Auction Houses, Dealers and Buyer Premiums

earlyAurum

Do dealers have to pay the full buyers premiums in auctions? If they have to pay, how is this guaranteed? Is there any regulation and if not should there be?
Thanks for your replies,
earlyAurum

commoncents05

Yes, they pay the full BP.

-Paul

coinguy1

Yes, dealers, even the largest ones, have to pay the full buyer's premium too. As far as how it's "guaranteed" - it is simply treated as part of the bid.

WTCG

All buyers, even the dealers, are required to pay the full amount of the buyer premiums. This detail is stated in the written terms and conditions of every auction.

Before bidding on anything in any auction people should read over the terms and conditions to clarify any confusions.

roadrunner

The dealers "account" for the buyer's premium but they NEVER actually pay it unless they forget to back it out. The seller ultimately pays it along with whatever consignment percentage fee they have negotiated. Bidders merely back off their bids 15%. That certainly isn't coming out of their pockets. Why would anyone pay a 15% bidder/buyer's fee for the privilege of being able to bid/buy in an auction?

For example some auction houses offer a net 105%+ of hammer price for larger and choice consignments. That works out to be an 8.7% overall commission to the auction house. Clearly, no one "paid" a 15% buyer's fee in this scenario. The auction house actually gave 6.3% of the buyer's fee "back" to the consignor. Even a consignor getting 100% of the hammer price is paying a net 13% commission. The bidders are paying 0%. If an auction house is able to convince a seller to consign for say 90% of hammer (explained as a 10% seller's fee), then their net in the end will be 90/115 or 78.3%. Only the seller is contributing to the consignment/bidding fees, never the buyer. A buyer's fee should really be called Seller's fee #2.

roadrunner

RYK

<< <i>The dealers "account" for the buyer's premium but they NEVER actually pay it unless they forget to back it out. The seller ultimately pays it along with whatever consignment percentage fee they have negotiated. Bidders merely back off their bids 15%. That certainly isn't coming out of their pockets. Why would anyone pay a 15% fee for the privilege of being able to bid/buy in an auction?

For example some auction houses offer a net 105% of hammer price for larger and choice consignments. That works out to be an 8.7% overall commission. Clearly, no one "paid" a 15% buyer's fee in this scenario. The auction house actually gave 6.3% of the buyer's fee back to the consignor. Even a consignor getting 100% of the hammer price is paying a net 13% commission. The bidders are paying 0%. If an auction house is able to convince a seller to consign for say 90% of hammer (explained as a 10% seller's fee), then their net in the end will be 90/115 or 78.3%. Only the seller is contributing to the consignment/bidding fees, never the buyer.

roadrunner >>



While I agree with your analysis, I think that the OP was asking if everyone pays 15% on top of hammer when they win an auction coin at Heritage, and the answer is "Yes".

sinin1

I am not sure if Heritage pays buyers premium when they 'win' a coin in a Heritage auction

they probably just pay final value minus sellers fee

of course they have high overhead

OKbustchaser

<< <i>I am not sure if Heritage pays buyers premium when they 'win' a coin in a Heritage auction

they probably just pay final value minus sellers fee

of course they have high overhead >>



I would assume that for tax purposes they would pay the fee--at least on paper. (Note: I am NOT a tax accountant--this might be illegal. If so, then disregard my ignorance.)