Traditionally, the Auctioneer is paid a sales commission by the Seller for auctioning/selling either personal property and/or real property. The licensed Auctioneer’s sales commission is usually calculated as a percentage of the final sale price. It is important to note, that the licensed Auctioneer who is handling the sale, represents the financial interests of the Seller only.

The term “Buyer’s Premium” is used in the Auction Business to add an advertised percentage or a flat fee to the total contract price to be paid by the highest bidder/buyer at the auction.  For example, If the highest bid at the auction is $100,000 for a parcel of real property and there is a ten percent (10%) Buyer’s Premium, the Buyer or winner of the bid would pay $110,000.   This is a method utilized by the licensed Auctioneer to shift the burden and/or the responsibility of the sales commission payment from the Seller to the Buyer at the end of the auction.  The utilization of the “Buyer’s Premium” to pay the auctioneer’s commission and/or the expenses of the auction for the Seller, never changes the legal relationship of the parties involved in the actual auction process.

The licensed Auctioneer is always going to be the agent of the Seller. The Buyer, who is now paying for either all or part of the licensed Auctioneer’s services, will not have any legal impact on the agency relationship between the licensed Auctioneer and the Seller.  The Auction Agreement/Contract that is signed between the Seller and the licensed Auctioneer, must enforce and make the fiduciary relationship clear, that the licensed Auctioneer represents the interests of the Seller only.  Remember, the fact that the Buyer is paying a “Buyer’s Premium” does not change the legal relationship between the Buyer(s), Seller(s) and the Auctioneer.

Tags: Appraisal, Auctioneer, buyers premium, Real Estate

This entry was posted on Sunday, September 7th, 2008 at 7:30 pm and is filed under Appraisal, Auctioneer, Dr. Martin, General, Investment, Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.