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Auctioneer Rates

Do Auctioneers Post Their Commission Rates?

 

Graphs and tables

Graphs and tables

Most Auctioneers and Auction Companies do not post their rates, charges and costs for an auction. Naturally a publication of such rates would enable clients to see what the Auctioneer and/or Auction Company charges and make judgments about if they wish to consign or not. If Auctioneers and Auction Companies did publish their fees and rates, other Auctioneers and Auction Companies would adjust their rates accordingly.
The most common violation of the Sherman Antitrust Act is price fixing. What is Price Fixing? Price fixing is ordinarily considered an agreement to inhibit price competition by raising, depressing, fixing, or stabilizing prices.
If you searched the internet you would find hundreds if not thousands of Auctioneers and Auction Companies who have listed their commission rate and expense information.
For Instance:

Flat rate – Many Auctioneers and Auction Companies charge a commission that is a flat rate. 40% on all items plus labor, marketing, etc.

Sliding Scale – Some Auctioneers And Auction Companies charge a commission that adjusts based upon the price of items. As the price goes up their commission goes down.
10% for items selling for $10,000 or more
15% for items selling between $5,000 and $10,000
20% for items selling for less than $5,000 (minimum $50)
Plus labor, marketing, etc.

So is it a violation of the Sherman Antitrust Act if an Auctioneer or Auction Company to post or publish their rates?
The answer is no. A careful reading of the Sherman Antitrust Act will make it clear that there must be an “agreement” to charge the more, less or the same as other Auctioneers or Auction Companies. The purpose of this part of the Sherman Antitrust Act is to protect sellers and buyers from price fixing which interferes with the free open and fair market forces to naturally meet where natural and uninhibited bidding among buys takes place.

An Auctioneer or Auction Company by posting their rates, hasn?t necessarily agreeing to charge the same as anyone else. Rather, they have simply just published what they charge for their services.

The only instance of where this would be a violation of the Sherman Antitrust Act would be where a group of Auctioneers or Auction Companies in the same geographic area would agree to charge the same rates in an attempt at price fixing by an agreement with other Auctioneers and Auction Companies. Proving a violation would more likely require evidence of collusion and/or some intentional or express intent to price fix beyond merely posting rates for public view.

Auctioneer Commission RatesThere was one case where the accusation of price-fixing was made against Sotherby?s that was filed in October 2000 for violating the Sherman Antitrust Act – 15 U.S.C. § 1. The United States argued that in April 1993 thru December 1999 Sotherby?s and conspirators entered into and participated in a combination and conspiracy to suppress and eliminate competition by fixing auction commission rates charged to sellers (“sellers’ commissions”) in the United States and elsewhere. In criminal case Criminal No.: 00 Cr. 1081 the government stated that the combination and conspiracy engaged in by Sotheby’s and co-conspirators was in unreasonable restraint of interstate and foreign trade and commerce in violation of Section 1 of the Sherman Act (15 U.S.C. § 1). The United States charged the combination and conspiracy consisted of a continuing agreement, understanding, and concert of action among Sotheby?s and co-conspirators, the substantial term of which was to fix sellers’ commissions in the U.S. and abroad.

For the purpose of forming and carrying out the charged combination and conspiracy, Sotheby’s and co-conspirators did those things that they combined and conspired to do, including, among other things participating in meetings and conversations in the United States and elsewhere to discuss sellers’ commissions; agreeing to raise pricing by fixing sellers’ commissions; agreeing to publish non-negotiable sellers’ commission schedules; agreeing to the order in which each co-conspirator would publish its non-negotiable sellers’ commission schedule; issuing sellers’ commission schedules in accordance with the agreements reached; exchanging customer information for the purpose of monitoring and enforcing adherence to the non-negotiable sellers’ commission schedules; agreeing not to make interest-free loans on consignments from sellers; and not making charitable contributions as part of the pricing to sellers.

(*Receive a FREE copy of the Criminal Complaint)

However, you as an individual, company, trustee , executor or executrix facing the decision of the best way of selling real estate or personal property should put your focus on finding the best quality Auctioneer and/or Auction Company that will provide you the very best results. This is the bottom line. A cheap rate or a high commission rate does not mean quality marketing and selling of anything. An Auctioneer with a nice sounding bid call means absolutely nothing other than that they can chant numbers. There is so much more you need to learn on How To Hire An Auctioneer. Explore more as we share with you everything you need to consider before you sign a contract.

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Understanding Auctions, Auctioneers & The Buyer’s Premium

AuctionIn a time within the land when we witness the economic downturn I find it surprising to hear some auctioneers boasting of not charging a buyer premium.

Auctioneers are supposed to be working for the seller but some may have been in the business so long that they lose sight of this and are more concerned about pleasing the customers (buyers) more than their clients (consignors).

Maybe some auctioneers have gotten to the point that they have so much business that they are only concerned about the customers and not their clients. If so, shame on them!
Auctioneers who don’t use a buyer premium are telling their clients that they should pay for everything – the commission, labor and advertising and every possible related expense to conducting an auction. Some Auctioneers are charging upwards of 35% PLUS advertising, labor and associated expenses. What does this leave a seller with at the end of the day? You are right, not much!

Product drives the sale. Product is what the customers/buyers consume. The product will determine the price regardless of what it is because auctions deal in the reality of what anything is worth.

Many people are skeptical and shy away of letting much personal property be sold at auction because of the loss they could suffer.

A buyer premium helps alleviate the seller of their fears of greater loss by letting the person who benefits the most from it – the buyer.

scalesIf you are the seller would you rather receive only sixty-five cents of every dollar less the advertising and associated costs or would you rather receive eighty-five cents of every dollar? The math is not hard to figure out.

Buyers who want the product will pay true market value and bid with very little regard to the buyer premium. This is not just an opinion but a matter of fact from research studies. (Stay tuned for our complete report soon to be published.)

Many prominent auction companies use very high buyer premium with some reaching upwards of 20+% You see the television shows on auctions. Even the popular Auction Kings at their auction house in GA use a 15% buyer premium.

A buyer premium is fair and balanced between both clients/sellers and customers/buyers. Clients are more willing to let product go to auction knowing that they will not suffer as great a loss.

I recently heard of an auctioneer boasting about how they will never use a buyer premium and finding every opportunity to try to belittle the buyer premium at an auction they conducted for a government entity. Why? Because the personal aspect of the sale is removed and there is little accountability since it is not personal assets they are selling. These auctioneers were obviously full of themselves and were really demonstrating that they have lost touch and have disregard for those whom they should treat with the utmost respect and gratitude – the seller/consignor, for without them, they would not be having the auction?

Anyone would know that it would be really insulting to talk this way in front of a family who has entrusted you to be looking out for their economic best interests for an estate or business. One thing you can have the assurance of is that these auctioneers who boast in this manner have been in the business either way too long or not long enough to understand how they have lost touch with whom they are working and are ethically and morally obligated to advocate and represent.

Fact is that today a person or family can not afford to suffer the loss of an auctioneer who refuses to use a buyer premium. It is really simple to figure out how much much more a family will pocket at the end of a day simply by the amount of the buyer premium. On average our clients make at Ten Percent (10%) or more than any of our competitors who do not use a buyer premium. Do not let an auctioneer get away with telling you that people will not buy what you have to sell if you have a buyer premium. These auctioneers are not being honest with you because studies have been conducted that have proven and the numbers don’t lie from the math that when an auctioneer uses a buyer premium that the people or company having the auction at the end of the day winds up with more money. The quality and quantity of the product is what determines the price, not the buyer premium. If you have what people want, people will come out to buy it regardless of a buyer premium