Auctioneers all over the United States charge a buyer’s premium (buyer’s fee or surcharge in Wisconsin) and many have such provisions in their contracts with their sellers, but some do not. We would hold that if it’s not in the contract, it can not be charged nor retained by (paid to) the auctioneer.
First, some bidders (and even if only one) bid less to compensate for the buyer’s premium being charged, and as such the seller would be owed that information prior and have to agree to the charge. Secondly, the seller would have to know all the expenses being charged — and paid to the auctioneer — at the time of contract.
Our holding would apply no matter the type of product, value, sale price, and even if ultimately the auction total exceeded expectations. In other words, it’s never right for an auctioneer to retain any amount charged to buyers (or sellers) unless the seller-client has knowledge of and consents to the complete arrangement.
I assume it goes without saying that buyers can’t be charged a buyer’s premium (or any other surcharge) without adequate disclosure? We’ve even seen situations where there was no buyer’s premium noted in the terms, but ultimately charged nonetheless — and buyers then took note …
Further, just because an auctioneer notes in the contract that a buyer’s premium will be charged (or collected,) that alone doesn’t indicate who ultimately receives it. Before you say, “it’s obvious” I can tell you that there are auctioneers giving their sellers some (or all) of the buyer’s premium collected — and noting such in the contract as they should.
I’m privy to at least three material cases where an auctioneer didn’t disclose to the client (with knowledge and consent, conspicuously noted in the written contract) a buyer’s premium would be charged. I assume you agree that this is unconscionable behavior? I assume you agree a situation like this “unjustly enriches” an auctioneer through concealment and misrepresentation?
The worst of this concealment and misrepresentation is reporting to the seller in the settlement and otherwise only the hammer price and seller commission as if no buyer’s premium was charged when it was. We plan to follow up this basic treatise with an example so that it’s clear how this should be managed, and how it should not.
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.
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