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Buyer Premium By The Numbers

The Seller’s Bottom Line

Auctioneers and auction companies can charge sellers a sales commission or a buyer premium.  Working with an auction company that charges a buyer premium will benefit the seller because it generates more revenue when compared to a sales commission.

Increased Revenue

Selecting the right auctioneer will impact the revenue that is generated from a sale. An auction company that uses buyer premium will charge the buyer after the final bid.  Since the buyer is charged a fee, the seller is not responsible for paying any fees to the auctioneer.

Dr. Jonathan Wu’s research study states that every percent charged on a sales commission will actually reduce the revenue that is generated for the seller by more than 1 percent.  When the hammer price remains constant, Dr. Wu’s research proved that a buyer premium will generate significantly higher revenue for the seller.

Human Behavior and Revenue

Although research suggests that the revenue generated by a buyer premium will increase significantly when the hammer price remains constant, human behavior can impact the revenue that is generated.  Buyers may estimate their final bid after adding the buyer premium to the bid.

Even if buyers change their bidding strategy, the seller will benefit when an auctioneer charges a buyer premium.  To learn more about how the buyer premium impacts revenue generation, request to read the full report – Learn More

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A Phone Call About An Estate…

An Almost Typical Day In The Life Of An Auctioneer…

sell at auctionWe had a call today (30 June 2016) asking about our estate auction services.
By Way Of Background…
This person had recently experienced the death of a loved one and are now needing to handle the settling of the estate.
About Us…
I offered condolences for their loss and told them that we do our very best to do two things for clients:
1) Save them as much money possible by letting them know the most cost effective way of having a sale.
2) Helping them receive as much money possible for their real and personal property.
More Details About The Estate…
I began to try to find out more about the particulars of their situation and what exactly were their goals and objectives.  The person told me that their goals were to sell everything from the personal property to the real estate to settle the estate. I informed them that we can do all these things for them but wanted to try to learn more to determine what is in their best interest. This person wanted to insist of having an “online auction” only of the personal property. I tried to inform them that most of the time an onsite auction is the most cost effective way of having a sale because it involved the least amount of labor. This person insisted that they wanted to know our rates and how much it would cost to box up and have everything sold somewhere else because they were told by an attorney to use a particular realtor.
Reality Gets Introduced…
I asked the person why they wanted to relinquish the right of first refusal by putting a price on what they wanted to sell. They didn’t have an answer, so I gave this illustration. I asked that if they had a valuable piece of artwork like a Picasso they wanted to sell (even shared how I’ve sold a Picasso at auction before and owned one of his works.) if they would have the local “art expert” come and would tell them that their neighbor down the street sold Solutionstheir Picasso for 100K and another person had one similar not much further away for 150K and that they would list theirs for 125K if they would think this is the best way of selling their Picasso?
They didn’t have an answer.
Some People Just Don’t Get It…
The answer: Of course not! Every piece of art or anything for that matter is unique and special in and of itself. Just because one person maybe didn’t pay enough for something and another person maybe paid too much for another doesn’t in any way shape or form determine what you want sold should be worth.
Listening To Bad Advice…
This person insisted they are going to listen to their attorney who recommended a realtor to sell the real estate. I told the person that if they believe that a realtor can get top dollar for an expensive item like a home (since they obviously believe their marketing methods are much better than ours) then the realtor would be much better selling the smaller and less expensive items in the home than we could ever be able to do, so they should have the realtor sell the personal property too.
Ignorance & Insults…
It saddens me how people want to insult us with not only with their words but unadulterated ignorance. I suppose some people just have to learn the hard way by paying more and getting less at the end of the day. This person can especially thank their attorney and realtor who have huge smiles because they will be receiving a lot of money at the expense of their ignorance.
Ignorance Is NOT Bliss!
Fact is that when a person surrenders the right of first refusal in any sales process they have already lost and given the control of the sale to the other party because they have made the initial offer. All any person who puts a price on anything they wish to sell can do is only entertain counter offers and the only guarantee they do have is that they will never know if they could ever have been able to get more because they didn’t have an auction.
Needless to say that the person who called thinks they know more about selling an estate with real and personal property than we do and is most definitely not they type of client we would ever consider providing with our services.  Maybe they can let the realtor do a garage sale for them.  After all, that is their method of selling – put a price on it and negotiate down till it sells.

