over $200, the standard fee paid by the sell will pay the auctioneer.

its because the fee structure for smalls is different than selling a 50,000 dollar tractor.

he cant stay in business selling a hammer for 6 cents profit or even 36 cents profit....

you pay somewhere between 25 and 50 percent profit when you buy new. His has to pay all the help and advirtising and liability and bad checks etc etc and has to file sales tax on top.
 
Interesting comment. What is he worried about when talking about Riff Raff....?? Their dollars are as good as mine, worth exactly 100 pennies!
I would bet (100 pennies!) it is just an excuse to him.... he may not want to hurt your feelings!
I just had a nasty thought: Maybe he should charge an entry fee for folks to attend.....(to keep the riff raff away..)LOL..
 
I hate it but have to see it from the auctioneer's point-of-view.

In the nearest city to me, Oneonta, NY - 20 miles distant there are two auction houses. One has stated he "will never charge a buyer's premium" while the other has been doing it now for 5 years. Lettis Auction and Austins Auction. The guy charging the 10% premium is getting a lot more business. Why ? I don't no and it doesn't seem fair. Maybe because he also has a Website where you can preview? But not only is he getting more business - he's making an extra 10% on all he sells.

If you were a local auctioneer and noticed more people going to the guy who charges the extra 10% - wouldn't you consider doing it?

Like I said, I hate it and find it insulting. Regardless, I suspect they'll all be doing it soon. A few old timers might be hold outs -but they'll die sooner or later.

The "hold out" in Oneonta, Jim Lettis DID die and new guy is running the place. I suppose it won't be long before he charges the 10%.
 
i don't like to pay a buyer's PENALTY for the privilege of buying something at an auction. most auctions that have them, i just stay away. the penalties have been around for household stuff and real estate for a long time, but some auctioneers are charging them at farm dispersals/ consignment sales now,too. like dave in sherburne said, who has/ has not been trying to ding me with penalties, will make a difference who gets my auction when i get done with my farm stuff.
 
I've been an Auctioneer here in S.E. Ohio for several years and haven't charged nor will I charge a buyers premium. There have been a few that have tried it but it just doesn't work around here. I charge 15% plus advertizing. the set up is at my expense and so is the auction crew on auction day. the only other thing I charge is for the actual cost of the porta johns. Now if I have a lot of large equipment then we can haggle over the commision with the owner and usually drop to somewhere between 5 and 10% for those items. The buyers premium around here is usually partially in lieu of the owners paying full commision, thus if a 10% buyers premium were charged then the owner would only pay 5%, making the 15% commision. My thoughts are why should someone that's buying an item have to help pay for selling it, just never has set right with me. Keith
 
I've been attending auctions for near thirty years and all around east-central Missouri and actually all across Missouri and Illinois, I can't ever remember being at a sale that charged a buyers premium. That's not the way it's supposed to work.
 
There's one guy around here that adds 3% at his consignment sales. Since he started do'n this crowds have got'n smaller and seems like every thing else sells cheap. I still go to his sales and most of the stuff I buy I only run to half what it's worth any way so it don't hurt me too bad. As long as this guy think's he's make'n money run'n half the crowd off I ain't go'n to tell him any diffrnet.

Dave
 
I refuse to attend an auction that has a buyers premium. I also make it a point to call ahead if it's not on the sale bill to make sure. If there is one, I tell them I won't be going because of it, if there isn't one, I thank them for not doing it and try to attend.

Around here, it's about 50/50. I know alot of guys that don't attend because of them. There are just too many other ways to get what you need today, with the internet and all, it's not worth letting the crooks win.

Just my opinion.

Tim
 
Sales tax is often required. Not the same as a buyer's premium which is just a rip off.I like a lot of others don't attend those auctions.
 
Ditto's on the no attendance policy. The auctioneer is the seller's agent. His job is to beg, plead, cajole, con, gyp, steal one more dollar, from the bidder! It is the height of gall, to extract a fee, from the buyer, too! If a lawyer did this, he would be disbarred for a conflict of interest. Even real estate agents can't do this! I guess the world's second oldest profession, has better lobbyists!
 
As a competitive bidder I thank you for your no

attendance policy. Fewer bidders means lower prices

and better deals. Some of us can do math and exer-

cise discipline, a buyer's premium means a different

bid stop point. Total maximum bid remains the same.
 
(quoted from post at 08:04:27 04/02/12) As a competitive bidder I thank you for your no

attendance policy. Fewer bidders means lower prices

and better deals. Some of us can do math and exer-

cise discipline, a buyer's premium means a different

bid stop point. Total maximum bid remains the same.
Click to expand...
Agree 100%. I ALWAYS figure in fees (taxes & buyers fee) when deciding where to stop bidding. Now if it was not in the terms in the ad or flyer or posted at the registration table, I might get upset when I walked up to the window to settle up, but that's not happened to me here inMichigan. I just don't understand all the chest-thumpin', I'm the buyer, don't screw me posts.

if it was a fixed price you were paying, I could understand, but at an auction, the BUYERS set the price. And if you're too dumb to figure in the Buyer's premium when making your bid, well.... can't help you there.
 
Don't laugh,some big estate sales have had a parking(entrance) fee and then IF you buy,you get it back and if you don't buy,you lose it.
 
Whatever floats your boat, man. I remain a principled bidder, and sleep very well, whether I buy something, or not.
 
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