I have written about buyer’s premiums many times. Most recently, I suggested that bidders are becoming increasingly sensitive to the buyer’s premiums — that they are to a heightened degree bidding mindful of the surcharge.
Another auctioneer noted that being aware of the buyer’s premium and it having an effect on one’s bidding are two different things. As such, I agree that every bidder should be aware if a buyer’s premium is being charged — of course. So far as the effect that this has on their bidding, I don’t agree that it has no effect.
Auctions do involve emotion and thought and people bid mindful of “winning” and/or “not losing.” However, there are also bidders who are bidding on substantial assets and/or buying to resell, where the buyer’s premium is an important consideration.
We have charged a buyer’s premium on all our real estate auctions since 1993. I have personally seen bidders bid without regard to the up-charge, and I’ve seen bidders bid completely with regard to the buyer’s premium. More recently, however, I’ve seen more “with regard” (as has Sotheby’s) than “without regard.”
I trace this trend in personal property as I witness the current transition from mostly collectors buying to now mostly resellers. Collectors bid with more emotion; dealers bid with more discretion. There’s no question emotion clouds all our judgement.
Further, I bid online quite a bit — and almost without exception figure in buyer’s premiums and shipping/handling as I bid. On eBay for example, I order by “Price + Shipping: lowest first” and bid accordingly — I know, I know … what a surprise that total price would be an important factor.
While emotion (and the desire to win) is intrinsic in all auctions, it’s much easier to maintain reasoning and knowledge online when contrasted with live auctions. In fact, I’ve held that as more and more auctioneers move to online auctions, emotion continues to moderate in that medium.
Auction markets are indeed unique in some respects around the United States. What one auctioneer is seeing in one market is often different than what another auctioneer is seeing in another market. Most auctioneers should not conclude every market is the same as his or hers.
Additionally, it isn’t that bidders don’t attend nor participate when there’s a buyer’s premium: https://mikebrandlyauctioneer.wordpress.com/2018/05/16/misunderstanding-effects-of-buyers-premiums/. For the most part, it’s much more that they bid a bit less to compensate.
As we have worked auctions in 41 states and talk to 100’s of auctioneers on the phone, via email, text message or visit with at conventions, seminars, classes and the like each year … we have our ear to the industry — and thus our conclusions. Of course, your own purview can be different than mine.
In 2018 Amazon had net sales of $232.9 billion and eBay’s sales worldwide last year was $94.58 billion. Rest assured these types of buyers (maybe $250 billion in purchases in the United States) are [total(ly)] price sensitive.
So, if the buyer’s premium doesn’t affect bidding, you’re telling me all these bidders buying on Amazon and eBay (and otherwise) all of a sudden aren’t price sensitive when they attend or otherwise participate in an auction?
And how much sold at auction in the United States last year — 2017? 2016? 2015? We apparently have little idea — but was it in excess of $250 billion? We desperately need more and better current data about the auction industry: https://mikebrandlyauctioneer.wordpress.com/2013/12/26/should-naa-become-a-trade-association/. Once our research is more complete, we’ll be publishing our findings.
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, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.
Comments