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Should We Have Auctions On Sunday?

Should We Have Auctions On SundayToday in business it is considered the norm and “good” business to provide the consumer what they want, when they want and how they want.  Shouldn’t auctioneers make the most of the opportunities on weekends to have auctions as often as they are able including Sunday?  After all, the majority of buyers at auctions are off from work on Sunday so why not have auctions on Sunday?  Isn’t it just part of keeping up with your customer’s needs and adjusting to the market-place?  Isn’t going to an Auction on Sunday just another item on the menu for the day that you can choose from?

Should We Conduct Auctions On SundayIt is very much counter culture to not go along to get along and in fact many would say that it hurts a business to not be open on a Sunday. By God’s mercy and grace, we at True Blue Auctions will NEVER have an auction on the Sabbath – the Lord’s Day.

Why? We seek to honor the Lord with everything we do in this business. Even if it “hurts” our business to not be open and having auctions on a Sunday.Should We Attend Auctions On Sunday

Keeping the Lord’s Day holy and not profaning it is something we take seriously.  We will NEVER conduct an Auction on the Lord’s Day.

Because of the importance of this day, I want to pass on and share with you just how important it is and why we will NEVER conduct an auction on a Sunday.

115. Which is the fourth commandment?

The fourth commandment is, Remember the sabbath day, to keep it holy. Six days shalt thou labour, and do all thy work; but the seventh day is the sabbath of the Lord thy God: in it thou shalt not do any work, thou, nor thy son, nor thy daughter, thy man-servant, nor thy maid-servant, nor thy cattle, nor thy stranger that is within thy gates. For in six days the Lord made heaven and earth, the sea, and all that in them is, and rested in the seventh day: wherefore the Lord blessed the sabbath-day and hallowed it.

116. What is required in the fourth commandment?

The fourth commandment requireth of all men the sanctifying or keeping holy to God such set times as he hath appointed in his Word, expressly one whole day in seven; which was the seventh from the beginning of the world to the resurrection of Christ, and the first day of the week ever since, and so to continue to the end of the world; which is the Christian sabbath, and in the New Testament called The Lord’s day.

117. How is the sabbath or the Lord’s day to be sanctified?

The sabbath or Lord’s day is to be sanctified by an holy resting all the day, not only from such works as are at all times sinful, but even from such worldly employments and recreations as are on other days lawful;  and making it our delight to spend the whole time (except so much of it as is to be taken up in works of necessity and mercy) in the public and private exercises of God’s worship: and, to that end, we are to prepare our hearts, and with such foresight, diligence, and moderation, to dispose and seasonably dispatch our worldly business, that we may be the more free and fit for the duties of that day.

118. Why is the charge of keeping the sabbath more specially directed to governors of families, and other superiors?

The charge of keeping the sabbath is more specially directed to governors of families, and other superiors, because they are bound not only to keep it themselves, but to see that it be observed by all those that are under their charge; and because they are prone ofttimes to hinder them by employments of their own.

119. What are the sins forbidden in the fourth commandment?

The sins forbidden in the fourth commandment are, all omissions of the duties required,all careless, negligent, and unprofitable performing of them, and being weary of them;all profaning the day by idleness, and doing that which is in itself sinful; and by all needless works, words, and thoughts, about our worldly employments and recreations.

120. What are the reasons annexed to the fourth commandment, the more to enforce it?

The reasons annexed to the fourth commandment, the more to enforce it, are taken from the equity of it, God allowing us six days of seven for our own affairs, and reserving but one for himself in these words, Six days shalt thou labour, and do all thy work: from God’s challenging a special propriety in that day, The seventh day is the sabbath of the Lord thy God: from the example of God, who in six days made heaven and earth, the sea, and all that in them is, and rested the seventh day: and from that blessing which God put upon that day, not only in sanctifying it to be a day for his service, but in ordaining it to be a means of blessing to us in our sanctifying it; Wherefore the Lord blessed the sabbath day, and hallowed it.

121. Why is the word Remember set in the beginning of the fourth commandment

The word Remember is set in the beginning of the fourth commandment, partly, because of the great benefit of remembering it, we being thereby helped in our preparation to keep it, and, in keeping it, better to keep all the rest of the commandments, and to continue a thankful remembrance of the two great benefits of creation and redemption, which contain a short abridgment of religion; and partly, because we are very ready to forget it, for that there is less light of nature for it, and yet it restraineth our natural liberty in things at other times lawful; that it cometh but once in seven days, and many worldly businesses come between, and too often take off our minds from thinking of it, either to prepare for it, or to sanctify it; and that Satan with his instruments labours much to blot out the glory, and even the memory of it, to bring in all irreligion and impiety.

We want to have a positive effect upon culture and upon the auction industry and this is why we will not, as the Catechism says, be used by “satan with his instruments labours much to blot out the glory, and even the memory of it, to bring in all irreligion and impiety.”

Also, it is important for you to realize that we don’t profess to be perfect or keep the fourth commandment perfectly. By His grace, we continue to press on to please King Jesus with how we conduct business and ask for and thank you for your prayerful support and thank you for letting us share with you why we will never have an auction on Sunday.

Below is a very good sermon I heard titled, How The Church Celebrates the Sabbath by Pastor Geoff Gleason. (When we are conducting Auctions in Augusta, you will find us visiting Cliffwood Presbyterian Church – http://www.cliffwoodpca.com/ each Lord’s Day).  Pastor Geoff Gleason preached other sermons as well that are very good on the Lord’s Day/Sabbath – The Sabbath: Founded In Creation and Why Celebrate The Sabbath?

I hope you are encouraged if you are a Christian, share this timely message with other believers. May the Lord have mercy upon this land and use His people reach the lost where the fruit of redemption is manifested where you live by His people obeying the Fourth Commandment.

Yours in King Jesus,

Skip Dreibelbis

Should We Conduct Auctions On Sunday
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Being A Good Steward Of Your Client’s Assets

StewardshipStewardship is not often thought of by many in business today – or should I say that it is when it comes to the business owner’s interests and not their client’s. Auctioneers are the fiduciary of their clients and are morally and ethically to always do what is in their client’s best interest. That is supposed to be… This includes everything from protecting from damages & theft, to the prices realized at auction, to the marketing of the items to be sold, and labor to conduct the auction.
The marketing of an auction is one of the most important aspects of the auction. Effective marketing is essential for success. If only a few people know about the auction then only a few people will show up for the sale. Less competition for the items sold will result in a lower return for the client. There are some auctioneers who market effectively and efficiently and others who do not. Some things to consider when interviewing an auctioneer about the marketing is the auctioneer also making money from you with the advertising? Some auctioneers offer “advertising packages” where a person can pick and choose from the auctioneers list of ways to market. What the client doesn’t know is the auctioneer is making money from each package. The client pays not only the price from the advertising vendor but also a price for the auctioneer creating the ad and submitting the ads for publication. Another thing you want to consider is, does the auctioneer know what advertising even works and what advertising is not effective? There are many auctioneers who take a “shotgun” approach and spend lots of money on every type of print media available. To these auctioneers it doesn’t matter if the media they publish in actually works or not. They figure it is their client’s money and it gets their name out there so they see it as a way to market their business at their client’s expense.
How can you know if an auctioneer actually cares about his client? You will know if you go to an auction and before you get a bid card they ask you, “How did you find out about the auction?” Auctioneers who actually track this information know what advertising works and what does not. Auctioneers are to give copies of receipts of everything to their client. This would include each and every advertising vendor they use. Each and every cost for the production of the auction must be accounted for by statue or the auctioneer could be brought up on charges and lose his license.
First Issue Of NewsweekPrint media is a dying industry and has been for years. Costs of publication are rising, rates keep increasing, and subscriptions keep going down! Just today (19 October 2012) in the Wall Street Journal was the article about Newsweek after 79 years of being in print will only be a digital publication in 2013. ( Read Article | View Videos – the Report  – the Implications – the changing landscape of the media) What does this have to do with auctioneers? Next time you see lots of ads scattered about in all types of print media you may want to ask yourself does this auctioneer care about saving his client money or does he care more about spreading his name anywhere he is able at the client’s expense? Many auctioneers still don’t get it and this is why you see them spending their client’s money. At True Blue Auctions, by His grace, we are “True Blue” to our clients which means that we are good stewards of our client’s marketing costs. We know that digital is the future and that is why you will always see the most robust website able to be built, as well as the latest marketing methods used for our clients. If there is any print media used it is because we know from years of tracking everyone who comes to our auctions just what advertising works and what does not. In fact, every auction we have ever conducted has tracked every bidder as to how they found out about the auction. We have done some very high profile auctions for distinguished celebrities where we auctioned their mansion, automobiles and all the contents of their homes and used zero print media. One was a three time Super Bowl player and at his auction there was not even standing room available. Over 200 people attended and it was in February we had just had 18 inches of snow and had to have the place “plowed out” for people to attend. I was told by several of our auctioneers, “Skip, you must get something in the paper.” I said, “With the advertising rates they have and what little space they give you? No way!” Now did I care about my client? Absolutely! Enough to make sure I was not about to waste his money on what I knew did not work. His auctions were a huge success and he was very pleased with how we did all we could to save costs and make him the most money possible. Never be afraid to ask the hard questions to an auctioneer. They are to be doing what is right by YOU, the client. I hope this article gives you some insight into how you can know if an auctioneer is being a good steward of his client’s best interests. If you have any questions, always feel free to reach out to us from our website, www.TrueBlueAuctions.com and let us make certain your hope by faith through grace today.

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What Do House Staging Result? Nothing!

A current research study discovers that home-staging solutions have an effect on a house’s price that results being under what many people believe.

How much does a gaudy violet wall surface color scheme impact a residence’s sales price?  Very little, based on brand new research on property staging.

Home Staging Study

Option 1: Some study participants saw a home rendering with ugly purple walls and mismatched furniture. Troy Hines/HBA Architecture & Interior Design

Making a good impression may help with a general overview of a potential homebuyer, but it does not mean they will spend more to purchase the home.

In fact, now there is data that proves that staging a home does not cause buyers to pay more for your house.  Michael Seiler, professor of Real Estate & Finance at the College of William & Mary, has investigated and conducted research on precisely how house shoppers  / home buyers answered 6 residence visits that differed in the color of paint and quality of furnishings.

His research found that home buyers were willing to pay on average of $204,000 in each of

the staged homes, no matter if the home had premium of furnishings or even hideous color of paint.  The irony is that his investigation also asked the home buyers if believed that the other home buyers would adjust what they would pay based upon the way the home was staged.

“We were able to parse out what you consciously believe and subconsciously believe,” Professor Seiler says. “Beforehand, everyone thinks poor staging is going to be a problem. But when we actually did the experiment, we found it doesn’t matter.”

Mr. Seiler and co-authors Mark Lane of Old Dominion University and Vicky Seiler of Johns Hopkins University led 820 home-buyers with one of 6 online residence trips in March 2012. Utilizing professional-grade making software application produced by a style company in Virginia Beach, Va., each residence showcased either a “neutral” off-white wall surface color or an “unsightly” purple paint color, and “great” furnishings, “unsightly” furnishings or no furnishings.

Still, Mr. Seiler warns: “All we could test is how much the home would sell for. What we don’t know is whether a well-staged home will sell faster. It may sell quicker.”

Home Staging Study

Option 2: Other participants saw a rendering of a room with neutral paint color and matching furniture. Troy Hines/HBA Architecture & Interior Design

The research about the, “The Impact of Staging Conditions on Residential Real Estate Demand,” has actually been approved by the Journal of Housing Research for magazine at some point following year, he claimed.

It might be challenging to encourage real-estate “experts” to embrace these facts and share them with their clients.

Doug Eichman, a real-estate representative with Core in New York City, invested greater than $30,000 to stage a Midtown East penthouse co-op listed by an agent for $6.995 million.  His stager, Cheryl Eisen, president of state of New York City-based Interior Marketing Group Inc., states staging a home works when a home buyer really feels emotional about the house.

The Study

Researchers took 820 home buyers through six different homes using video of houses that differed in home furnishings and wall surface color. Participants then ranked their perceptions of the home and stated what they would want to pay for the home.

The research found the following:

– Respondents shared they would pay about $204,000 for the residence in all 6 of the homes toured, no matter how high quality of home furnishings or paint color.

– Respondents thought other home buyers would pay $7,595.75 less, or 3.7 %, for a residence with an unpleasant wall surface color and $8,297.22 much less, or 4 %, for a home with inadequate home furnishings.

Source: Lead writer Michael Seiler, instructor of realty & finance of the College of William & Mary.